MIXED REVIEWS ON RULING DIGITAL MUSIC HURT OR HELPED?

Byline: Brent Hopkins Staff Writer

Tech companies on the losing side warned on Monday that the Supreme Court's ruling on the legality of peer-to-peer fil,e-sharing could spell a bleak future for digital entertainment.

The winners - at Hollywood studios, record labels and legal download services - hailed it as a victory in what some call the new Wild West of computer entertainment. The losers - at networks such as Grokster, Morpheus and tech companies - said it would open up the industry to nuisance lawsuits that would quash intellectual advancement.

``It'll affect consumers because companies won't want to come out with the next iPod, the next mp3 player, because they could be sued,'' said Will Rodger, director of public policy for the Computer & Communications Industry Association, a trade group that filed court papers backing the networks. ``Our guys are looking at this ruling and are having our lawyers talk to their engineers, so there (are) some ideas that won't get funded and inventions that won't come to the fore.''

Apple Computer, maker of the iPod and proprietor of the iTunes Music Store, remained relatively quiet on the ruling. The Cupertino-based company released a written statement calling the ruling good news for its download service, but there was no comment on how it would affect future hardware development.

Beverly Hills-based Napster also hailed the ruling, issuing a statement that it should encourage more legal downloads.

That would be a boon for artists, said Neil Portnow, president of the Recording Academy. The Santa Monica-based trade group has long sought compensation for its companies and artists, saying peer-to-peer networks rob creators of their intellectual-property rights.

``The creative community has no particular beef with the technology sector,'' Portnow said. ``It was never hopeful that this would shut down the legal systems, just the few that aren't. For the tech sector, if they do the right thing and create fair, ethical and legal systems, that'll be embraced by consumer and creator.''

When file-sharing networks first rose to prominence, they were among the only games in town for digital music fans. Now that it's easier for the average consumer to buy complete albums online or to rip their own CDs onto a digital player, John Haynes, product manager for Van Nuys-based Al & Ed's Autosound, said peer-to-peer networks have become less relevant. He doubts that Monday's ruling will bring the digital-music business to a grinding halt.

``I don't think this will affect hardware sales at all,'' Haynes said. ``It's a music lover's desire to take their music with them since people use their computers for their whole collection. There are a lot of ways besides the share-ware companies.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com