By Richard Menta 5/27/02
Considering that Audiogalaxy is one of the older post-Napster P2P brethren, I guess they have to feel pretty good that they have avoided the music industry lawyers this long. But that's of little consolation should lengthy court procedures still cripple them financially like they are designed to do.
That court process has now begun for Audiogalaxy. The Record Industry Association of America (RIAA) filed a copyright lawsuit against the company Friday, moving them from legal target to defendant.
Audiogalaxy managed to postpone the inevitable by adopting a file share screening process early on to deflect RIAA accusations of piracy. The RIAA managed to force Napster into adopting such a screening process and at the time hoped that would compel all the Napster clones to follow suit. Audiogalaxy was one of the few who chose that route and the RIAA responded by giving Audiogalaxy's volunteer screening efforts a little space while they added Morpheus, Grokster, Madster (formerly Aimster), and KaZaa to the court docket.
In the end, filtering proved to be a concept with significant limitations.
Meanwhile, Kazaa split into two entities, sending the heart of the network to Australian company Sharman Networks while the Dutch company in the RIAA crosshairs became a shell organization. Aussie KaZaa incorporated on the island of Vanuatu to shelter itself from international lawsuit. Dutch KaZaa folded just a few days ago to preserve a favorable court decision that ruled that users, not the company, are responsible for illegal file trading.
KaZaa's escape from the RIAA's legal attack opened up a "slot" that Audiogalaxy fit nicely into. The record industry in their suit charges that the efforts of Audiogalaxy to filter access to copyrighted music has been ineffective and that under US law that makes them guilty of piracy.
Said RIAA VP Matt Oppenheim to CNET "If they had demonstrated the ability to filter, we wouldn't be here."
As has been the case in the earlier lawsuits, The National Music Publishers Association (NMPA) and the Harry Fox Agency joined as plaintiffs.
Unlike the suits against the former FastTrack companies, which are being tried in California, the Audiogalaxy trial will take place in NY. NY has been the site of very favorable rulings for the RIAA. This includes the MP3.com trial that won the record industry over $120 million.
My question is this. What is easier for Audiogalaxy to do, spend tens-of-millions of capital on a pyrrhic legal fight or to follow KaZaa's lead, reincorporate on safe haven of Vanuatu and close shop on US soil?
Despite the muscle the RIAA is exerting, expatriation of US technology is the likely progression to this battle between old and new industry. At times they seem not that all different. Frankly, the recent actions of the profitable KaZaa show they can be as duplicitous as the record industry. They also so far have the best road map in a fiscal sense and that is to incline others to repeat it.
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