Filesharing and Digital media / Grokster shut down. Who cares?
Unless you haven't been keeping up with any news, you have seen many articles on Grokster since it's original indictment in 2003. The court originally ruled in favor of Grokster against the RIAA and the MPAA, who, of course appealed the case. Monday, the court ruled against Grokster in what RIAA CEO Mitch Bainwol called: "an incredibly significant chapter in the story of digital music. .... a chapter that ends on a high note for the recording industry, the tech community and music fans and consumers everywhere.".
What is not mentioned in the statements made by the RIAA is that Grokster was only a tiny player in the filesharing community, and only made software to help people share files. They hosted no media on their servers. This means that anyone who already has Grokster's program installed on their machine will see no difference. The same people will be sharing the same files with no new hindrance. Grokster will just no longer be putting out any updates of it's software.
So where was the big blow against online piracy? There wasn't one. Shutting down a software distributor does little to hinder people from getting what they need to share files. Even if all of the companies that made software capable of file sharing where shut down systematically, piracy would only slow a little. Much of the software that is used is already written by amateurs. They would take the task on completely and distribute the software in the same way the files are shared.
What the major record labels, movie studios, RIAA and MPAA fail to see in all of this is the needs of the consumer. A good amount of internet piracy is done for the thrill of it. It is easy to feel smart and banditlike when you remain mostly anonymous in your own eyes. But the other portion is done for demand of services that aren't being properly handled. People want cheap digital media. They want movies and TV on demand, songs sold individually already in a format for their mp3 players, and cheaper software for their computers. People are tired of paying $22 a CD for crappy music, $30 a DVD for low quality movies, and hundreds of dollars for computer software that offers little in the ways of upgrades from the former versions.
Apple saw this need and answered it with it's popular music service iTunes. At $0.99 a song and many albums totaling $9.99, it is a smash hit. In the two years it has been online, it has sold over 500 million songs. They also just released downloadable movies, TV shows, and Music videos, totaling 1 million downloads in the first week alone. This has not stopped the piracy of media, but it does show that people are ready for a new medium and are sick of paying too much for an album with only one good song, or $50 for a few episodes of a TV series they used to watch for free. Sony BMG however does not see the sense in satisfying the customer with price ranges and already are demanding that Apple charge more so that they can have a higher profit margin. CEO of Apple Steve Jobs does not see eye to eye with Sony however, and so far has refused the demands in order to keep iPod and iTunes customers happy. (Thanks Steve!)
Other online music services have come along, but none seem to capture the magic that iTunes has. Why? The first thing that comes up is of course the domanance of the iPod. 65% of people in the world that own mp3 players own an iPod. Which only works with iTunes and vice versa. This would lead you to believe that companies that sell music compatible with the other music players available claim about half again the number of songs sold by iTunes, say 250 million mp3s sold in total? Of course this isn't so, but why? iTunes got it right the first time by offering songs to be downloaded completely with little limitations on its' use. Other companies, like Napster, boast subscription services, where the customer pays a monthly fee for all the non-CD-burnable music they want... as long as their player supports it. So what happens when you stop paying? You have no music. All the music has to be validated by the service monthly if it is to keep working. Needless to say Napster hasn't enjoyed much of a success with it's services.
Other companies don't fare much better. This doesn't stop people drooling at iTunes success though. Many companies strive to come up with download services of their own. Even Starbucks wants to join the game. They can only sell music to non-iPod owners unless their music is DRM free, in which case customers could manually place the songs into iTunes and use it on their iPods. The chances of music companies agreeing with DRM free music is slim, so that leaves only non-iPod owners and seekers of cheap music to burn to CD as the customers. A slim market at this time, but growing daily.
So are media and software companies excited about Apples successful venture in modern customer service and sales? They might be if they could understand it. The MPAA claims yearly losses in the billions each year due to movie pirating. Are people watching less movies now that they can download them? The MPAA would sure like you to think so. Yet, there seems to be now drop in the amount of money movies make at the box office, and DVD sales are at an all time high. Where is the loss coming from? Movie companies count every download as a lost sale. This is making the mistake of assuming everyone that downloaded Star Wars episode III sat at home watching their grainy downloaded version of it instead of going to the movie theater. Due to the money it made we all know this isn't true. The DVD, released today is also sure to have good sales. Even with all of the downloading, Star Wars is making huge profits. There is some true loss though. Asian and east European countries are notorious for selling bootleg copies of movies on the streets for as little as $2 a disc to tourists and locals.
Software companies claim huge losses due to piracy as well. China is noted to have pirated copies of Windows XP on it 90% of its' home computers. A huge loss according Microsoft. They don't mention however, that most of China would have to work a few months to be able to afford the $200US that the software costs to even purchase it legitimately. Only people living in the wealthier parts of the nation could afford this luxury.
