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What does Chris Rock say? I LOVE black people, but I HATE ni#$&rs? I LOVE people who try to make it easier and cheaper for people to acquire music through the establishment and utilization of new technologies, but I HATE pricks who don't have an innovative bone in their bodies and just want to piggyback on the efforts of others to make money, not caring whether they're selling music or wrenches.

If you think the Grokster decision is a referendum on P2P, you just haven't read it. Rather, it's a referendum on SCUMBAGS!

That's what Grokster and Streamcast are. Shawn Fanning was eager to create a system for people to acquire music. Grokster and Streamcast just wanted to sell advertising. Don't forget, Napster never sold advertising spots or spyware, the company was solely about music. Oh, they wanted to hijack this music and charge people for its acquisition, but the court said no go, and the company went out of business.

The problem with the major labels is they equated the illegal behavior with the technology. The court in the Napster case did NOT say it was illegal to distribute songs via P2P networks, just that you couldn't do it without a LICENSE! So, armed with this ruling, you'd think the labels would establish LICENSED P2P. But NO!! They believed they'd stopped the future, and could confidently retreat into the past. And if there WAS any further distribution of music online, it was going to be on THEIR terms. You could either RENT IT, or… Well, that's ALL they wanted to do until Roger Ames met with Steve Jobs and bullied Universal into licensing the iTunes Music Store before suing file-traders.

But it's not about the iTunes Music Store, which now Universal and the other majors embrace with relish. You see the iTMS doesn't deliver what the public wants, it doesn't REPLICATE Napster, it doesn't deliver unlocked files for a cheaper price than CDs. Rather, you purchase an inferior product to the CD, at a price sometimes in EXCESS of the disc. So, not having solved the problem, not delivering what Napster demonstrated a DEMAND FOR, other people moved in to fill that void.

When GM comes out with a hot new car, Ford imitates it.

Better yet, when GM and Ford and Chrysler demonstrated demand for SUVs, what did the Japanese, caught flat-footed, do? Did they SUE the Detroit manufacturers? Look for LEGAL solutions? No, they just built BETTER SUVs, and now both GM and Ford's debt is junk and Toyota is eating up their market share.

You see, it's BUSINESS, not law, that matters. If someone demonstrates a better way, and that method has no patent or copyright protection, you IMITATE IT! Something the backward execs in the music industry refused to do. Believing that the Morris Levy winning through intimidation/it's my ball, you play my game world still existed. But it doesn't.

Maybe if the major labels had sued code, the 0's and 1's that make up software programs, they MIGHT have had a chance of eviscerating their perceived problem. If they sued the Internet into submission, got it so TECHNICALLY people couldn't trade files. But these bozos just sued the scumbags who spread the software, not the software itself, which is now in the hands of millions of users. It's a pyrrhic victory. Grokster and Streamcast die, P2P lives.

Justice Souter's got no problem with P2P, he says so. He's got no problem with the Sony Betamax decision. He's just got a problem with CROOKS! People who try to bend the law to make their behavior appear legal solely so they can reap financial reward.

Read the case. The behavior of these two companies is so heinous as to defy defense. They were not teenager hackers creating cool software, rather they trolled the old Napster in its dying days, telling its users to come to THEIR house to trade copyrighted material next.

And that's what the case turns on. If you build your business on inducing infringement in this heinous way, you're screwed.

So, where does the behavioral line lie?

Expect the labels to litigate that for five to ten more years. But, reading the Supreme Court decision, know that they have an uphill battle. It would be HARD to find offenders as egregious as Grokster and Streamcast. What about the hacker who creates something in his bedroom for FUN? Or Bram Cohen, who wrote BitTorrent, who came RIGHT OUT and said it was illegal to trade copyrighted material with his software, who did NO inducing. By the standard of today's decision, it looks pretty good for Bram. For his behavior was COMPLETELY DIFFERENT from Grokster and Streamcast.

We live in a land of laws. The only goal of the Supreme Court is to interpret those laws. They don't make the laws up, they just apply the facts to the Constitution and the statutes that exist. Furthermore, the Supreme Court chooses to hear very few cases. To the point where many legal questions go undecided. In other words, if you're depending on the law to protect your business model, you're in trouble. Technology moves just too fast.

Today's decision is not about the content companies winning, or the P2P companies losing. That's not how the Supreme Court works, that's not what's at stake here. Rather, the question was, were these TWO companies possibly liable for copyright infringement. The Court said it was possible, there should be a hearing on the facts. The Court DID NOT say the labels are entitled to maintain their business model, that P2P must die. To believe EITHER of these things is true is to misunderstand the ruling.

Then again, most people blowing the hardest are not attorneys. Certainly not attorneys without a vested interest.

All that was established today was that decentralized P2P CAN be liable. Not that ALL decentralized P2P is liable. And, it's not liable because it IS P2P, but because the owners of the company acted in a heinous way.

Make no mistake, the labels wasted a ton of money here. This is not a vast improvement on the decision they got in Napster. But it's four years later. And now, HUNDREDS OF MILLIONS of people have P2P software on their desktops, and it's been proven that suing THEM has no impact on the number of people trading files, actually it's INCREASING! So, we already know the people are liable, but they're sill doing it. Put the distributors of the software out of business, but their applications are, like roaches, impossible to eradicate. In other words, the labels have won the battle but lost the war. Today's victory was a sideshow. No more likely to cause Wall Street to embrace Warner stock than Edgar Bronfman, Jr.'s lame proclamations that the iTunes Music Store and the new Napster would herald new profitability for the industry.

It's simple. In order to emerge victorious, you've got to know your enemy. File-trading as presently practiced is mass copyright infringement. But, it's the most exciting way to discover and acquire new music. Anybody who uses the software knows this. But, the people suing do not. They live in a world where "computer" is a dirty word.

The lesson of Grokster is NEXT TIME there's a technological breakthrough, don't try to sue it into submission, rather, MONETIZE IT! But, throughout history old, decaying empires fight to hold on to what they possess rather than enter a scary, unclear future. We've seen this movie again and again, the old die, and the new take over. Why the music business thinks it's any different is beyond comprehension.

Contact Bob Lefsetz | View Lefsetz Letter Archives

NOTE: The views expressed in this editorial do not necessarily reflect the opinion of CelebrityAccess, Encore or its employees.