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Grokster in Talks to Be Bought By Mashboxx 71

Carl Bialik from the WSJ writes "The Supreme Court's ruling in Grokster has driven the P2P company to enter talks with Mashboxx, 'an upstart that is attempting to establish a legal peer-to-peer music company, according to people familiar with the matter,' the Wall Street Journal reports. Mashboxx would let users sample free but charge for downloads. The WSJ adds: 'To encourage the file-sharing companies and their users to go legitimate, the labels are seriously considering dropping such claims, some record executives say. In fact, say people close to the talks, Grokster is negotiating a settlement with the RIAA. The RIAA and Grokster declined to comment.'"
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Grokster in Talks to Be Bought By Mashboxx

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  • Does anyone know what was the supreme court ruling? I am curious.
  • Why P2P? (Score:5, Insightful)

    by garcia ( 6573 ) on Monday September 19, 2005 @11:33AM (#13596222)
    What I need someone to explain to me is why I should have to forfeit my upstream to a company for downloads?

    If I'm paying I shouldn't have to share shit. It's not going to help w/the costs of the songs. If anything, the RIAA will want to increase the costs just so that there isn't anyone saying that P2P is acceptable (legal or not).

    Apple and allofmp3.com have it the right way. Pay for the songs, download them w/o sharing, and be done with it.

    People shouldn't be charged twice for shit. P2P was popular because it was free and no other reason.
    • Re:Why P2P? (Score:5, Interesting)

      by BewireNomali ( 618969 ) on Monday September 19, 2005 @11:47AM (#13596324)
      Apple has it right for a company that sells consumer electronics. they don't make any money off song sales. Therefore, this model is not appropriate for a music company.

      Ringtones sell for 3-5 bucks and sell pretty well. this suggests that songs are underpriced, or at least priced significantly less than the market will bear. To that end, it seems that Apple is artificially depressing the cost of music, to the detriment of music companies.

      I can't speak for allofmp3.com, but ITMS is probably a loss leader as opposed to a viable revenue generation model for sales of music.

      Record companies can't make money at a dollar a song. Peer networks would help because they kill bandwidth costs and presumably pass saving on to the consumer.
      • Why can't a record company make money at 50 ukp a song? Let's assume they sell it as a 256kbit compressed download. Assume just less than an hour for the album and that's 100 Mbytes.

        That's just not a lot for something with a cost of around 5 quid.

        Streaming radio stations seem to cope...
      • What I don't understand is how they can fail to make money at $1 a track. Everyone bangs on about how little the artist cough pretty face cough gets paid. so that must therefore mean a large portion, lets say 90c (and I think that 10c to the artist is generous), of that $1 is being spent on other things.

        What could possibly cost that much? Recording studios don't come cheap but it's not like they have to be lined in gold. Porduction costs a bob or to. Bandwidth, yep that costs a little as do the servers. I

        • That's all academic. Apple, which has no marketing costs for artists, nor padded expense accounts, makes no money from ITMS.
          • Apple makes no money on it's ITunes sales - because they pay hefty license fees to the Music Companies. The music companies make lots of money on Itunes sales. And Apple makes money on Ipods and they are all happy.
        • Re:Why P2P? (Score:3, Informative)

          by Agrippa ( 111029 )
          "What I don't understand is how they can fail to make money at $1 a track. Everyone bangs on about how little the artist cough pretty face cough gets paid. so that must therefore mean a large portion, lets say 90c (and I think that 10c to the artist is generous), of that $1 is being spent on other things."

          Because you are forgetting (or don't know about) the fact that publishing companies, which are seperate from the record companies, also get their share of the revenue. Each publishing company gets to nego
        • "What I don't understand is how they can fail to make money at $1 a track."

          Your understanding is correct. The GP stated that record companies aren't making money at a buck a song, but that doesn't make it true.

          Of the $0.60 - $0.70 or so that the record companies gross per iTMS sale in the US, you're correct that a significant amount of goes to marketing. The same can be said for the iPod itself, as well as most product Apple makes, as well as most products made by most computer peripheral companies.

      • Record companies can't make money at a dollar a song.

