In holding that Grokster is not illegal due to the potential for non-infringing use, the 9th Circuit seems to have given powerful legal ammunition to other P2P technologies with more promise for legitimate commercial uses. Specifically, swarming technologies like BitTorrent appear to have an even stronger case for commercial viability than the admittedly pirate-friendly (and legal) decentralized P2P programs like Grokster. The New York Times already has BitTorrent pegged as the next paradigm in file sharing.
A quick tech recap - BitTorrent allows publishers to post "torrent" files on a tracker, which is essentially a dedicated network only for that specific published file. The file is broken into small chunks and each downloader receives these chunks in a random order. Simultaneously, the pieces the downloader has already received are uploaded to his peers who are connected to the torrent. The net result is that a large number of users downloading the file at the same time equals faster download speeds for everyone. Once a file is no longer in high demand, the torrent eventually dies out. The technology is especially useful for large files because it alleviates the burden placed on the publisher's server in a traditional download. Swarming makes everyone who wants to get the file share the workload.
How does all of this technology relate to the current legal debate? Swarming has proven to be a viable legal distribution mechanism, as evidenced by high profile legitimate business uses. Linux is an open-source operating system, intended to be freely modified and made available for no cost to users. New builds of the Linux software are typically quite large, frequently exceeding 1GB. Problem - when the publishers of any popular Linux variant release a new version they are quickly overwhelmed with downloaders. Excessive bandwidth demands mean that servers are overloaded, users must wait in queues for their turn, and download speeds decrease for everyone. Enter BitTorrent. When users share the load amongst themselves, the publisher saves bandwidth and the downloaders are happy to get their large file in a speedy manner.
More examples of legitimate BitTorrent use are popping up every day. Blizzard Entertainment, one of the biggest names in the computer game industry, used BitTorrent to distribute beta versions of their World of Warcraft game to testers. Why bother printing CDs or taxing the company's servers when you can just harness the power of a bunch of anxious gamers who are waiting to grab your software the instant you choose to release it?
Sounds like a valuable business lesson for rival game maker Valve, who made a major download of their highly anticipated Half Life 2 game available on the company's proprietary Steam service on August 26. Valve's service sends encrypted files directly to registered users' machines, and paying the registration fee allows users to unlock the encryption. However, high demand for the game resulted in the following message for much of the first day of release: "The Steam servers are currently too busy to handle any more preloads of Half-Life 2. Please try again in a few hours." Applying swarming principles to similar future versions of the distribution service seems like a move that could ease frustrations for both the company and their customers. It appears that Valve is already aware of the potential - the company hired BitTorrent's creator, Bram Cohen, this spring.
The software industry is not the only one that can benefit from applying some of these peer-to-peer principles to their distribution strategies. It is certainly not inconceivable to envision a near future in which movie studios deliver encrypted digital versions of the latest hit film directly to users over high speed internet connections. Think of it as iTunes for movies. In order to make such a project feasible, the studios would want to address the problem of the massive bandwidth required to distribute such unavoidably large files. Swarming based technologies would take some of the burden and offload it to downloaders. Even if the system was not 100% peer-to-peer, a hybrid technology designed to kick in during peak download times and use the resources of concurrent downloaders doesn't seem like an entirely unrealistic proposition.
Ironically, the decision in Grokster might be the best thing that could have happened for the music labels and movie studios. The technologies that the entertainment companies are fighting may very well be incorporated into their future business models. Much like the RIAA's legal "victory" over Napster actually hurt the music companies by ushering in the age of decentralized P2P, the music industry's defeat in Grokster could be a key in the development of the next big thing for commercial entertainment.
The 9th Circuit was wise in taking a stand that will protect innovation. Now enterprising software developers are encouraged to push the boundaries of new technology with less fear of being sued by big entertainment. Besides, isn't giving authors an incentive to create one of the rationales of having intellectual property law in the first place?
See also nationally known network security expert Joe Stewart's 2004 paper "BitTorrent and the Legitimate Use of P2P"