“Grokster Ltd., a pioneering file-sharing service that allowed users to illegally download copyrighted songs, shut down as part of a legal settlement announced yesterday with the music industry,” Sarah McBride writes for The Wall Street Journal.
“The move reinforces a Supreme Court ruling in June that let the music industry sue file-sharing businesses if they help people obtain copyrighted material free. Grokster, founded in 2001, had been the leader of file-sharing sites fighting against the music companies. Its decision to give up will make it harder for surviving U.S. sites to stay in their current business. Instead, they will likely be forced to go legitimate by working with copyright holders, or to move their operations offshore, which could make it difficult for them to attract advertisers,” McBride writes.
“‘It’s very clear that the main effect of the court’s Grokster ruling has been to force these businesses to accept that they don’t have a viable business model,’ said Justin Hughes, an associate professor at the Cardozo School of Law of Yeshiva University, New York, who specializes in intellectual property. ‘You can’t go to the venture-capital markets and say ‘Please fund my totally illegal business plan.’ The move also could boost the prospects of legal file-sharing sites, including Apple Computer Inc.’s iTunes, the leading music-downloading service,” McBride writes.
Full article here.
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Grokster to stop distributing file-sharing service – November 07, 2005