RIAA, MPAA sue popular Napster progeny

Having successfully forced file-sharing rogue Napster Inc. into compliance with copyright laws, the Recording Industry Association of America Inc. (RIAA), along with the major Hollywood studios, is now launching attacks against popular file-swapping services MusicCity, KaZaA, Morpheus and Grokster, an RIAA representative confirmed Wednesday.

"We cannot sit idly by while these services continue to operate illegally, especially at a time when new legitimate services are being launched," Hilary Rosen, RIAA president and chief executive officer (CEO) said in a statement.

The RIAA and Motion Picture Association of America (MPAA) filed suit against MusicCity.com Inc, MusicCity Networks Inc. (which operates Morpheus), Grokster Ltd., and Consumer Empowerment BV (also known as FastTrack, operator of the KaZaA service) in the U.S. District Court for the Central District of California late Tuesday for copyright infringement.

None of the defendants were immediately available for comment Wednesday.

Like Napster, the services covered in the suit allowed users to swap content, including copyright-protected music and movies, for free via their networks.

In their suit, the plaintiffs said that the file-sharing networks "created a 21st century pirated bazaar where the unlawful exchange of protected materials takes place across the vast expanses of the Internet, and where the materials being exchanged include first-run movies currently playing in theaters and hit songs from virtually every major recording artist."

All of the peer-to-peer (P-to-P) networks charged in the suit utilize software from Amsterdam-based FastTrack, which is made up of a loose organization of programmers. FastTrack Founder and CEO Niklas Zennström manages the KaZaA service, and the company licensed its file-swapping software to Tennessee-based MusicCity, and West Indies-based Grokster.

Although each service boasts a different user interface, the file-sharing software that powers them is virtually identical, and connects all users to the same network library, the plaintiffs said. Given this, the plaintiffs claim that not only are the services aware that they are enabling the sharing of copyright works, but are also able "to control the activities of their users and the infringing digital files available through their network," the suit states. This is important because in order for the defendants to be found guilty, they must be proven to have both knowledge of and control over the illegal activities.

The RIAA has already battled other file-sharing services, such as Napster, on similar grounds, but Tuesday's suit represents the first time the record industry has teamed with the MPAA to present a unified front. (Napster has been offline since July when a court ordered it to suspend its services until it could prove that its filters were 100 percent effective in weeding out copyright works.)

In what has no doubt become a pressing issue for the MPAA, first-run movies still out in theaters are being traded for free over the services, in addition to older titles.

And, the services are wildly popular. According to FastTrack, over 34 million copies of its software have been downloaded in the past six months. What's more, digital entertainment researcher Webnoize Inc. reported Wednesday that consumers downloaded more than 1.5 billion digital files using the FastTrack network during September, 56 percent more than in August. Additionally, 1 million users were typically logged on to the network at any one time, the researcher reported, compared to 580,000 the previous month.

With the boom in file-swapping and the proliferation of post-Napster progeny, the RIAA and MPAA are seeing their market seriously challenged.

The onslaught of free file-sharing services present a dual threat to the record labels, which are set to launch two separate online music subscription services later this year -- Pressplay and MusicNet. Pressplay was formed by Vivendi Universal SA and Sony Music Entertainment Inc., and MusicNet is backed by Bertelsmann AG, AOL Time Warner, RealNetworks and EMI Group.

To put the brakes on these free file-swapping bandits, the RIAA and MPAA are asking for preliminary injunctions to enjoin the defendants' activities. They are also requesting the defendants' profits, and a damage reward decided upon by the court, or alternatively, maximum statutory damages of no less than US$150,000 per individual copyright infringement.

What is a more likely scenario, however, is that the cases will be settled out of court, much like Napster chose to do last week with the National Music Publishers' Association (NMPA), agreeing to pay US$26 million in damages for past, unauthorized use of music and to advance another $10 million for future licensing royalties.

Still, the reach of these newer file-swapping services is far and wide, with FastTrack software sitting on millions of computers around the globe. It remains to be seen how difficult it will be for the RIAA and MPAA to pursue foes, some outside of the U.S., which run a network that could possibly survive even if the companies themselves are eliminated.

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More about AOLBertelsmannEMIFastTrackGroksterKaZaAMorpheusMotion Picture Association of AmericaMusicCity NetworksMusicNetNapsterRealNetworksRecording Industry Association of AmericaSonySony Music EntertainmentTime WarnerVivendiWebnoizeWest Indies-based Grokster

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