INDUSTRY REPORT
War Over File-Swapping Continues

Still, Recording Industry Association of America (RIAA) boss Mitch Bainwol says, "This decision does nothing to absolve these businesses from their responsibility as corporate citizens to address the rampant illegal use of their networks."

And Motion Picture Association of America's (MPAA) Jack Valenti states, "We will continue to pursue all avenues in our power to fight those who illicitly profit from our members' valuable property."

Why is Valenti continuing to act as the movie industry mouth-piece? Wasn't that supposed to have been Dan Glickman's new job? Meanwhile, can we now expect the number of lawsuits launched by Big Music's enforcer -- the RIAA -- against former entertainment industry consumers to be ramped up with MPAA troopers joining in more enthusiastically than hitherto? Does Howdy Doody have wooden eyeballs?

Bolstering Support for Induce Act

Hollywood has already made an important move to bolster support for the Induce Act -- legislation to crack down on copyright violations via file-sharing software -- meaning the Big Four record label cartel members and the major studios plan to continue trying to storm the fledgling P2P industry, instead of using it to help them into the 21st century.

The Induct Act is Hollywood's most powerful remaining anti-P2P weapon of mass destruction. It's "an over-reaching new form of indirect liability that will force technology companies of all kinds to 'ask permission' before innovating for fear of ruinous litigation if they don't," as senior Electronic Frontier Foundation (EFF) lawyer Fred von Lohmann describes it.

Its introduction sparked a massive backlash from more than 40 companies and entities, including CNET Networks, Google, NetCoalition, Novell and Yahoo.

In a carefully worded statement, which could have been taken almost word-for-word from Induce opponents, Business Software Alliance (BSA) boss Robert Holleyman said:

"We urge you to ensure that beneficial technologies are not put at risk by the need to stop bad actors and to avoid overbroad or ambiguous standards that could chill innovation, deprive consumers of access to beneficial new technologies and encourage costly litigation."

'Bad Actors'

Among BSA members are Adobe, Apple (Nasdaq: AAPL) , Macromedia, Microsoft (Nasdaq: MSFT) , Network Associates, Cisco Systems, HP (NYSE: HPQ) , IBM (NYSE: IBM) and Intel (Nasdaq: INTC) .

"Bad actors" is a phrase gaining currency within the entertainment industry. Now U.S. Sen. Orin Hatch, R-Utah, and three other powerful politicians are trying to rally support against "bad actors," using U.S. Register of Copyrights Mary Beth Peters as a front.

Peters has made it abundantly clear that she's backing Senate Judiciary Committee Chairman Hatch's Induce Act.

Nonetheless, urged on by Hatch, Senate Republican leader Bill Frist, Democratic leader Tom Daschle and the Judiciary Committee's senior Democrat, Patrick Leahy, want Peters' commitment on record.

"There is little dispute that entities intentionally encouraging and promoting widespread infringement should be held secondarily liable for the infringement they intend to induce," the senators wrote to Peters in a letter quoted by the Hollywood Reporter.

"The imposition of such liability is particularly appropriate given that much file-sharing software automates the redistribution of infringing files so effectively that people making hundreds of works available for distribution to millions of persons around the globe can testify that they had no idea that they were engaged in the massive, global redistribution of those protected works."

Paralysis No Option

The senators "tell Peters that 'we remain open to other approaches' asking her 'to attempt to achieve consensus proposals' and deliver them to the senators by Sept. 7," the report says, also stating:

"Senate aides said the letter doesn't mean that the senators have given up on their bill, although final passage this year is unlikely given that it is an election year and Congress has much unfinished work left to do. 'This was a step contemplated from the beginning,' one aide said. 'It's another step toward getting a bill through Congress'."

RIAA boss Bainwol says, "Paralysis is not an option." He adds, "We remain eager to work on a common-sense compromise that fulfills the ultimate objective of targeting bad actors who are jeopardizing the future of music."

Thanks, however, to the internet and peer-to-peer technologies, for the first time in history "consumers" -- the corporate world's contemptuous name for the people who keep it in business -- are beginning to realize they hold the whip hand.

The entertainment industry forgets that, just as it forgets who designs, runs and maintains its systems.

The next couple of years will be extremely interesting.