        If more artists distributed their songs electronically, and stopped giving everything to the record company CEOs, $1 would not be too bad. Sell a million songs - make $1 million bucks. Sell a million albums and make $10 million. Heck, I would pay $3 a song if I knew most of it goes to the person who wrote it not the to some rich executive that contributed to the creation of the song as much as my chair contributes the creation of my programs, yet someho

        • Sliding scales. Buy one song a month it's $3, buy more than two they drop to $2.50 etc down to $0.50.

          Surely the overhead in transactions will be dealt with in the 'first' songs for the month, and the rest can be straight to the artist.
        • The problem here is that record companies often pay for or lend artists the money to make records (that means studios, producer and session musicians). There is also the promotional aspects (particularly advertising and touring). Some artists are managing to break through and do this themselves, but it's a new kind of music business.
          • That's a valid point. Perhaps the two schemes can co-exist. The record companies could use a little pressure and competition. As some artits will become more wealthy and more popular, the musicinas can perhaps directly purchase advertising and distribute the songs directly through some pay-per-song service and also make more in return. If I knew that my favourite band is getting most of the money, I am willing to pay a nice premium. Perhaps, some artists can even set up a donation scheme, much like the auth
        • Ideally that is the way it should be. However, people still are influenced by the media in purchasing music. Despite the ability to get it direct from indie artist for free or without protection. People prefer to risk penalties and strive to acquire label music because of label promotion.
      • Therefore, this model is not appropriate for a music company.
        Either that, or being a music company is not an appropriate business model!
      • This is total nonsense.

        Ringtones sell for stupid prices because they are external fashion statements and are bought once a month if that. I have hundreds of CDs for example and thousands of mp3s.

        Record companies don't have any distribution costs or physical production costs with digital music. You are a RIAA fanboy, nothing more, nothing less.
        • Ringtones sell for stupid prices because they are external fashion statements and are bought once a month if that.

          No, ringtones sell for stupid prices because of vendor lock-in. If the cell phones were capable of playing music samples that were user created it's highly unlikely that people would purchase ringtones.

          Thus, why cell phones don't typically have an easy way to add your own music and also why the prices are so high for what amounts to nothing more than fair-use clips.
          • Ringtones (Score:3, Informative)

            by Joe Random ( 777564 )

            If the cell phones were capable of playing music samples that were user created it's highly unlikely that people would purchase ringtones.

            Some can, and I don't. More specifically, my phone (an LG VX6000) can play MP3 ringtones -- once you've purchased the correct USB cable and scoured the Internet for the necessary software, that is.

            As an aside, "Battle without Honor or Humanity" from the Kill Bill soundtrack makes a great alarm. Put that sucker on full volume, and it never fails to wake me up.

      • If it costs X dollars to create, market, and distribute a CD with 20 songs on it, than it costs X/20 dollars to create each song on that CD. Since you would be hard pressed to find a CD priced at much less than $1 x the number of tracks, a song can be sold at less than a dollar and make a profit. Even if you want to argue that some songs cost more than others to produce, because of music videos and whatnot, that cost as it stands right now is offset by the profit of the CD as a whole. So therefore the onl
        • Lol. My argument is not nonsense. Your analysis is flawed.

          I reiterate. Apple, which incurs none of the costs of a record company, MAKES NO MONEY AT A DOLLAR A SONG.

          How can a record company then take the same model and make money, especially considering that said music sales would comprise its main business?

          • I reiterate. Apple, which incurs none of the costs of a record company, MAKES NO MONEY AT A DOLLAR A SONG.

            I agree with your overall reasoning. But although we've heard it repeated endlessly that Apple doesn't make a dime off of iTMS, and that they just do it to sell iPods, nowhere have I seen any real numbers showing that Apple isn't making any money selling music.

            My guess is they're not making big bucks at it, but I wouldn't be so sure they're not making some money. After all, it's to their long-term

            • Apple makes *loads* of profit per song.

              Something like 94%.

              They pay nearly ALL of that to the labels for the license.

              Apple doesn't mind, because it locks people into the iPod. iTunes is a vehicle to sell iPods.

              RIAA and Co. don't mind, because its pure profit. No recurring production costs. It's simply another revenue stream for something they've already produced. There are fewer production costs associated with giving rights to Apple than producing CDs, and $1 per song is more than the going rate for, say, a
              • They pay nearly ALL of that to the labels for the license.

