Justice may be blind...

...but is it deaf? Seems not. At least, David Souter knows what an iPod is. This was one of the big revelations in yesterday's oral arguments in MGM v. Grokster, which will decide the fate of peer-to-peer (P2P) Internet file-sharing.

The Cranky Economist may or may not have ever downloaded lots and lots of songs illegally via Napster and Kazaa, thus contributing to the bandwidth crowding on his college network when he was in school. I'll plead the Fifth. Although for the record, if I were to have done such a terrible thing, I would have disabled file-sharing from my own computer, thus welching off other people's music libraries while contributing nary an obnoxious European house dance song to the ether myself, thus incurring the wrath of European house DJs and my fellow alleged illegal file-downloaders alike. But this is all mere speculation.

The real problem is that I find myself siding with the recording industry on this one. When all is said and done, the songs are still copyrighted. And as someone whose day job is in the publishing world, I can attest to how important copyright is. Grokster's claim that there are many legitimate uses for its product would be slightly more credible if the whole online edifice weren't marketed quite so explicitly as a vehicle for illegally downloading copyrighted materials. Although some economists are still debating the extent of the economic damage the P2P phenomenon has caused to the record labels, at the end of the day that's irrelevant. The law is the law.

Ironically, I think the recording industry and the artists are in trouble whatever the outcome of this case. If they lose, they will continue to lose sales to online downloads. You just can't compete with free, especially when your product is so darn expensive. But if they win, I'm willing to bet that sales continue slipping. With so many more outlets for entertainment spending, high CD prices are just not a sustainable business model. For the past couple years, the labels have been able to blame competition from Napster, Kazaa and Grokster for their poor results. If the Supreme Court rules against the P2P networks, that crutch will disappear. Obscenely overpaid artists might find the value of their contracts slipping to slightly more reasonable levels. Will they be in the poor house? Probably not. But they may need to turn to starring in frivolous MTV reality shows to make the spare change to support their lavish lifestyles.