Friday, April 01, 2005

MGM v. Grokster: A wish and a modest proposal

I’m not a lawyer, didn’t play one on TV and haven’t slept at a Holiday Inn Express, so there’s no point at all in my speculating what will happen in this case. I'm not even much of a court watcher. So today I’ll just discuss what I’d like to see happen, which is that the justices tell Grokster’s and MGM’s executives to sit in a room and not leave until they’ve hashed out a licensing deal, at least in principle.

If downloading is as widespread as MGM’s lawyers claim, then it is certainly worth the effort to explore a deal with Grokster, particularly if the couple of cents a song that Napster To Go provides was deemed a worthy effort.

If Grokster were to go legit, as it were, by inking a licensing deal with majors, it seems safe to assume that Grokster’s value as both an advertising and a subscription vehicle would spike. Users would no longer have to fear prosecution by labels, which, in the weird world of p2p, would add value to a service. Subsequently, Grokster could adjust its advertising and subscription rates to reflect the growth in traffic and/or download activity.

Grokster deserves to be as profitable as they were before the Supreme Court hearing (because they were a legal operation then, regardless of what the Court rules in the coming weeks), but they could arrive at an equitable split of the added revenue by paying each label royalties based on the extent to which traffic was driven by people who downloaded said label’s content. I don’t think the blanket or flat-rate license sounds equitable or necessary, since it is rather possible to quantify via downloads the relationship between downloading and site traffic.

Just a thought. As always, I welcome comments, suggestions and criticisms.

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