Record Labels Seek To Isolate File Sharing Networks

by Glen Shapiro, LawAndTax-News.com, New York

21 July 2004

According to reports in the US media this week, record labels are increasingly attempting to isolate peer-to-peer file sharing networks by preventing other firms from doing business with them.

Citing unnamed music and technology industry officials in a report published on Tuesday, Reuters revealed that the attempts by the record labels to drive firms such as Grokster and Morpheus out of business have blocked deals worth millions of dollars in revenue to the firms, and could be in violation of US antitrust laws.

According to the report, one example of a potential deal which has been nixed by the recording industry is the alliance between UK download service Wippit and Grokster, which was shelved following Universal Music Group's threats to cut Wippit off if it did business with Grokster.

RealNetworks reportedly also ditched plans to work with Morpheus following pressure from the recording industry.

However, the record labels have defended their actions, arguing that they are merely exercising their right not to work with companies facilitating services which they believe to be illegal.

"We have the right and the sense not to do business with people who aim to profit or otherwise enable the theft of our artists' music," Larry Kenswil, president of the eLabs division of Universal told Reuters.

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