Profiting from peer-to-peer file sharing

Lion's Gate, an independent film producer, is promoting its forthcoming film Rules of Attraction on the peer-to-peer (P2P) file sharing system KaZaa, as reported in this LA Times article (free registration required) . In Living Networks I noted how Capitol Records - part of EMI - had used the feared and hated P2P system Aimster to promote Radiohead's Kid A. Content firms will find it very hard to succeed unless they get their wares flowing freely through the networks, as just a few are starting to realize. Other major movie and music companies are suing Kazaa. Interestingly, Microsoft is picking up the tab for the P2P promotion campaign, presumably to help promote Windows Media. In a related article, Wharton professor Peter Fader says "record companies are shooting themselves in the foot" by trying to stamp out peer-to-peer file sharing. A fine balance, or rather integration of protection and promotion is required, but they are definitely pursuing sub-optimal strategies at the moment.