Kazaa Settles With Record Industry, Goes Legit

The major record companies have reached a global out-of-court settlement of international litigation against the operators of the Kazaa peer-to-peer network.
The settlement, announced by the trade organizations representing the international and U.S. recording industries, IFPI and RIAA, applies to Kazaa’s operations worldwide. It concludes the ongoing legal proceedings brought by the record companies against the service’s operators in the United States and Australia.
Kazaa has agreed to pay what the labels term “a substantial sum” in compensation to the record companies that took the legal action to stop copyright infringement on the network. Kazaa also will introduce filtering technologies ensuring that users can no longer distribute copyright-infringing files.
RIAA Chairman/CEO Mitch Bainwol called the settlement welcome news. “A little more than a year ago, the U.S. Supreme Court struck a wise balance between protecting innovation and the rights of creators,” he stated. He said the deal helps bring clarity to the marketplace.
John Kennedy, chairman and CEO of IFPI, stated: “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. 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 follows a ruling in an Australian court last year that found the Kazaa operators guilty of authorizing widespread copyright infringement, prompting litigation in the United States by record companies, music publishers and motion picture studios against Kazaa, Grokster and Streamcast for copyright infringement.
The case against Grokster and Streamcast ultimately reached the U.S. Supreme Court, which in June 2005 unanimously ruled that individuals or companies that promote copyright theft by users of their service can be held responsible. Grokster settled with the record labels and motion picture studios last year.