updated 12:40 pm EDT, Thu July 27, 2006
Kazaa pays $100m
Kazaa has reached a settlement with four major record labels paying out $100 million for enabling the illegal exchange of files through its technology file sharing network. Macworld UK reports that Sharman Networks, owner of the Kazaa service, will have to pay out the money to the four major labels -- it unknown is whether or not the independent labels will receive any money despite accounting for a fifth of the entire music market. David Munns vice chairman of EMI Music believes that the settlement is "a big step forward in the development of a vibrant, legitimate digital music marketplace." This was not the first of Kazaa's troubles as last year it lost a landmark case, where it was ruled that Kazaa operators were guilty of authorizing widespread copyright infringement, before the Federal Court of Australia. In addition, Kazaa will begin filtering content to remove copyrighted material immediately as part of the agreement and may also put in place a legal model of distributions.
"Kazaa was an international engine of copyright theft, which damaged the whole music sector and hampered our industry's efforts to grow a legitimate digital business," explained chairman and CEO of the International Federation of the Phonographic Industry. "It has paid a heavy price for its past activities. At the same time Kazaa will now be making a transition to a legal model and converting a powerful distribution technology to legitimate use."
The settlement is seen as a major victory by some--as a case that may set precedent for more legal actions against Peer-to-Peer networks. Kazaa, at its peak, reached 4.2 million simultaneous users worldwide and has continued to be one of the largest Peer-to-Peer services.