Content owners such as record labels and movie studios were buoyed last year by the Supreme Court victory against file-sharing website Grokster. In turn, the creators and distributors of other file-sharing software – such as eDonkey, Kazaa and Streamcast – have capitulated, paying significant damages, shutting down the distribution of their software and in some cases opting to obtain licences from content owners. In addition, attention is now focused on user-generated content (UGC) sites such as MySpace and YouTube, which threaten to compete with services run by media giants such as Apple, Microsoft and Yahoo.
Although the speed at which this recent phenomenon has taken root has surprised many, it has also spawned new opportunities for media conglomerates to invest in new methods of marketing and distribution where traditional channels of distribution are facing decline. For example, News Corp recently acquired MySpace for $580m (£311m) and Google has just announced it has agreed to acquire YouTube for $1.65bn (£889m).
