Michael Weiss, as interviewed by Chris Hedgecock via email for Zeropaid.com
ZP: We have heard plenty in the news lately about MGM v Grokster, but the fact is there are many other parties involved in this case, on both sides. Can you give us an update on how the case has progressed since the summary judgment went your way in April of 2003?
MW: On October, 2001, twenty-eight of the biggest entertainment conglomerates on the face of the Earth, including all RIAA and MPAA member companies, sued StreamCast Networks (makers of Morpheus), Consumer Empowerment (makers of Kazaa) and Grokster in the United States District Federal Court. At that time Morpheus was the # 1 software. The users of each of our software products formed the Fasttrack P2P Network.
Internal RIAA strategic memos leaked on the Internet showed that the plaintiffs planned on applying pressure to Kazaa’s Niklas Zennstrom and Janus Friis to become witnesses on their behalf to target Morpheus for conviction of contributory and vicarious copyright infringement. The RIAA was then going to target the investors of Morpheus, “to send a message to other investors” not to invest in companies that could adversely effect the RIAA / MPAA member companies’ business.
In January 2002, Niklas and Janus sold Kazaa to newly formed Sharman Networks (located in Vanuatu). Then in February 2002, Sharman “disconnected” Morpheus from the Fasttrack Network and Morpheus quickly developed new software based on the open-source Gnutella protocol.
As the case progressed, StreamCast and Grokster set forth motions to have a summary judgment while Sharman proceeded to push for a court trial. In April 2003, we won that motion and the plaintiffs moved to appeal the case on an expedited basis—meaning that our case went ahead of the capital punishment cases, criminal cases and other corporate cases waiting to be heard.
| “If we don’t stop the Entertainment Industry now – where will this end?” |
In February, 2004, the 9th Circuit Court of Appeals heard the case and in August 2004, upheld the District Court ruling on our behalf. That ruling stated that StreamCast and Grokster could not be held liable for the action of their users – based upon the evidence that was presented in the Federal Court case for the then current versions of our software�Morpheus’ Gnutella version and Grokster’s Fasttrack version. Kazaa is still waiting to go to trial on their software in the US, but is waiting the verdict of their Australian trial.
The plaintiffs were relentless in their pursuit. They even petitioned the US Supreme Court to overturn the rulings of both the District Federal Court and the 9th Circuit Court of Appeals. The Supreme Court agreed and heard the case on March 29, 2005. We expect to hear their decision in late June 2005.
ZP: Mark Cuban made a large splash in the press by offering to pay for the court costs in the MGM v Grokster case. How realistic is this, have you seen any checks yet? Who has funded the defense so far, do you share expenses with Grokster?
MW: The RIAA / MPAA strategy is to outspend their opponents into submission. Their strategy worked with Napster, Scour and countless others that have dared to cross their path. Even today, they pick on individual consumers who do not have the financial or legal resources to fight back. Much to the surprise of the RIAA, StreamCast decided to fight. It has been an expensive battle for us – to the tune of nearly $4 million – and that was just to get to the Supreme Court.
The plaintiffs literally have an army of attorneys representing them, including David Kendall and Kenneth Starr, respectively the defender and prosecutor of President Clinton in the Monica Lewinsky impeachment proceedings. StreamCast has several top-tier legal teams, fortunately the Electronic Frontier Foundation decided to take our cause, in addition to our own General Counsel. The EFF works on a “pro-bono” basis (they don’t charge – but do take donations), similar to the ACLU. Grokster retained the services of a top legal team who agreed to work pro bono for them. In addition to attorney fees, there are many other costs involved in taking a case through to the Supreme Court – evidence collection, expert witness fees, court costs and more. StreamCast has taken the lead in footing all the expenses and a majority of the legal bills.
Mark Cuban has been an outspoken supporter of technology innovation vs. entertainment industry. As we headed for the Supreme Court, StreamCast was advised to retain additional legal help in the form of a seasoned Supreme Court attorney – adding even more to our costs. When a major corporation whose interests were aligned was forced to withdraw their offer for support when pressured by the entertainment industry, Mark immediately stepped up to pay the costs of our Supreme Court attorney. At our request, Grokster agreed to one attorney arguing for both companies, with each of our own attorneys assisting in the arduous brief writing and preparation tasks… a team effort by all.
ZP: Let’s speculate on the outcome of this case. If the supreme court hands down a judgment against you obviously that spells disaster for your company, but not necessarily for p2p and file sharing as a whole. Some such as Michael Robertson have said that the outcome of this case is irrelevant and to rule against the defendants would just drive innovation offshore but do little to curb the “problem”. What do you think would be the implications on our community as a whole from such a judgment?
