Wednesday, May 12, 2010

LimeWire Found to Infringe Copyrights; Wall Street Journal, 5/13/10

Ethan Smith, Wall Street Journal; LimeWire Found to Infringe Copyrights:

"A federal judge ruled Wednesday that the makers of LimeWire, a popular file-sharing application, were liable for copyright infringement and related claims brought by a consortium of 13 major music labels.

The blistering, 59-page ruling from Judge Kimba Wood of U.S. District Court in Manhattan granted several requests for summary judgment made by the music labels, which are represented by the Recording Industry Association of America.

For many in the music industry the ruling is a throwback to an earlier digital era. LimeWire and similar software had their heyday several years ago, and while still present on many people's computers they have been eclipsed by newer downloading methods such as BitTorrent.

In a statement, LimeWire Chief Executive George Searle said: "LimeWire strongly opposes the court's recent decision." RIAA CEO Mitch Bainwol, in a statement, called the ruling "an extraordinary victory for the entire creative community."

Nonetheless, it is unclear whether the ruling will have a tangible effect on illegal downloading of music and other media, experts said, given the diffuse nature of the networks on which the material travels.

Judge Wood's ruling didn't shut down LimeWire, though she could do so after subsequent hearings.

But even if she does issue such an order, experts say it is unlikely to stop its use by people who have already installed the software on their computers, since the file-trading network operates independently, out of the control of the company or any other central authority.

LimeWire was the last major commercial distributor of software that lets users access the once-popular Gnutella network, where people shared music.

NPD Group, which tracks consumer behavior, said LimeWire is present in 1.7 million households and used by 58% of people who download music using so-called peer-to-peer networks. NPD added that most people who download music from such networks use more than one kind of software, meaning that LimeWire users are also likely to use BitTorrent and other method.

Illegal downloading activity is difficult to measure but by many estimates it far exceeds paid downloads, despite the growth of Apple Inc.'s iTunes Store.

"The music marketplace and the digital entertainment marketplace is overwhelmingly a pirate market," said Eric Garland, CEO of BigChampagne LLC, which monitors file-sharing activity for clients including media companies.

Mr. Garland offered what he called a "conservative" estimate that around one billion songs a month, or 12 billion a year, are downloaded illegally. That compares with 1.2 billion songs downloaded in all of 2009 from paid services in the U.S.—by far the world's largest market for digital downloads. Even adding in other nations' downloading, peer-to-peer sharing likely dwarfs paid music downloads by about seven to one."

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