Sydney (Australia) - The proprietors of Kazaa - the biggest P2P file sharing network for unmonitored content ever developed, by most estimates - announced a settlement with movie studios and music publishers, in order to avoid a fate similar to what its co-defendant Grokster faced in their landmark battle with MGM. Estimates of the amount of money traded vary wildly, and have not been officially announced, though the London-based Financial Times today estimated that Sharman Networks would pay each of the big four music publishers $25 million each.
Attached to this impressively low settlement amount is a promise to do what Sharman at one time claimed wasn’t either possible or necessary : to go legit. Citing a "new age of cooperation between P2P technology and content industries," Sharman CEO Nikki Hemming stated this morning, "It has been our long standing goal for Kazaa to play a significant role in the growing market for licensed online distribution and authorised exchange of copyrighted content using peer-to-peer technology, and this settlement ensures that we will be working together with the content providers to the benefit of consumers, businesses and artists."
In other words, Kazaa will be making a play to follow in the footsteps of Napster which, after its conversion to a service for licensed and even subscription-based content - and even after a huge drop in projected users - still exists. There’s no word today about how much may have been exchanged between Sharman and plaintiff Metro-Goldwyn-Mayer, the Sony Pictures division that prevailed triumphantly in the Grokster case.
Sources told The Australian newspaper that Sharman pledged not only to modify its Kazaa software, but also to "use all reasonable means" to discourage online piracy.
In a statement today, Motion Picture Association of America president Dan Glickman apparently acknowledged having seen Kazaa’s new filters. "I applaud the work Sharman has done to develop and deploy new filtering technology," Glickman stated, "which represents a breakthrough for online distribution opportunities. Such endeavors are paving the way for the future of consumer choice and entertainment."
Last September, the Australian Federal Court - the counterpart of the US District Court - ordered Sharman to modify its software to allow only licensed content to be shared between Kazaa users, or else face a USD$760 million penalty. Today’s settlement apparently involves only Sharman Networks, and not the developers of Kazaa - Niklas Zennstrom and Janus Friis - whose follow-up act, Skype, is the centerpiece of a modern communications empire.