Illegal File Sharing Drops Post Grokster

By Nate Mook, BetaNews

December 14, 2005, 5:20 PM

According to research firm NPD Group, illegal peer-to-peer file sharing has dropped for the first time since the RIAA began its legal assault in 2003. Since that initial victory, P2P usage has only gone up -- until the June U.S. Supreme Court ruling against Grokster.

In June, an estimated 6.4 million United States households downloaded at least one music file, but by October that number had dipped to 5.7 million, an 11 percent decrease. NPD says the change is the first significant drop it has seen that is not related to "seasonality," such as students returning to school.

The firm largely attributed the drop to the record and entertainment industry's victory against file sharing service Grokster in June. The Supreme Court ruled that Grokster and other P2P networks can be held liable for the actions of their users, depending on how they market their services.

Grokster officially shut its doors in November, joining WinMX and eDonkey, and agreed to pay $50 million to settle music and movie piracy claims. Grokster, like iMesh, has plans to resurface as a legit music download network utilizing technology from its new parent company Mashboxx.

StreamCast Networks, maker of Morpheus and Kazaa owner Sharman Networks have pledged to continue their legal battle against the RIAA and MPAA, although it's unclear how long the two P2P services will remain standing.

But despite the decrease in terms of P2P usage, the number of actual files being traded has gone up since June from 258 million to 266 million. NPD said the difference indicates that major file swappers -- the small percentage of users sharing the vast majority of content -- have not given up.

Also, it's not clear how many users have moved away from public networks to private ones, which are harder to monitor and track. With BitTorrent quickly becoming the new file sharing standard, closed groups have formed around the technology to keep the prying eyes of the RIAA out.

According to another research firm, BigChampagne, illicit P2P use continues to rise, even after the June Grokster decision. The number of average global users peaked above 9.5 million in August and remains over 9 million, say the company's statistics, which are compiled by counting unique nodes and files on popular networks.