• Business Week , Wednesday, February 28, 2007 10:45 AM

Where history is an immovable force, change is inevitable -- but try telling that to major media companies. Short of total Web censorship (a la China), illegal file-sharing won't go away. Companies facilitating the free exchange of files between consumers can be brought before the Supreme Court; new ones will always sprout up.

While it continues to fight against piracy, Big Media is now showing signs of trying to adapt. We're not talking about doing away with DRM, , but rather smart partnerships with a new breed of P2P sting operators like ARTISTDirect's MediaDefender and Skyrider. These companies infiltrate P2P networks by licensing copyrighted music or videos, uploading them to a P2P network and then slapping ads on them. When users search for artists, these files appear; they're free, but users have to sit through an ad. Among MediaDefender's first promotions is a Jay-Z video sponsored by Coca-Cola; ad revenue is split between the tech provider and Roc-A-Fella Records, the artist's label.

Getting major labels on board is another issue. They fear that teaming with companies like MediaDefender could compromise their legal position that "there is no legitimate use for [P2P] technology," says BigChampagne CEO Eric Garland.

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