Grokster: Get Over It

by Dave Morgan, Jun 30, 2005, 6:00 AM

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By now, everyone in the industry knows that the United States Supreme Court ruled earlier this week that file-sharing services could be held liable for copyright infringement by consumers using their services. This is big. It means that companies can no longer operate such services without assuming some liability for how they are used. Many in our industry are disappointed by the decision, concerned that holding the creators of technology liable for any one of a myriad of uses will discourage innovation. They point to examples like the development of the tape recorder, photocopier, VCR, and personal video recorder as prime examples of innovative technologies that have flourished because they were not held back by lawyers worried that among their uses were the unauthorized copying of copyrighted materials.

As an entrepreneur that takes pleasure in watching new technologies devastate slow-moving mature marketplaces, I was originally supportive of these arguments. How could I think otherwise? Upon reflection, however, I have changed my mind. I think that the court was right in Grokster. I think that the decision is best for the continued growth and development of the interactive media and advertising industry.

Why? First, let me give you some transparency into my personal biases. Not only was I a media lawyer in a previous life, but my father spent 12 years as a district attorney, so I believe in both the notion of copyright and that people should obey the law. Second, I work with lots of traditional media companies, so I frequently view issues from their perspective. And third, I think that the music recording industry has been operating for years on a terrible business model that shows they care very little about their consumers, and they deserve to be put out of business for their stupidity.

My reasons for applauding the Grokster decision are simple:

Web services are more than just technology. Grokster was not just a technology, it was full Web service. Grokster was a turn-key service that was used primarily to share copyrighted files. I don't buy the argument that it was just a peer-to-peer file-sharing technology. Groove is such a technology. I didn't see Ray Ozzie getting sued here. We have to realize that the technology industry has evolved from developing pure technologies to delivering specific and focused applications and Web services. Companies that develop and deliver such applications and services should not expect protection on the same bases of ignorance and lack of control that were available historically to pure technology developers. The folks that ran Grokster knew exactly what they were doing and how their service was being used.

File-sharing services have inflicted harm for money. While most of the attention file-sharing services have garnered focused on how they helped consumers bypass the out-dated business models of the recording industry, little attention has been paid to their involvement in the development and growth of the spyware and adware industries. For those that may not have been aware of this, a majority of the spyware and adware downloads that have occurred over the past several years were "bundled" with file-sharing software and with virtually no awareness on the part of the consumer. For this, the file-sharing services have received tens of millions of dollars. File-sharing services are not Don Quixotes, they have been making lots of money. As a result of their efforts, we have tens of millions of spyware applications infecting computers and dozens of bills in Congress and state houses trying to remedy the file-sharing caused spyware problem. Do you think that it's a coincidence that the leading anti-spyware bill in Congress was sponsored by Sonny Bono's widow?

Copyright is the law, and protecting it is good for advertising. We may not like the business model of the music industry, but that doesn't entitle companies to illegally circumvent it just because they can. Great content drives consumer attention and engagement and creates an environment for great advertising. We need companies to create that great content. We have laws that help them protect it and recoup their investments in creating it. There is no question in my mind that the content creation industry is undergoing enormous disruptive changes. However, that doesn't mean their businesses can be attacked without respect for the law. Not only is it wrong, but it's not necessary; they are already enormously vulnerable to legitimate business models attacks from the likes of consumer-generated content.

While I am sure many don't agree with some of my positions, I am confident that over the course of the next few years the new content creators that the Internet and new technologies are enabling will be very happy that we still have vibrant and secure copyright laws in place to help them protect what they have created.

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