Grokster U-turns And Closes Service

Grokster U-turns And Closes ServiceGrokster, the online music sharing service, much legally embattled, has decided to shut the service and pay $50 million to settle claims against it.

Visitors to their site will now see the following message

The United States Supreme Court unanimously confirmed that using this service to trade copyrighted material is illegal.

Copying copyrighted motion picture and music files using unauthorized peer-to-peer services is illegal and is prosecuted by copyright owners.

There are legal services for downloading music and movies.

This service is not one of them.

Quite a turn around from their previous stance and not exactly expected.

AP is reporting that the settlement

permanently bans Grokster from participating, directly or indirectly, in the theft of copyrighted files and requires the company to stop giving away its software.

You would think that this would pretty much be the end of them, but no.

Grokster U-turns And Closes ServiceThere is a plan to launch a service that they say will be a “safe and legal service” under the name Grokster 3G.

As you would expect with such a massive turn around, the record industry is pretty happy. Mitch Bainwol, Chairman and CEO of the Recording Industry Association of America (RIAA) explained their position, “As the Court articulated in no uncertain terms, there is a right way and a wrong way to conduct a business. This settlement makes clear that businesses are well aware when they are operating on the wrong side of that line.”

The fallout from this sudden turn-around by Grokster is far from clear. They were originally one of the strongest proponents of the right to run a P2P service without restricting the content that is exchanged on it.

Grokster U-turns And Closes ServiceCertainly, it will put significantly more pressure on StreamCast Networks Inc., which distributes Morpheus, and Sharman Networks Ltd., which distributes Kazaa, who were co-defendants of the original court case.

What is not certain is if Grokster will be able to pull any of their current users over to their new Grokster 3G service – effectively ‘doing a Napster’. We suspect that it’s highly likely that many of the current Grokster’s will feel betrayed by their change around.