This all spells out to the fact that much piracy is due to over charging for media by companies that do not have customers in mind. Apple took the lead and appealed to customers with success AND profits. Hopefully, someday, other companies will see the needs of the modern customer like Apple has and more services will be offered to meet the needs of modern digital life. Until then, we have iTunes and free distribution, open source software to get the honest ones through.
What is not mentioned in the statements made by the RIAA is that Grokster was only a tiny player in the filesharing community, and only made software to help people share files. They hosted no media on their servers. This means that anyone who already has Grokster's program installed on their machine will see no difference. The same people will be sharing the same files with no new hindrance. Grokster will just no longer be putting out any updates of it's software.
So where was the big blow against online piracy? There wasn't one. Shutting down a software distributor does little to hinder people from getting what they need to share files. Even if all of the companies that made software capable of file sharing where shut down systematically, piracy would only slow a little. Much of the software that is used is already written by amateurs. They would take the task on completely and distribute the software in the same way the files are shared.
What the major record labels, movie studios, RIAA and MPAA fail to see in all of this is the needs of the consumer. A good amount of internet piracy is done for the thrill of it. It is easy to feel smart and banditlike when you remain mostly anonymous in your own eyes. But the other portion is done for demand of services that aren't being properly handled. People want cheap digital media. They want movies and TV on demand, songs sold individually already in a format for their mp3 players, and cheaper software for their computers. People are tired of paying $22 a CD for crappy music, $30 a DVD for low quality movies, and hundreds of dollars for computer software that offers little in the ways of upgrades from the former versions.
Apple saw this need and answered it with it's popular music service iTunes. At $0.99 a song and many albums totaling $9.99, it is a smash hit. In the two years it has been online, it has sold over 500 million songs. They also just released downloadable movies, TV shows, and Music videos, totaling 1 million downloads in the first week alone. This has not stopped the piracy of media, but it does show that people are ready for a new medium and are sick of paying too much for an album with only one good song, or $50 for a few episodes of a TV series they used to watch for free. Sony BMG however does not see the sense in satisfying the customer with price ranges and already are demanding that Apple charge more so that they can have a higher profit margin. CEO of Apple Steve Jobs does not see eye to eye with Sony however, and so far has refused the demands in order to keep iPod and iTunes customers happy. (Thanks Steve!)
Other online music services have come along, but none seem to capture the magic that iTunes has. Why? The first thing that comes up is of course the domanance of the iPod. 65% of people in the world that own mp3 players own an iPod. Which only works with iTunes and vice versa. This would lead you to believe that companies that sell music compatible with the other music players available claim about half again the number of songs sold by iTunes, say 250 million mp3s sold in total? Of course this isn't so, but why? iTunes got it right the first time by offering songs to be downloaded completely with little limitations on its' use. Other companies, like Napster, boast subscription services, where the customer pays a monthly fee for all the non-CD-burnable music they want... as long as their player supports it. So what happens when you stop paying? You have no music. All the music has to be validated by the service monthly if it is to keep working. Needless to say Napster hasn't enjoyed much of a success with it's services.
Other companies don't fare much better. This doesn't stop people drooling at iTunes success though. Many companies strive to come up with download services of their own. Even Starbucks wants to join the game. They can only sell music to non-iPod owners unless their music is DRM free, in which case customers could manually place the songs into iTunes and use it on their iPods. The chances of music companies agreeing with DRM free music is slim, so that leaves only non-iPod owners and seekers of cheap music to burn to CD as the customers. A slim market at this time, but growing daily.
So are media and software companies excited about Apples successful venture in modern customer service and sales? They might be if they could understand it. The MPAA claims yearly losses in the billions each year due to movie pirating. Are people watching less movies now that they can download them? The MPAA would sure like you to think so. Yet, there seems to be now drop in the amount of money movies make at the box office, and DVD sales are at an all time high. Where is the loss coming from? Movie companies count every download as a lost sale. This is making the mistake of assuming everyone that downloaded Star Wars episode III sat at home watching their grainy downloaded version of it instead of going to the movie theater. Due to the money it made we all know this isn't true. The DVD, released today is also sure to have good sales. Even with all of the downloading, Star Wars is making huge profits. There is some true loss though. Asian and east European countries are notorious for selling bootleg copies of movies on the streets for as little as $2 a disc to tourists and locals.
Software companies claim huge losses due to piracy as well. China is noted to have pirated copies of Windows XP on it 90% of its' home computers. A huge loss according Microsoft. They don't mention however, that most of China would have to work a few months to be able to afford the $200US that the software costs to even purchase it legitimately. Only people living in the wealthier parts of the nation could afford this luxury.
This all spells out to the fact that much piracy is due to over charging for media by companies that do not have customers in mind. Apple took the lead and appealed to customers with success AND profits. Hopefully, someday, other companies will see the needs of the modern customer like Apple has and more services will be offered to meet the needs of modern digital life. Until then, we have iTunes and free distribution, open source software to get the honest ones through.
posted by Rar-Kai at
3:31 PM
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