MW: Michael Robertson is right; the genie is out of the bottle. Even if StreamCast is forced to close, Morpheus software will continue to work. We just won’t be able to continually improve on the technology. The Entertainment Industry is fond of saying that companies like ours have hi-jacked P2P technology for immoral purposes. However, it is companies like ours that continue to fund P2P innovation (let’s leave the moral debate between the entertainment industry and software developers for another article). If technology innovators can no longer create without the fear of costly litigation hanging over their head, then technology innovation in this country will be chilled, providing the opportunity for other countries to take the technological lead over the United States.
The dangers in this case far transcends peer-to-peer. Besides, if it is file-sharing the Entertainment Industry is trying to stop; then they’ll have to next target software programs such as Instant Messaging, eMail, newsgroups and even physical products such as iPODs where 20 GB of data can be transferred a lot quicker between two users than it would take downloading through any computer program. If we don’t stop the Entertainment Industry now – where will this end?
ZP: If the court rules for the defendants, obviously you have a tremendous leg up in your legal standing, but that would be true for any file sharing company on US soil. You still have a long battle ahead in coming to terms with the record labels, and would be immediately joined by heavy competition since you would have cleared the legal hurdles involved in operating a p2p network. What are your plans to make peace after the war, so to speak?
MW: A victory for StreamCast will ensure that Americans won’t have to live in a society where every file is fingerprinted, every user is tagged, every search is monitored and every result is filtered. StreamCast is in the business of distributing communications technologies that empowers its users more than any other technology that has preceded it. It can empower content creators, too. SteamCast is not in the music or movie business – however if those businesses wish to embrace our technology – and the distribution channel created by this technology – to provide more cost effective and efficient ways to market their goods to consumers, then I hope they choose to do so. Our doors are open to them now and our doors will remain open if we have a victory. But don’t expect us to change the way our technology works, just to win a record label contract. We’re not playing that game. In the meantime we will continue to improve Morpheus in an attempt to make it the best technology available. That’s how we expect to compete.
| “Good competition makes for better products, which is good for consumers (even if the RIAA / MPAA doesn’t agree)” |
ZP: We all remember the heavyweight Morpheus of old, that at one time commanded more active users than any other software on the planet. After you were disconnected from the FastTrack network, you reverted to a gnutella based app, and are now touting a new version 5.0. In the meantime, we have seen FastTrack give way to the eDonkey network. Is this a return to glory for Morpheus? Tell us a little about what we can expect from the new version, what networks will it connect to, is there any DRM or spyware built in?
MW: As you know, this is my second round with Morpheus as StreamCast CEO. I took it from 0 to 22 million users from April 2001 to Sept 2001. Then I left and the company encountered many difficulties under the new regime. Fortunately, I was brought back to the company two years ago and have set out to regain Morpheus’ popularity. It has taken longer than I envisioned and the competition has become a lot tougher. That’s actually a good thing… good competition makes for better products, which is good for consumers (even if the RIAA / MPAA doesn’t agree). To be number one, Morpheus will have to provide users with a product that exceeds all their expectations and works better than the others. It’s a simple proposition.
Last October, Morpheus introduced its users to NEOnet technology that formed the new NEOnet P2P Network. During this time, users were able to use Morpheus to also connect to other networks including Gnutella, eDonkey and Fasttrack. NEOnet is beginning to kick ass and these other networks are becoming less relevant to the point that, with the exception of Gnutella, they will not be a part of Morpheus 5. NEOnet is just about to hit its stride and users will finally see what all the fuss is about�quicker searches with more reliable results. Users will see an entirely new GUI, unlike any other file-sharing client to date, along with substantial improvements for BitTorrent searches. In short, Morpheus 5 is the product that we have wanted to release for the past two years. In the end, the users will decide if we have finally gotten it right and if two years have been worth the wait. We hope so.
Morpheus does not include spyware – or adware. However, to help pay our bills – both development and legal – the free version of Morpheus currently ships with one to two additional software bundles. Morpheus works independent of these bundles and the bundles can easily be removed without affecting Morpheus’ performance. Morpheus Ultra, available for purchase for $19.95 contains no bundles or advertising. We understand that users do not like bundled software in general and we are moving to a new “P2P search monetization” strategy similar to what Google, Overture and others do for web searches. Once we have this fully functioning, we will no longer need to rely on bundles to defer our costs for providing a free version to our users.
Big thanks to Michael for granting us an interview, hope to see more great things from Streamcast in the future.
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