                That's what I've heard. But I wonder what the numbers amount to. "Something like 94%" is pretty vague. I'm not bashing on you, I just wish there was some way of finding out a bit more definitively how much Apple actually pockets from iTMS.

                My theory is that they're purposely keeping it secret, and letting everyone believe that it's a loss-leader for them. Yes, the labels are taking a huge chunk of the profits from Apple, but once you get sunk cos

          • Apple supposedly make no money because they are passing ~75 cents per song to the record companies. This money is pure profit for the record companies.

            If the record companies started selling music directly to customers at $1/song, they would likely make about as much as they do now.
        • Wow, you don't get it. First, most albums have 10 songs, not 20. Secondly, there are typically 2 to 4 songs on an album, and 6 to 8 "filler" songs. Best case, 6 good, 4 crap. No one will buy the 4 crap.

          Also, this assumes that every song has the same production cost. They don't. Cost to produce a single song can range from $1000 to $1 million. Literally. Boston did their debut album on a basement rig using a 12 track and 2 inch tape (although that was pretty nice basement gear in 1976-) Big names us
      • I hardly consider 33cents/song no money, especially since there is very little overhead per purchased song. Sure, they make more money from ipod sales, but iTMS is definitely running a profit.
      • Re:Why P2P? (Score:5, Insightful)

        by nEoN nOoDlE ( 27594 ) on Monday September 19, 2005 @12:19PM (#13596631) Homepage
        Ringtones sell for 3-5 bucks and sell pretty well.

        keep in mind, people have thousands of songs on their hard drives, but only a couple of ringtones on their phones. The usage is not consistent so therefore the price can't be.

        Record companies can't make money at a dollar a song.

        Ridiculous. Record companies have been making money - and lots of it - at a dollar or less a song when the songs were on CD and tape. And at least the consumer got a hard copy of a product. In the case of digital music, it costs the record companies even less since there are no shipping, packaging, or production costs after the music is recorded.
      • Record companies can't make money at a dollar a song.

        Um, excuse me? That's the biggest piece of drivel I've seen on Slashdot in a *long* time.

      • Re:Why P2P? (Score:2, Informative)

        Apple has it right for a company that sells consumer electronics. they don't make any money off song sales.

        That doesn't seem to square with Apple's financial statements. Their latest 10-Q [corporate-ir.net] says they made 241 million US dollars on "other music products". That category covers:

        Other music products consists of iTunes Music Store sales, iPod-related services, and Apple-branded and third-party iPodrelated accessories.

        Given the looks of the other parts of that, I'd guess the iTunes sales accounts for ove

      • Ringtones sell for 3-5 bucks and sell pretty well. this suggests that songs are underpriced, or at least priced significantly less than the market will bear.

        Could be, sure, but I don't think so. People will pay $3~5 for ringtones because *ringtones* are cool. They probably would not pay the same amount for a single for the iPod, and they certainly *will not* pay that much per song for an album.

        I think the cost of ringtones says more about the successful marketing of ringtones than it does about a gener
      • Apple isn't making money off of selling the music because the record companies are charging such high fees for apple to have the ability to provide them. On average apple (last i heard) was making 3-5 cents per downloaded song. Apple isn't making any money off of it because they're just acting as the middle man and passing all of the profits off to the record companies who are doing quite well at 95cents per song. (roughly $12 for 12 songs and there are no distribution costs.. basically the same cash th
      • "Record companies can't make money at a dollar a song."

        That's a pretty strong assertion to make without offering any supporting evidence. How much does it cost to record a song? If the record companies really can't make money selling songs at a buck a pop, with hundreds of thousands to millions of potential downloads then I'd say they're fundamentally unfit to continue in business.

        I had some friends in a band who put out their own album, using the money they earned working in a warehouse... if the
      • The only reason that ringtones sell for more than music downloads is because there is no other convievable way for the majority of non-techy people out there to get the tones onto their phone.

        Personally I bought a datacable and use bitpim to transfer midi's to my LG phone, but that is well beyond most people.

        If there were an easy free alternative to paying for the tones to get sent to your phone people would be doing it.

