Quick on the heels of reports that eDonkey was going out of business along with WinMX, then refutations that eDonkey was alive and well, company president Sam Yagan testified in a Senate committe hearing on the future of P2P, and declared his intent to comply with the RIAA's cease-and-desist threats. "Because the Grokster standard requires defining a company's intent, the decision was essentially a call to litigate. This is critical because most startup companies just don't have very much money," explained Yagan. "Whereas I could have managed to pay for a summary judgment hearing under Betamax, I simply couldn't afford the protracted litigation needed to prove my case in court under Grokster." Yagan implied that eDonkey would settle (damages?) with the RIAA, then repone as a closed and presumably fully licensed system.

Yagan wrapped up his editorializing with an odd remark: "As you know, eBay recently acquired the P2P company Skype for more than two billion dollars. Note that Skype was founded offshore; it would be a real tragedy and a blow to our economy should all technology entrepreneurs take their innovations offshore." Skype is a P2P company? Only in the loosest of definitions. Perhaps Yagan is confused by the background of Skype's founders; they were the creaters of the original KaZaA. While Skype represents an example of P2P technology, it is not really the type of application Yagan is implying. Offshore incorporation is a shield for companies that use IP without authorization. Skype is far removed from that business model. For that reason, Yagan's point, as made to a Senate committee exploring the issues of content infringement via P2P, is lost on me.

UPDATE: The complete transcript of Yagan's remarks (it's a long but interesting read), is here.