Recording industry suffers defeat at hands of new file-swapping services
As CD sales fall (by 8.8% last year) and 19% of Americans 12 and older have downloaded "an audio file from a file-sharing network" (according to a December survey by Ipsos-Reid) and more than half of 12-17 years old have done the same, the Recording industry is under siege. After its success in driving Napster into the ground, they were hoping to do the same with the new breed of file-sharing services but a federal court thought otherwise in a recent ruling according to this Wall Street Journal story (subscription required):
The decision came in a case brought by major record labels, movie studios and music publishers against Grokster Ltd. and StreamCast Networks Inc., which provide software programs called Grokster and Morpheus that let users trade music and movie files between their computers. Rather than shut down the file-sharing software, as the industry had hoped, U.S. District Court Judge Stephen V. Wilson in Los Angeles ruled that Grokster and StreamCast are not breaking copyright laws by making their software available.
That is largely because the companies are not operating centralized services [like Napster did] that would allow them to monitor the activities -- and copyright infringements -- of their users. The companies didn't have "actual knowledge of infringement at a time when they can use that knowledge to stop the particular infringement," he wrote. Sharman Networks Ltd., which offers the similar file-sharing program Kazaa, joined the case later than Grokster and StreamCast and wasn't covered in the ruling.