        The $1 per song on ITMS is just enough to make it cheaper than the time it may tak

      • Record companies can't make money at a dollar a song? When the only distribution costs are the bandwidth for a 5 meg file?

        And yet, they can make bajillions of dollars by selling a CD for $15 by way of the brick-and-mortar store middleman? Even after the costs of pressing, packaging, shipping, and minimum wage employees?

    • No DRM (Score:4, Interesting)

      by drgonzo59 ( 747139 ) on Monday September 19, 2005 @11:51AM (#13596370)
      My problem is with DRM. I got some song of iTunes and I thought (I clicked through the agreement and what not) that if I buy the song I can play it anywhere like any other music file, especially on my Linux machine. Oh no! My windows drive died so I never reinstalled and am using Ubuntu, BUT I could not play the songs I payed for. Of course, I found out DVD Jon's site [nanocrew.net] with his FairKeys and DeDRMS programs and removed the DRM from my songs, but I had to go through all that trouble to play songs that I already payed for!

      For me at least,the main advantage to iTunes was an accessible and convient way to download music and $1 is the price of convinience more than anything. I could go to any P2P network and find and download the music for free, but the time it takes usually is worth more than $1 (at least for me). So if there was a site that you can get your music in plain mp3 or ogg or other non-DRM-crippled format, I would pay $1 just to save time. I don't know how they can do it with a P2P network though, but the underlying mechanism doesn't matter as long as I can get my songs faster.

      • Go to www.allofmp3.com it is a site that you can get your music in plain mp3 or ogg or other non-DRM-crippled format,.

        It is quite cheap and alternative OS friendly as you only need a web browser (dunno if it works on Lynx though...).

        A full album (9 tracks) in OGG Q10 (about 186 MB) will cost you like $4. Nice deal uh?
      • OH come on.. just burn them to an audio or mp3 cd. iTunes lets you do that and you can play them anywhere. Just because you were too stupid to change the format isn't apple's fault. I've never tried it but you might even be able to use itunes under wine or vmware. This is such lame fud. Its no different if you buy a windows media based solution's songs. Hell i think apple is better because you can burn unlimited cd copies of your songs.
    • welcome our new P2P Darknets Overlords....

      All the packets marked as http, mix in some encryption, use Freenet code as a basis and Bittorrent/TOR for distribution ...

      You won't have the same p2p as we know it, but at least we won't have to get some news about RIAA members pursuing file sharers AND buying the data from p2p trade analysts...

      For the upstream part, maybe you could gain "points" that would win you free mp3s, extra video, etc... At least, they won't ask me to give bandwith "for my own good"...

      But I
    • Grokster in Talks to Be Bought By Mashboxx

      Yes, but are they in talks like a pirate??
  • Grokster is negotiating a settlement with the RIAA.

    Yeah, right. I doubt there is a single P2P company out there that has near the amount of money to spend that the RIAA will demand for compensation.

    • From the linked article:

      Talks with other companies have proved successful in the past, when the RIAA reached a settlement with Israel-based iMesh Ltd. for $4.1 million in July 2004. The Israeli company agreed to migrate to a service that would protect copyrights.

      It's not just money they're after, it's complience.

    • "Yeah, right. I doubt there is a single P2P company out there that has near the amount of money to spend that the RIAA will demand for compensation."

      As previously mentioned, the RIAA settled with another company for $4MM and the agreement to move to permission-based distribution. When the courts froze Kazaa's assets they had about $30MM cash in the bank (I don't recall if this is US or Australian money; either way, it's a lot). I'm sure the RIAA will demand all of it.

  • Grokster? (Score:4, Insightful)

    by Conspiracy_Of_Doves ( 236787 ) on Monday September 19, 2005 @11:39AM (#13596261)
    Does anyone still even use Grokster?
  • Silly Names (Score:3, Funny)

    by L. VeGas ( 580015 ) on Monday September 19, 2005 @11:45AM (#13596305) Homepage Journal
    Can anyone explain to me why P2P companies / applications have such silly names?

    Grokster
    Napster
    Kazaa
    Mashboxx (now with two x's!)
    EDonkey
    etc.

    Say what you will about Microsoft, at least their name makes sense.
    • Huh? Make sense like ME, NT, XP, Excell, Outlook and Bob?
    • Can anyone explain to me why P2P companies / applications have such silly names?

