A YEAR AGO, THE ENTERTAINMENT industry hailed the Supreme Court's decision in the Grokster case as a milestone in its battle against online piracy. Maybe so -- but if it was, the industry has little to show for it. If only the major labels and studios cared as much about serving customers as protecting copyrights.
The court's ruling said that companies such as Grokster, which enabled users to share files over the Internet, could be held liable for promoting copyright infringement. Many of these firms no longer exist, but the software they distributed still works. In addition, there are still plenty of noncommercial file-sharing programs, maintained and updated by a decentralized cadre of volunteers.
The Recording Industry Assn. of America argues that this picture would have been much worse without the lawsuits against file sharing. In the last few years, the percentage of U.S. Internet users who share files has remained about the same, while the percentage buying music at legitimate online stores has grown substantially.
Nevertheless, free downloaders represent a lost opportunity for the entertainment industry. The number of legitimate outlets for music, TV shows and movies online may be growing, but file-sharing networks continue to attract a much larger audience. By one estimate, almost 10 million people around the world are using file-sharing networks at any given moment. Evidently, the industry-backed services haven't come up with an offer as compelling as free files that can easily be played on any device.
The Grokster ruling wasn't simply a nudge for companies like Grokster to get out of the file-sharing business. It was an invitation for the entertainment industry to get in. By clarifying the legal obligations of file-sharing companies, the Grokster ruling created a road map for partnerships between tech and entertainment companies.
So far, however, talks between leading file-sharing firms and entertainment conglomerates have yielded few tangible results. Labels and studios have warmed a bit to popular but bootleg-heavy sites such as YouTube.com, where users post most of the videos, yet they remain extremely cautious about letting users redistribute their works.
The industry needs much more experimentation with approaches that give users the control and freedom to consume that make file-sharing networks so attractive. Instead of hoping that millions of Internet users on file-sharing networks will go somewhere else and pay for their downloads, it's past time to try to do business with them where they are.