The RIAA's letter accuses the seven P2P software makers -- apparently including WinMX, BearShare, and eDonkey -- of "enabling and inducing the infringement of" copyrighted music. The latter refers to language in the US Supreme Court's recent Grokster decision that established a standard for infringement liability based on inducing infringing behavior -- although the court referred the cases against Grokster and Morpheus back to a lower court and did not actually find the defendants guilty.

There is evidence that WinMX and eDonkey are shuttering their businesses. This will mean that those networks may not add new users, although their existing users should be able to continue sharing files.

Grokster, meanwhile, is in discussions to sell itself to Mashboxx, a company that offers a copyright-respecting file-sharing network and that is run by Wayne Rosso, Grokster's former CEO. Mashboxx has licenses to some of the major recording companies' material and is currently in beta test. It uses technology from Snocap (a company founded by original Napster developer Shawn Fanning) and Philips Labs to detect copyrighted material passing through its network and act according to the wishes of the copyright owner.

Grokster expects its sale to a copyright-respecting service to have the effect of ameliorating the record companies' ire and reaching a settlement in the Grokster case, which otherwise could eat up massive amounts of legal fees in its ninth federal circuit court trial. Mashboxx's purchase of Grokster is in fact reportedly contingent on it settling its case against the recording industry. Mashboxx would gain in the deal by obtaining information on Grokster's huge user community for virtually no money -- a marketer's dream.

Meanwhile, Streamcast Networks (the company behind Morpheus) intends to stick with business as usual, and Streamcast CEO Michael Weiss recently made some characteristically defiant statements about prevailing in court.

All this momentum towards copyright-respecting P2P is interesting, but there's one problem: there is very little evidence that many consumers are interested in it or that it even works on a large scale. Services like Mashboxx and the revamped iMesh, which allow trading of any files along with acoustic fingerprinting technology to detect copyrighted music tracks, are in beta test and may have scalability constraints, while "walled garden" file-sharing services that use DRM, like Peer Impact and Weed, have yet to achieve significant user bases. In particular, we have yet to see evidence that any of these services will attract users of existing popular online music services such as iTunes and Rhapsody.

We can see why some P2P software providers may feel the need to sell out rather than fight the RIAA's ammunition from the Grokster case, but that does not necessarily mean that copyright-respecting P2P is the future.

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