      Because despite the uber-nerd population of slashdot that sees things through their own particularly technical/net-savvy lens, the vast majority of the people who pumped up the usage of Napster, for example, were your basic teenage pop music fans that wanted for free what they used to have to spend their lawn mowing and baby sitting money on (that is, CDs). You can read up [wikipedia.org] on Napster history, but it doesn't take much familiar
    • "Microsoft" sounds like "tiny and malleable" to me - not exactly a name that makes much sense, either. "IBM" (International Business Machines) does, but that's about the only computer company I can think of right now whose name is actually a reasonable description of what they're doing.
  • by highcon ( 857286 )
    The new companies will be the ones who are able to make the new paradigm work. It will take a while to sort itself out, but soon a few companies will come around that do not base their entire business model on hyping physical copies out the door. I would be extrememly surprised if one of the established recording industry behemoths were able to make this transition; the bigger the organization, the greater the inertia.
  • Where did the Supreme Court find that Grokster was guilty of "encouraging illegal infringement"? I know they found Kazaa guilty of that (though it's clear to me the evidence didn't support that finding). But I haven't heard that Grokster was found to have "induced". I smell a VC PR weasel.
  • Help me with this.. is the general thought process at (any) Big Corp Inc. to determine whether or not it will be less expensive to pay a host of lawyers $900/hour to defeat (insert P2P company here) in court or less expensive to pay off the P2P company to shut down and stop file sharing?

    This whole thing smells like extortion. Question is, how do they get away with it?

    The only ones winning appear to be the lawyers.

    Will there be distributed music in 10 years? If so, what will it look like?
    • "Help me with this.. is the general thought process at (any) Big Corp Inc. to determine whether or not it will be less expensive to pay a host of lawyers $900/hour to defeat (insert P2P company here) in court or less expensive to pay off the P2P company to shut down and stop file sharing? "

      That would be the thinking, except that the total cost of each option is not so simple. It has to be looked at in terms of the policy applied to all P2P companies, not just one -- after all, someone is sure to fill the
  • Big Surprise... (Score:4, Insightful)

    by joshsnow ( 551754 ) on Monday September 19, 2005 @01:07PM (#13596994) Journal
    an upstart that is attempting to establish a legal peer-to-peer music company

    Well what a surprise

    The recording industry reasserts control over the means of distribution, benefitting not the artists and the consumers, but the big recording companies who own the artists and control the consumers.
    This is what happened with Napster and the end game for the RIAA and MPAA etc is to be controlling all means of distribiution of electronic media via the internet.

    It's worked with DVDs and CDs to an extent.
    If they lowered the price of albums and gave consumers what they want, maybe people wouldn't engage so much in illegal file sharing.


    • benefitting not the artists and the consumers, but the big recording companies who own the artists...

      Nobody is forcing the artists to sign with the record companies. Like anyone else they can log on and upload their stuff to any P2P site.

      The little secret is that no matter how hip / fly / cool / or off the chain an artist claims to be he still "wants his"- if you know what I mean.

      The only price some of the consumers accept is "free"- and that's why they keep going to P2P sites.

      Let the flame-war
      • Nobody is forcing the artists to sign with the record companies

        Well, it's very difficult for an artist to gain exposure without a marketing machine (charts, paper and web avertising, billboards for the "big" artists ).

        Unfourtanately, the people who provide that service - usually out of advances against projected sales - also tend to own the distribution rights (and possibly broadcast and play rights) to the work being promoted.

        So, for an artist to be sucessful, they may percieve that they need to b
  • Peer Impact is already doing what Mashboxx proposes to do and credits its users for upstream babdwith with a system credit they call Peercash .They have all 4 major record lavbels signed and all of the big independant distributors on baord they also sell protected content from the major labels and unencubered MP3s from the indies in a walled garden p2p network .Soon they will have games and they hope to have movies by the end of this year .

    Wayne Russo has been promising a beta release of Mashbox for seve
  • If grokster won't duke it out with this case, it leaves the door wide open for the RIAA's abuse of PR to screw over other p2p developers regardless of guilt under the new standard simply because it's untested.

    I'm definitely having pains of sympathy for open source, which will have virtually NO legal protections.

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