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eDonkey Throws in the Towel
[Quote:]
One of the goals of existing businesses is to raise the barriers of entry to stifle competition in whatever form it may come in. For example, a standard practice of the major airlines is to buy up all the gates at airports to block access to newcomers.
Another way to raise barriers is through expensive litigation. The cost of going to court is so high that it easily can sap away the assets a young company. This is why it is such an effective tool for large corporations with deep pockets. Suits, even under the most frivolous conditions, can foist debilitating legal expenses on any potential contender without a hundred million dollars in venture backing (and even then as the original MP3.com – who had $300 million in backing – found out before it went out of business).
MetaMachine, the parent of eDonkey, is NOT one of those richly-back entities the company’s president, Sam Yagan, told a Senate Judiciary committee. Yagan was a witness at the committees hearing, “Protecting Copyright and Innovation in a Post-Grokster World”, a fact finding mission for Capitol Hill to see if Congress wants to jump into the post-Grokster decision fray or sit it out and give the market an opportunity to settle it first.
During his testimony Yagan dropped the bombshell. “…I am not here as an active participant in the future of P2P, but rather as one who has thrown in his towel and with no interest in replaying past issues…” Yagan had decided to give up the fight, with prejudice.
As Yagan continued, “The Grokster standard requires divining a company’s “intent,” the decision was essentially a call to litigate. This is critical because most startup companies just don’t have very much money. Whereas I could have managed to pay for a summary judgment hearing under Betamax, I simply couldn’t afford the protracted litigation needed to prove my case in court under Grokster. Without that financial ability, exiting the business was our only option despite my confidence that we never induced infringement and that we would have prevailed under the Grokster standard.”
Yagen made his statement. He feels eDonkey did nothing wrong, but the burden to prove it is too expensive. The “call to litigate” raised the barriers of entry to a level beyond the company’s means.
If Xerox were a startup today, they wouldn’t have made it out of the garage…
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If Xerox were a startup today, publishers would be going after watermarks and serialized paper like mad, and they’d levy a “copying mitigation” tax on blank paper sold at the shop.