The corporate entertainment cartel got a badly deserved smackdown in federal appeals court. From the AP:

The makers of two leading file-sharing programs are not legally liable for the songs, movies and other copyright works swapped online by their users, a federal appeals court ruled Thursday in a stinging blow to the entertainment industry.

Among other reasons, the 9th U.S. Circuit Court of Appeals said Grokster Ltd. and StreamCast Networks Inc., unlike the original Napster, were not responsible because they don't have central servers pointing users to copyright material.

"In the context of this case, the software design is of great import," Judge Sidney R. Thomas wrote for the unanimous three-judge panel, which upheld a lower court ruling that dismissed the bulk of the lawsuit brought by movie studios and music labels.

The panel noted that the software firms simply provide software that lets individual users to share information over the Internet, regardless of whether that shared information was copyrighted.

"The technology has numerous other uses, significantly reducing the distribution costs of public domain and permissively shared art and speech, as well as reducing the centralized control of that distribution," Thomas wrote.

They could appeal to the Supreme Court, but I predict that they don't. Lower court smacked them down, and the appeals court was unanimous. You wouldn't think that they'd want to absolutely bring down a Supreme Court decision on themselves.

Quite simply, the industry rationally and legally had no even beginning of a legitimate leg on which to stand with this. They just thought they'd buy and bully their way through. Judges don't need money for their re-election though, so that didn't work out for them.

As to legal bullying, that leaves the industry cartel with little other obvious option than going after individuals sharing files one by one. This is just flat a losing proposition for the industry as it is. It's ineffective in stopping the practice, costs them a lot of time and bother, and tends to make them look really bad. Technology will tend to develop better anonymity for users, making it more difficult yet.

This seems to suggest that the industry will have to become far more creative, and (dare I say it) more co-operative with the consumers. You know, the folks what make all their money for them in the first place. Perhaps if they had a more reasonable pricing structure for these 10 cent items called "CDs" they would have less grief.

Perhaps consider just flat selling unrestricted MP3s to consumers at a reasonable price. A dollar for one DRM restricted song is just an insult to consumers. Want to go back to the drawing boards?

They're going to have to actually come up with some more reasonable solutions to offer consumers, cause they're bumping up against the limits of what dirty work they can get the government to do for them.