Digital Life

Grokster's End and the Future of File Sharing

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The file-sharing software firm Grokster has agreed to close its service and pay a $50-million penalty to settle a lawsuit with entertainment companies. The move comes five months after the U.S. Supreme Court ruled against Grokster in an intellectual property dispute. Day to Day tech contributor Xeni Jardin reports on what the move means for the future of file sharing on the Internet.


The long battle between the entertainment industry and the Grokster file-sharing service is over. Yesterday, Grokster gave up. It agreed to pay a $50 million penalty and stop distributing software that enabled the swapping of copyrighted songs. Here with a report is the co-editor of and DAY TO DAY tech contributor, Xeni Jardin.

XENI JARDIN reporting:

Grokster is dead. File-sharing is not. Five months after the nation's high court ruled against it, what used to be the Grokster home page has been replaced by a few lines of lawyery PR speak. `There are legal services for downloading music and movies,' reads the message. `This service is not one of them.'

Grokster can no longer distribute its software in current form and must dismantle the system behind it. So is this the end of piracy?

Mr. ERIC GARLAND (Big Champagne): Certainly not. Grokster is really a minor contributor to the problem even today.

JARDIN: Eric Garland of online research firm Big Champagne explains the settlement won't stop anyone who already has a copy of the Grokster software from using it to download copyrighted music or movies. And even at full strength, Grokster wasn't the biggest problem.

Mr. GARLAND: Today's news is really about the ongoing story, the attempt to convert all of this enthusiasm for music online into a paid marketplace. Well, the audience for free MP3 swapping dwarfs legal alternatives. The online music marketplace is overwhelmingly pirate.

JARDIN: According to Big Champagne, more than nine million users accessed peer-to-peer networks like Kazaa, BitTorrent and eDonkey in October. The entertainment industry considers them promoters of piracy, but they're still online. And there are other ways to trade copied music, too, including instant messaging and e-mail. But Recording Industry Association of America spokesperson Jonathan Lamy says the death of Grokster is significant.

Mr. JONATHAN LAMY (Spokesperson, Recording Industry Association of America): And it probably signals a landscape that is significantly changing, and by that I mean right now you have maybe a half-dozen other advertising-based peer-to-peer networks, many of which have expressed to us a willingness to become legitimate.

JARDIN: And there is hope that services will find opportunity in Grokster's demise. National Music Publishers Association Chairman David Israelite believes the settlement will help fee-based services like Apple's iTunes to flourish.

Mr. DAVID ISRAELITE (Chair, National Music Publishers Association): The legal online market is still in its infancy stages. It's a growing market. It represents about 5 percent of the music market today, but expectations are that it's going to grow exponentially. The illegal market is really still significant, but it's something that we're hoping to chip away at piece by piece.

JARDIN: The lawsuit that killed Grokster was considered one of the biggest copyright cases in 20 years. But Princeton University computer science Professor Ed Felten argues the Supreme Court should have more clearly defined the boundary between legal and illegal technologies in its Grokster ruling.

Professor ED FELTEN (Princeton University): Technologists who are designing new systems are somewhat in the dark about where the legal line is. They're holding back because they fear a lawsuit from the recording industry or the movie industry, a lawsuit which they might lose, and even if they do win it would be very expensive to fight.

JARDIN: In other words, technology that hasn't even been invented yet could end up being a target of new lawsuits. And for Grokster, the company, what's next? There are plans for a fee-based version of that service. A statement from Grokster's West Indies headquarters reads, in part, `It is time for a new beginning. While today marks the end of the Grokster of old, we hope to have a new next-generation Grokster, a lawful service that respects copyright, available soon.' For NPR News in Los Angeles, I'm Xeni Jardin.

CHADWICK: I'm Alex Chadwick. Stay with us on DAY TO DAY from NPR News.

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