Kazaa to pay more than $115 million to settle piracy suits

It seems those “free” movies and songs, which millions of computer users happily downloaded over Kazaa, are not going be free after all. Sharman Networks – the company that produced the popular Kazaa software – has agreed to pay more than $115-million to the entertainment industry to settle global piracy lawsuits.

In a dramatic close to the legal battle between file-sharing software developer Kazaa and the entertainment industry, Kazaa said on Thursday that it has agreed to pay at least US$100 million to four record companies and an additional amount to motion picture companies to settle two lawsuits.

Kazaa will pay Universal Music Group, Sony BMG Music Entertainment Ltd., EMI Group. and Warner Music Group Corp., said Alex Jacob, a spokesman for the International Federation of the Phonographic Industry. He could not specify the exact amount of the payment or the distribution to each company.

Kazaa will make a separate payout to motion picture companies, he said. Jacob could not say how much that payment would be or which companies would receive it.

The settlement marks an end to U.S. and Australian lawsuits filed by major recording labels and motion picture companies in an attempt to stop copyright infringement over the Kazaa file sharing network. The U.S. suit was filed by a group of movie studies lead by Metro-Goldwyn-Mayer Studios Inc. against Grokster Ltd., the file sharing network that closed late last year to settle the legal battle. Sharman Networks Ltd., which owns and distributes the Kazaa software, was named as a defendant in the suit.

The Australian suit was filed by the a group of record companies including those receiving the payout from Kazaa.

As part of the agreement, Kazaa said it would implement filtering technologies that would help prevent its software from being used to share copyright-infringing files. Kazaa and the record and movie industries also said they will work together to develop a legal model for distributing digital music and movies.

The parties were vague about Kazaa’s future model. Kazaa plans to work with the music and motion picture companies to make peer-to-peer file sharing a part of future online digital entertainment, Kazaa said. Kazaa will make more announcements about its new business model in the near future but it’s too early now to say how exactly that will pan out, said Felicity Campbell, a spokeswoman for a firm that represents Kazaa.

The settlement follows an Australian ruling last year in which a judge found that Kazaa authorized the widespread violation of copyright works, ordering Kazaa to make changes to the way its system works.

The U.S. Supreme Court last year said that file sharing software developers can be held liable for copyright infringements by their users. At the time Kazaa said that ruling wouldn’t apply to it because Kazaa requires users to agree not to use the software to infringe on intellectual property.

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