Chris Barton: File-swappers' court win big breakthrough

A courtroom ruling on Anzac Day indicated a turning point in the music download wars. It was a decisive victory for the wonderfully named Grokster and Morpheus, whose software allows music and video files to be shared online.

The movie, record and music publishing industries had launched a legal offensive to shut them down. But US District Court Judge Stephen Wilson dismissed the action because, although the software could be used to swap copyrighted music and videos, it could also be used for legal purposes.

His ruling reflects a 1984 Supreme Court decision not to outlaw Sony's Betamax video recorder.

Like file-sharing software, Sony's equipment and its successors could be used to make pirate copies, but also had legitimate uses such as recording TV programmes for viewing at another time.

The judgment notes Morpheus has been used for sharing the works of Shakespeare and to find public domain and government documents. And Grokster has a partnership with GigAmerica which hosts music from over 6000 independent bands and musicians. In short, plenty of legitimate use.

But Judge Wilson also said: "The court is not blind to the possibility that defendants may have intentionally structured their business to avoid secondary liability for copyright infringement, while benefiting financially from the illicit draw of their wares."

It is a reference to the way the software works. Unlike the pioneer file sharer Napster - a centrally controlled service which a US court ordered shut down - Morpheus and Grokster don't have any control over what is traded on their systems.

Both operate as decentralised "peer-to-peer" networks where tens of millions of users with the software installed on their computers connect to each other over the internet to swap files.

But while the swapping is carried out free, both companies distributing the software are making a decent amount of money through advertising.

Streamcast, the company which disseminates the open source, Gnutella-based Morpheus, had US$2 million ($3.5 million) in revenues as of July 2002 and is projecting US$5.7 million by the end off the year. Grokster, which distributes a branded version of the Fast Track networking technology developed by another file sharer, KaZaA, also "derives substantial revenue from advertising".

As Judge Wilson points out, the more individuals who download the software, the more advertising revenue the companies get. And because most users of the software are downloading copyrighted material, most of the revenue depends on infringement.

That means it's okay to turn a blind eye and make a profit on a system or technology where known infringing is taking place because you can do nothing to stop it.

Which is why the judge threw the case out - saying nothing in copyright law can dictate technology development, and for the plaintiffs to be successful Congress would have to change the law. As long as technology is multi-purpose, makers do not have to redesign their technology to appease copyright owners.

So where to from here? There's every chance the record labels and others will appeal. Meanwhile, they're still pounding away with their legal arsenal.

A week ago, three university students in Australia allegedly involved with a downloading website hosted on university computers were charged with copyright offences.

The same week, four US university students agreed to pay the Recording Industry Association of America (RIAA) between US$12,000 and US$17,000 each to settle music piracy charges using campus computers.

And in another US court, an internet provider was forced to divulge the name of a customer accused of illegally circulating copyright music.

They've also opened up a new front against the song swappers themselves. Using the instant messaging capability of Grokster and KaZaA, the RIAA sent out 200,000 warning messages a week ago and is planning more.

The messages warned individuals what they were doing was illegal and that they could be easily identified. In part it read: "DON'T STEAL MUSIC, either by offering it to others to copy or downloading it on a 'file sharing' system like this."

There's talk, too, of the war against music downloading getting very nasty. Record labels are reportedly planning to sabotage the computers and internet connections of people who download pirated music - including a program called "silent", which locks up a computer system for a certain duration, and "poisoning" the networks with trash files.

You have to wonder about the record companies' wisdom in alienating a growing group of potential consumers like this. But such threats are unlikely to make much difference to a web movement that says if a song is sung it should be swapped.

This is a generation that accepts and exploits what technology has to offer and has little patience with companies that refuse to adapt to change. For the record companies it's a nightmare - music buyers growing more and more accustomed to getting their music free.

The names of the services themselves point to just how significant that change is. Morpheus, the Greek god of dreams, could imitate any sound and shape - hence metamorphosis, or morph, meaning transformation. Grok, from the 1961 Robert Heinlein sci-fi classic Stranger in a Strange Land, means to wholly comprehend.

That's something Apple Computer probably does. Last week it launched its own online music store iTunes - offering downloadable songs at 99USc each. Steve Jobs described that price as "pretty doggone close" to free.

The question everyone is asking is whether that's close enough to stop the file swappers. Many think not, but others say it's a sign - the selling of music rights to Apple - that the industry is at last beginning to grok the net.

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