File-Sharing Services May Reform Themselves

The head of EDonkey, which built one of the most popular ways for finding pirated music and movies, said Monday that a transformation of the software was "certainly imminent." And Grokster Ltd. wants to combine forces with Mashboxx, a coming service that will pay copyright owners for their songs, according to people familiar with the talks.

Other companies are expected to make similar moves after the Supreme Court's June ruling that file-sharing firms that encourage people to download unauthorized copies of music and movies can be sued for the sins of their customers.

A multimillion-dollar question: whether the entertainment industry -- which wants to recoup some of the hundreds of millions of dollars it says online piracy has siphoned away -- will bless the conversions, or continue its relentless legal and legislative battle against file sharing, or a little of each.

The Recording Industry Assn. of America declined to comment Monday, but last week it sent cease-and-desist letters to EDonkey, BearShare, LimeWire, WinMX, Warez and two other firms. The entertainment industry is already suing Grokster and Streamcast Networks Inc. in U.S. District Court in Los Angeles.

"There is considerable momentum out there because the current peer-to-peers in my view would be foolish to ignore what's taking place," said Robert Summer, chairman of IMesh.com Inc., which settled with the recording industry before June's ruling. "They will be pursued."

IMesh agreed to pay $4.1 million and stop its millions of users from making unauthorized copies of songs. Those sorts of restrictions generally end up driving away users, who flock to file-sharing networks for free music, movies and other digital goods. The program distributors give their software away and make money by selling ads.

Both the file-sharing networks and the entertainment industry recognize that if new online offerings are too cumbersome or restrictive, users may turn to overseas services or to technologies such as BitTorrent, which are harder to control.

Even if all the companies comply, piracy rates might not change much. That's because the programs that sit on users' computers find each other on a variety of networks, and those programs can be made by different people.