Grokster shut down to benefit Apple’s iTunes Music Store

“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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Related articles:
Grokster to stop distributing file-sharing service – November 07, 2005


  1. There will always be a Black Market for every market – it is part of the economic system. This win for the industry is also a win for the legitimate consumer as it will increase the market size of legal media downloads and as that market grows, more and more competitors will be drawn to it, furthering competition and benefiting the consumer.

    When Companies Compete, You Win! (I heard that somewhere)

    MDN word: basis

  2. In an interesting side note to this and the Creative-waves-the-white-flag story, it appears that Creative just cannot come up with anything better to do with their money, so they are giving it back to their investors!

    Trading a $7 and change, CREAF has announced a $0.25 per share dividend to be paid to share holders of Record on Nov. 16th. WHOA!

    This is a common practice for Utility companies, Banks, and others that are in very stable markets and use the dividend as a way to keep their otherwise-tame stocks in investor’s portfolios. But for a technology company, it signals (at least to me) that they don’t have the faith in their R&D to invest in new technologies and rather than spend those $millions on future R&D, they have a better shot attracting and retaining investors by declaring a dividend!

    For what it’s worth, AAPL has over $9.95 PER SHARE in cash and has no debt, but rather than pay out a quarterly, annual, or even one time dividend, AAPL is retaining those coffers for a rainy day – a wise move in the fickle and fast paced (and unchartered) markets Apple competes.

    MDN word: act

  3. Creative — a dividend? Boy that’s a tell.

    Apple has enough cash for a thunderstorm plus a rainy day. I hope they pick a good day to buy.

    Microcorpse has enough cash to pay huge dividends, settle huge lawsuits, pay huge fines, resurrect Howard Hughes, and still maintain an army of codewriters that is so huge that they get in each other’s way and can’t even manage to make a presentation.

    MW: control.

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