Catherine Holahan’s article “Music Downloading’s New Deal” discusses the new business model of ad-supported file downloading services. Holahan starts off by giving statistics showing that illegal downloading is still rampant and believes that this is due to a generation of kids who grew up downloading and sharing files on the internet and not seeing it as the equivalent of stealing from a CD from a store. She talks about how many pirate sights are going legit and are trying to form partnerships with records labels. Holahan mentions that many of the legal pay per download services have not been profitable and how subscription services, like Napster, have not been successful either.

A new trend in legal downloading services is a system where users can download free songs but have to sit through advertisements first. The downloading companies must sign deals with record companies to be able to offer their music and then they share the revenue from advertising. Holahan then talks about companies that record labels hire to put bogus files onto illegal downloading services in order to make the process of finding illegal downloads more difficult and making it take more time to weed out the bad files. People within the industry believe that this new business model with the increased inconvenience of finding good quality illegal files will bring a new revenue stream to the music industry. Holahan talks about Qtrax, which closed down its original model to build this new model of ad-supported downloading in fear of alienating the record labels that it would need to work with in the future.

This new alternative business model to the pay per download model and the subscription model is still under development but people within the industry believe that it will have success. After years of fighting downloading services, it appears as if the record companies are finally starting to embrace them and work them into their business models.

“Supreme Court Finds Marketing Activity Creates Liability in Peer-to-Peer (P2P) File-Sharing Case” from the Journal of the Academy of Marketing Science looks at how the Grokster decision will affect the marketing of new technologies that could potentially have copyright infringing capabilities. In the Grokster case the court looked beyond the Sony ruling on the issue of whether the distributor induced copyright infringement. The court put forth the active inducement test which meant that a company could be held liable if the courts could interpret its actions as inducing, enticing or persuading its users to infringe on copyrighted works.

The Supreme Court has been trying to find the line to balance technological innovation and protect copyrighted materials. The members of the Supreme Court differed on the extent of protecting the Sony ruling. Justices Breyer, Stevens, and O’Connor believed that Sony protects distributors unless it can be proved that their products are almost exclusively used for infringement. Justices Ginsberg, Kennedy, and Rehnquist would have supported modifying Sony to require that distributors anticipate and prevent infringing uses. While at present time, the law does not require companies to anticipate infringing uses, firms can be held liable if they intentionally profit off of illegal uses. It is possible that future courts will see acts that would not previously be seen as intentional as being sufficeint to hold companies liable.