Rewind to 1984: In a landmark decision for the media industry, the Supreme Court ruled 5-4 that Sony
Fast-forward to today: The Court, in a unanimous decision, ruled that developers of file-sharing programs such as Grokster and StreamCast can be liable for copyright infringement. It appears that most of the material traded on such file-sharing services violates copyright law (the Court estimates 90%).
Is the Court not hip with the 21st century? Didn't the Betamax decision unleash innovation, earning billion-dollar profits for the media industry? Will the Grokster decision reverse it all?
Not really. The Betamax decision hasn't been overturned -- just modified to keep up with the latest technologies. The Court's compromise states that creating a technology doesn't make a developer liable, but actively encouraging others to use that technology for copyright infringement does.
Justice David Souter wrote in the opinion: "The record is replete with evidence that from the moment Grokster and StreamCast began to distribute their free software, each one clearly voiced the objective that recipients use it to download copyrighted works, and each took active steps to encourage infringement."
The Court's ruling is doubtlessly devastating for file-sharers focusing on music and video. There's a good chance that Grokster, StreamCast, and many similar services will die. Venture capitalists will also be more cautious in funding file-sharing startups.
The decision is good news for those firms legally selling music online, such as Apple
However, court rulings alone won't save the media industry. What's to stop programmers in, say, Estonia, from developing a P2P network? And what other new-fangled technologies will change the industry? The pace of technological advance will only intensify. To keep up, the media industry needs to forget about rewinding and concentrate on going fast-forward.
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Fool contributor Tom Taulli has no financial position in companies mentioned in this article.
