July 28, 2006 Record and Movie Industries Reach a Settlement With Kazaa By ERIC PFANNER NY Times
http://www.nytimes.com/2006/07/28/technology/28kazaa.html?ref=technology&pagewanted=print LONDON, July 27 The music industry and Hollywood movie studios said Thursday that they had settled lawsuits against a longtime nemesis, the owner of the digital file-sharing network Kazaa, which will try to transform itself into a legitimate online distributor of films and music. Sharman Networks, a privately held company that is incorporated in Vanuatu and operates Kazaa from Australia, agreed to pay $115 million to the major record companies and movie studios, which had accused Kazaa of aiding the illegal copying of music on the Internet. Sharman Networks said the agreement, which follows a court ruling against Kazaa in Australia last year and a United States Supreme Court decision against other file-sharing services, cleared the way for it to offer the broadest range of licensed content over Kazaa. The chief executive of Sharman, Nikki Hemming, said, All the parties involved now recognize the time is right to work together, and we are looking forward to collaborating with the music and motion picture companies to make P2P an integral part of the future of online digital entertainment. Peer-to-peer network technology, or P2P, allows users to share computer files over the Internet, including music and movies stored in digital form. Kazaa was a pioneer of peer-to-peer network software. Under the settlement, Sharman will pay the major record companies in excess of $100 million, said John Kennedy, chief executive of the International Federation of the Phonographic Industry in London. Executives who were briefed on the agreement said the total payment was $115 million; they did not provide a breakdown of payments. No details of the settlement with the movie studios were available. The music industry federation said that Sharman had agreed to license music from the four major recording companies Universal Music Group, Sony BMG, Warner Music and the EMI Group that own the vast majority of music copyrights. Independent record labels are not included, but would be free to pursue their own licensing deals with Sharman, executives said. Sharman also said it would take steps to prevent unauthorized distribution of material through Kazaa. We are under no illusion that this solves everything, Mr. Kennedy said, noting that other file-sharing services thrive. But this is very encouraging. Under the agreement, the major recording companies will not invest directly in Kazaa but will be entitled to 20 percent of the proceeds of any eventual sale of the service, Mr. Kennedy said, giving them a stake in the success of the new arrangement. Music company executives welcomed the settlement, and Universal said it would share the proceeds with its artists. David Munns, vice chairman of EMI Music, said in a statement, While the award may seem like a vast pot of money, it will merely offset the millions we have invested and will continue to invest in fighting illegal pirate operations around the world and protecting the works that our artists create. In making the switch to a licensed, royalty-paying business, Kazaa would follow Napster, one of the original file-swapping services, which was reborn after an adverse court ruling in 2001. Kazaa has been earning revenue primarily from advertising, and Mr. Kennedy said the recording industry would not object if it persisted with an advertiser-supported model, rather than charging users, as long as it pays royalties. The movie industry has also begun to embrace peer-to-peer technology as a way to distribute material. Several download-to-own services, which allow users to buy digital files of films on the Internet, have also been started. Niklas Zennstrom and Janus Friis, the founders of Kazaa, are named in the settlement because of their role in creating the Kazaa system, even though they sold it to Sharman in 2002. The settlement barred them from engaging in future behavior deemed to be in violation of copyright laws. Mr. Zennstrom and Mr. Friis could not immediately be reached for comment. Previously, the music industry had succeeded in shutting down the file-sharing service Grokster, after the Supreme Court ruled against it and a co-defendant, StreamCast, which provides Morpheus software. The entertainment industry continues to pursue a copyright-infringement case against StreamCast. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
