Friday, July 28, 2006

Kazaa settles copyright case for $115 million

Further to the Supreme Court decision in Grokster, one notes that Kazaa has settled:

Sharman Networks Ltd.'s Kazaa, a file-sharing service that helped introduce millions to online music theft, has agreed to settle litigation with the entertainment industry for more than $115 million. The settlement represents the waning of the era of Internet businesses facilitating unauthorized music downloading. (from the Wall Street Journal through MoneyWeb.

The article also states:

Napster, created in 1999, was the first file-sharing service that became popular for illegally downloading music. After it was shut down, Kazaa, StreamCast Networks Inc.'s Morpheus, and Grokster took off. After lawsuits from the record industry [RIAA], Napster shut down and the name now belongs to a legitimate music download service. Grokster was purchased last year by Mashboxx, which expects to launch a legitimate file-sharing music service later this year.

Kazaa was created by Janus Friis and Niklas Zennstrom in 2000. The two avoided travel to the U.S. since 2001 because they feared being served legal papers, a worry that ends with the settlement. Under the terms of the settlement, Kazaa agreed to introduce filtering systems to ensure that people can no longer use Kazaa to pilfer copyrighted music and movie files. Sharman, based in the Pacific Island nation of Vanuatu, also said it would work with the entertainment companies to sell licensed content. After the Kazaa sale to Sharman, Mr. Friis and Mr. Zennstrom founded Internet phone service Skype, which is based on the same underlying technology as Kazaa. Last year, they sold Skype to eBay Inc. for about $2.6 billion in cash and stock.

Of the Grokster case defendants, Grokster agreed to settle that case for $50 million and promised to go legitimate, and now Kazaa has settled. StreamCast's Morpheus is the sole remaining defendant in the case pending in federal court in Los Angeles. Although the Supreme Court decision was criticized as not going far enough, it seems to have produced results.


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