Obviously, the biggest issue in the news right now is The Pirate Bay, and their ongoing trial in Sweden.  But I’ll leave that topic for someone else, and instead offer up my thoughts on Grokster’s aftermath, and the way Grokster prompted the RIAA to respond with its gigantic lawsuit campaign.

Exposition: Everyone’s already aware of the RIAA’s gigantic legal campaign, I think.  But in case somebody isn’t, the Recording Industry Association of America sued approximately 30,000 individuals for copyright infringement based on their use of P2P software.  It built a gigantic legal machine and targeted consumers with limited ability to fight back.  The vast majority of the RIAA’s victims either settled or agreed to a “pre-settlement letter”, with only one case (Capitol v. Thomas) actually making it all the way to a trial (currently headed for a retrial based on faulty jury instructions).  Just last December, the RIAA made the surprise announcement that it had already ceased filing new lawsuits, though that claim should probably be taken with a grain of salt, considering they lied about it at the time.

The facts of their campaign are mostly well-established at this point, and probably everyone reading this blog has read plenty about it before.

A lot of people have praised the MGM v. Grokster decision for its fairness; the Court found a way to hold Grokster and Streamcast liable for inducing their users to commit copyright infringement without having to decide whether P2P itself was illegal.  The Court specifically shied away from that, not wanting to stifle emerging technologies; but there was significant evidence that both companies knew their products were primarily used for infringement, and actively relied on that infringing activity to generate the bulk of their profits (through advertising).  I like the decision, myself.  I think they were right in holding the companies liable, and very appropriately left a lot of issues ambiguous.

People complained because the lines of inducement were blurry, but the significance was that the Court focused on inducement and not on the substantiality issue of Sony v. Universal (i.e., the Betamax case).  The door was left open that other P2P software could still be legal, as long as the owners didn’t attempt to induce copyright infringement.  Perhaps just as importantly, the case took a few years to litigate: in that time, file-sharing applications blossomed.  The Gnutella network spread like wildfire, with dozens of clients being released; the eDonkey network did the same, and torrent sites popped up on servers all over the world.  The Grokster decision meant that if the RIAA decided to sue the companies backing these services, they wouldn’t be guaranteed victory, even as file-sharing clients multiplied like rabbits.

Except, by this point, the industry had built up a considerable amount of inertia pushing it towards legal action.  And when Grokster made it clear that legal action against companies wouldn’t be effective, the RIAA’s lawyers had to go somewhere.  The point of logic to consider is why the industry was so hell-bent on pursuing legal remedies; from an outsider’s perspective, it looks like nobody stopped to consider the option of how to adapt their business models to new technologies.  I can’t second-guess this; it seems obvious to me, but I’m sure that whoever made the decision had reasons.  Not necessarily good ones, but some kind of reasons.

These days, the industry’s changing its tactics; Amazon and iTunes have pushed them to offer DRM-free mp3 sales, they’ve made headway on getting agreements with ISPs on implementing three-strikes (and similar) policies, and there are still a few high-profile secondary liability cases being pursued (*cough* The Pirate Bay *cough*).  But the Grokster decision is still the dominant influence on the shape of p2p today, and on Big Content’s ongoing struggle to deal with it.

image from modernhumorist.com