OUR TAKE
A Victory for Music-Swappers

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By Rex Moore (TMF Orangeblood)
May 8, 2003

In the noisy war over music file-sharing services, some important news passed rather quietly a couple of weeks ago when a federal judge dismissed a copyright infringement lawsuit against Morpheus and Grokster -- services through which millions of files are illegally shared.

Why did the courts shut down Napster in 2000, but not these two services? U.S. District Court Judge Stephen Wilson said that unlike Napster, Morpheus and Grokster did not control and facilitate the sharing of copyrighted files. As a representative for Morpheus said, "When you make a piece of software and distribute it to the world, and therefore have no ability to control what people do with it, you are in the same shoes as those who manufacturer photocopiers and VCRs."

The decision surprised and dismayed the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA), the plaintiffs who were representing various film and music companies such as Sony (NYSE: SNE), AOL Time Warner (NYSE: AOL), and Vivendi (NYSE: V). They say they will appeal the ruling.

Soon after, the RIAA -- in an action that exemplifies its utter failure to win the public-relations part of this battle -- sent threatening instant-message warnings to hundreds of thousands of users it suspected were illegally swapping music. It read, in part, "When you offer music on these systems, you are not anonymous and you can easily be identified." It was a brilliant way to further alienate music lovers while making practically no difference in their file-swapping habits.

As Rick Munarriz (TMF Edible) has pointed out, there's a slight breeze of hope blowing through the industry that Apple's (Nasdaq: AAPL) entry into the digital-music arena may start to turn the tide against the pirates. The company's new iTunes Music Store offers songs for $0.99 that you can stream, burn to a CD, or transfer to a portable MP3 device. It's by far the best legal service out there, and will be available to Microsoft (Nasdaq: MSFT) Windows users later this year.

As of now, Apple is not just the best hope for the music industry... it's the only hope.

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