The Crux of The Record Industry's Problems

By Jon Newton 3/25/05

"The music business should have stuck by Thomas Edison’s technology if it wanted to avoid the threat of piracy. His wax cylinders could record a performance but could not be reproduced; that became possible only with the invention of the flat-disc record some years later."

The quote comes in a The Economist OpEd centering on March 29's Grokster v MGM US Supreme Court hearing when the entertainment industry will for the third time try to bend the US legal system to its will to force a decision which would effectively crush p2p file sharing, and put a stop to innovation in America.

Jon Newton

Standing against Hollywood are StreamCast Networks and Grokster Ltd, makers of the Morpheus and Grokster p2p applications who maintain they're not liable for uses to which their software may be put.

:"In court, the two software firms will no doubt cite the case of Sony’s Betamax technology as a precedent," says The Economist. "The home video-recording system, which was eventually superseded by VHS, faced a suit in 1984 in which Disney and Universal called for its ban. The entertainment firms feared that the ability to record on to video would allow considerable infringement of their copyright. America’s Supreme Court ruled that Sony was not liable because the equipment had “substantial” uses other than infringement, such as the recording of TV programmes for later viewing."

Ironically, Sony is now on the other side in Grokster v MGM. But tottering awkwardly on several fences is nothing new for Sony, which also develops, makes and markets a huge range of equipment identical to that used in operations it says are robbing it and its brothers in the music and movie studio cartels.

Software produced by StreamCast and Grokster, "has significant non-infringing uses, such as sharing music that is not copyright-protected and internet-routed phone calls," says the OpEd. "In fact, some make the case that P2P technology could make the internet more robust and secure by avoiding the use of centralised servers, and that the entertainment companies’ lawsuit is thus harmful to the web as a whole."

But, The Economost adds, "even if the entertainment business manages to coax more users into paying for legal downloads and succeeds in court against Grokster and StreamCast, its problems are unlikely to go away. True, a Supreme Court ruling in the industry’s favour would put paid to other P2P services. But it is not clear that curbing illegal downloading will translate into extra sales for the music business. A rush into legal downloading would hardly be good for sales of CDs: some cannibalisation is inevitable."

And it hits the nail squarely on the head in its last sentence: "perhaps the decline in global sales is indicative of a far greater problem for the music industry - consumers simply think that many of its products are just not worth paying for."


Jon Newton is the editor of and is a regular contributer to MP3 Newswire. Jon's site is devoted to the politics of digital music and his insights as well as those of his co-writers can be read there. We urge you to explore it.


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Other MP3 stories:
What Makes a Journalist? Thoughts on Apple and Think Secret
iTunes Prices Too High
Can Free Broadcast TV Really Be Napsterized?


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