RIAA and Audiogalaxy Settle

By Robert Menta 6/18/02

Do you call it compromise or capitulation? It is probably the latter, though all the details of the deal are being kept mum. What is known is that file swap client Audiogalaxy has settled with the Record Industry Association of America and starting immediately it will filter all works traded on its popular P2P service.

According to theRIAA press release:

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The recording industry, music publishers and songwriters announced today that they have reached an out-of-court settlement with Audiogalaxy.com, the Napster-like clone, which requires Audiogalaxy to stop the infringement of copyrighted works on their peer-to-peer network....The other key provision of the agreement is for Audiogalaxy to pay the music publishers and recording industry a substantial sum based on Audiogalaxy's assets and interest in resolving this case quickly.

Those last words are the most telling "...based on Audiogalaxy's assets and interest in resolving this case quickly" particularly the part about the assets. What puts the biggest pressure on most of the P2P litigants facing the RIAA is the fact that outside of a healthy audience they don't have much in the form of assets. KaZaa is making a profit thanks to a shrewd abuse of parasite-ware, but the others only generate limited revenue. As for RIAA's use of the word "substantial", it appears to me as if they are trying to pump up the impact of the financial terms of this agreement, terms which are of course undisclosed.

Maybe the RIAA is accepting the fact that killing the US-based P2P companies will only drive users to file-trade services who expatriate from American or European soil (as KaZaa did by running to the island of Vanatu)? Fleeing only makes it harder for the RIAA to go after the file trade services causing the industry lobby to lose control and influence. KaZaa has shown how profitable it is to flee. For balance, the RIAA needed to show that someone thought coming to terms with the industry was a good option to hitting the sails. That or watch all the other P2P clients head for the south seas.

Audiogalaxy has always been the most open to cutting a deal with the RIAA so it is no surprise they were the first to come to some kind of closure with the music industry. The question is how many users are going to stay wih the filtered product?

The reason that the music industry's efforts at duplicating Napster, PressPlay and MusicNet by name, have failed is because they only touch on a small percentage of all the music available on the Napster clones. The RIAA can say that a filtered product is the only proper - and now for Audiogalaxy santioned - product, but is the consumer going to buy it? The truth is the record industry has already shown that they either don't understand or refuse to listen to their own customers. Until they do, what passes for a suitable trade service by RIAA terms are only doomed to consumer disinterest.

Nonetheless, the settlement allows Audiogalaxy to focus on its core business without the distraction of lawyers and judges. Now they just have to retain their audience while making money to justify their deal with the devil. Simple, right?

You can read the RIAA Press release here.


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