Just An Online Minute... Grokster

by Tobi Elkin, Jun 27, 2005, 1:00 PM

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The Supreme Court ruled today on Grokster v. MGM Studios that Internet file-sharing services will be held responsible if they plan to offer their customers software used mostly for swapping songs and movies illegally.

The unanimous decision sends the case back to the lower court, which had ruled in favor of file-sharing services Grokster Ltd. and StreamCast Networks Inc. on the grounds that the companies couldn't be sued. The decision indicates that the justices felt there was enough evidence of unlawful intent for the case to go to trial. Essentially, file-sharing services aren't going to get a free pass.

At issue was whether the companies that offer the software that enables PC users to share illegally downloaded files of copyrighted material are themselves liable for copyright infringement.

Meanwhile, a survey by online research company Entertainment Media Research reports that the number of consumers purchasing music tracks legally is increasing. Currently, EMR finds that nearly 35 percent of online music users now download tracks legally, compared to 40 percent who acquire pirated music.

EMR's research indicates that 23 percent of online music users it interviewed were prepared to download music legally, up from 16 percent a year ago. Of those who bought music legally, 44 percent cited potential prosecution as a driver for legal downloading, with 39 percent saying that illegal music swapping is unfair to musicians.

Interestingly, 29 percent of survey participants cited fear of viruses as a primary reason they stayed away from illegal download sites.

Earlier this month, a report by The NPD Group indicated that Apple's iTunes music store is becoming more popular than some peer-to-peer file-sharing services. The report found that iTunes was racking up as many users as LimeWire, a service that lets users swap music without paying any type of copyright or license fees. NPD projected that iTunes might even surpass LimeWire's popularity in the future as legal downloads become more attractive to consumers.

For its research, EMR gathered data from 4,000 music consumers about their buying habits, and concluded that the fear of prosecution, of getting Internet viruses, and of inferior quality are driving consumers toward legal downloads.

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