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The file swapping debate gathers pace

P-to-P vendors forge ahead with business plans

Under attack from the US entertainment industry and some members of the US Congress, the largest peer-to-peer (P-to-P) software vendors are forging ahead with business plans that some critics find ironic: the distribution of music and content licensed from the very industry that calls them "outlaws."

At its launch event on 29 September, the six members of the newly formed P2P United lobbying group pushed for Congress to legalise the sharing of music through P-to-P software by setting up compulsory licensing that would require the entertainment industry to make its content available on P-to-P networks for a price.

Most P-to-P vendors agree that the unauthorised trading of copyright material has to stop, said P-to-P site Grokster's president Wayne Rosso. "I think you'll find that most of us feel the future for us is in original content," he added. "There are two ways to stop piracy online: nuclear holocaust and licensing the content. Obviously, the Riaa (Recording Industry Association of America ) has opted for nuclear holocaust."

Meanwhile, Sharman Networks, owner of the popular Kazaa Media Desktop P-to-P package, wants to persuade companies in the music and movie industries to voluntarily licence content to them. Sharman Networks is pushing ahead with this business plan even as it sues those industries for what the company calls an industry-wide "conspiracy" to shut Kazaa out of the market of distributing licensed content.

P-to-P vendors say it's almost inevitable that the entertainment industry will embrace P-to-P as a distribution model. They argue that P-to-P, with most digital content residing on users' hard drives, is a more cost-effective and efficient model of distributing digital content than maintaining a large array of central servers. They also talk up P-to-P's "viral" marketing benefits, where users trust recommendations from other users more than products hyped by large companies.

The goal of Sharman Networks and its partner Altnet is to become the premier distributor of licensed ? that is, authorised ? digital entertainment, said Alan Morris, Sharman's executive vice president. P-to-P companies including the privately held Sharman and Grokster feature authorised downloads of some video games and music from some independent artists or labels, and they also carry advertising, through banner ads or pop-ups that users must endure if they don't want to pay for ad-free versions of the P-to-P software.

"We want to work with them," Morris said of his current opponents in the entertainment industry. "(Licensed content) is not a sideline for us. I don't need the hassle of fighting lawsuits... just to make a few bucks on some advertising."

Critics of the current crop of P-to-P vendors say there's little chance that the entertainment industry will suddenly make an about face and start working with the vendors it has been trying to sue into submission. Compulsory licensing, which P2P United members champion as an approach that would allow artists to be paid for files traded, hasn't been part of the extensive P-to-P debate in Congress this year, although hearings on the issue have been held in past years.

A spokeswoman for the Riaa declined to comment on P-to-P business plans, but pointed to a recent statement from Riaa Chairman and Chief Executive Officer Mitch Bainwol, urging P-to-P companies to "finally act like responsible corporate citizens" by warning users about illegal file sharing and filtering copyright content off their networks. P-to-P vendors "deliberately induce people to break the law," Bainwol said in his 30 September statement, and in a hearing in early September, Riaa President Cary Sherman accused P-to-P services of facilitating the trade of child pornography and exposing their users to security problems.

The talk coming from the Motion Picture Association of America (MPAA) has taken an even more no-compromise tone than the RIAA's statements. "Kazaa, Gnutella, Morpheus and the rest of them are outlaw sites," Jack Valenti, president and chief executive officer of the MPAA said in a congressional hearing 30 September. "They do nothing but offer illegal music, movies and the most sordid pornography that your mind can ever comprehend."

And so the debate continues.


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