Kazaa will pay an estimated US$115 million to settle the action brought by music companies, with a further undisclosed sum due to movie companies. While the majority is expected to be paid by Kazaa’s Australian owners Sharman Networks, it is understood that a portion is being stumped up by Niklas Zennstrom and Janus Friis, the software’s original creators. Zennstrom and Friis went on to found internet phone call company Skype, selling it to online auctioneers eBay in October 2005 for €1.9 billion in cash and stock. The pair have recently announced plans to develop software for distributing TV shows and other forms of video online.
Kazaa’s owner Sharman will now discuss licensing and technical practicalities with rightsowners. The company’s secure distribution partner Altnet has announced the Global File Registry (GFR), described as ‘the cornerstone of Altnet’s new online content protection and digital crime prevention strategy’. Like Snocap, the content registry founded by Napster founder Shawn Fanning, GFR offers rightsowners the chance to identify infringing copies and have them blocked from participating filesharing networks or replaced with digital rights management secured, paid-for files.
There is no cast-iron guarantee, however, that building a Global File Registry will shield Kazaa from further legal attack. While the proposed GFR requires labels and publishers to log in and select those tracks that they do not wish to be shared, copyright is not designed as an opt-out system. It’s conceivable, therefore, that a rightsholder could accuse Kazaa of having contributed to piracy by not blocking their music by default.
Caught in quote:
‘I look forward to [Kazaa] entering the marketplace because it’s always great to have unimaginative competitors’
Wayne Rosso, president of licensed p2p outfit Mashboxx, on Kazaa, his new rival
The settlement arrangement has been described as a victory for the music industry but it’s a pretty good deal for Kazaa, too. Following the MGM Studios vs Grokster decision of June 2005 (which found that filesharing companies could be sued for inducing copyright infringement), Kazaa’s opportunities in the States seemed bleak. Then, later in 2005, Kazaa was forced to end distribution of its software in Australia after a legal defeat in its home country.
Now, despite for years claiming that it couldn’t control the content travelling over its networks, Kazaa gets to stay in business - potentially profiting from a Global File Registry which is built to do exactly that. And Kevin Bermeister, boss of Altnet and a significant player in the Kazaa story, can portray himself as a champion of rightsholder causes, publishing a vision statement which shamelessly attacks the ‘silent beneficiaries of piracy’ such as computer manufacturers and internet service providers. Further, in an ironic twist, Altnet has employed as head of its enforcement programme Michael Speck, former general manager of Music Industry Piracy Investigations, the firm used by Australian labels to raid the homes and offices of Kazaa staff.
But Kazaa is no longer a pioneer, not even in the licensed filesharing world. It has already been beaten to the punch by iMesh, which launched its legitimate service in the US in October 2005, and by the Playlouder MSP, which is currently trialling a hybrid internet service provider / music sharing service in the UK. Mashboxx, a legal filesharing outfit headed up by former Grokster president Wayne Rosso, has picked up licences from all four major labels and is expected to run tests later this year. As for the chances of filtered filesharing taking off, the jury’s out. Not only are the technical challenges tremendous, but the business models are questionable. Don’t think for a minute that peer-to-peer is dead.
Alliance licensing perspective
The MCPS-PRS Alliance is in discussion with the likes of iMesh, PlayLouder and Mashboxx to determine their music licensing requirements.
This article orignally appeared in M21, published September 2006.