Kazaa settlement

Kazaa has agreed to pay more than US$115 million to the entertainment industry to settle global piracy lawsuits.  From Wired:

Sharman Networks, which produced and distributed the popular Kazaa software also promised to "use all reasonable means" to discourage online piracy, including building into its software "robust and secure" ways to frustrate computer users who try to find and download copyrighted music and movies, court papers said.

The settlement included payment of $115 million to music companies and a lesser amount to the movie industry, said people familiar with those provisions. They agreed to speak on condition of anonymity because some provisions were included in secret agreements not disclosed in the public court papers. Sharman Networks has already paid nearly all the money to the entertainment industry, these people said.

...

"Services based on theft are going legit or going under, and a legal marketplace is showing real promise," said Mitch Bainwol, head of the Washington-based Recording Industry Association of America, the trade group for the largest labels.

The head of the Motion Picture Association of America, Dan Glickman, called the settlement an important victory in a historic legal case.

Sharman Networks indicated it will negotiate licenses with entertainment companies to distribute music and movies lawfully over its Kazaa service, similar to Apple Inc.'s iTunes service. The settlement does not prohibit Sharman Networks from legally distributing copyrighted files.

The chief executive of Sharman Networks, Nikki Hemming, said the settlement "marks the dawn of a new age of cooperation" between file-sharing services and the entertainment industry. "This settlement ensures that we will be working together with the content providers to the benefit of consumers, businesses and artists," she said.

Read more here.  And according to the New York Times, Kazaa hopes to continue with an advertiser-supported model (rather than charging users):

The music industry federation said that Sharman had agreed to license music from the four major recording companies — Universal Music Group, Sony BMG, Warner Music and the EMI Group — that own the vast majority of music copyrights. Independent record labels are not included, but would be free to pursue their own licensing deals with Sharman, executives said.

Sharman also said it would take steps to prevent unauthorized distribution of material through Kazaa.

...

Under the agreement, the major recording companies will not invest directly in Kazaa but will be entitled to 20 percent of the proceeds of any eventual sale of the service, Mr. Kennedy said, giving them a stake in the success of the new arrangement.

Music company executives welcomed the settlement, and Universal said it would share the proceeds with its artists.

David Munns, vice chairman of EMI Music, said in a statement, “While the award may seem like a vast pot of money, it will merely offset the millions we have invested — and will continue to invest — in fighting illegal pirate operations around the world and protecting the works that our artists create.”

In making the switch to a licensed, royalty-paying business, Kazaa would follow Napster, one of the original file-swapping services, which was reborn after an adverse court ruling in 2001.

Kazaa has been earning revenue primarily from advertising, and Mr. Kennedy said the recording industry would not object if it persisted with an advertiser-supported model, rather than charging users, as long as it pays royalties. The movie industry has also begun to embrace peer-to-peer technology as a way to distribute material. Several download-to-own services, which allow users to buy digital files of films on the Internet, have also been started.

Read more here.

But, all of this is not necessarily good news.  Wired's blog Listening Post has this perspective:

RIAA Gets $115 Million from Kazaa

Not that anyone uses it anymore, but Kazaa has joined the list of other P2P companies which have settled with the RIAA.  The price tag is a hefty one: $115 million. As a part of the settlement, Kazaa is supposed to "go legal," but so were Grokster, Scour, and others, and nothing's come of it so far.

The RIAA claims that each song transmitted via P2P networks is worth up to $150,000 (good luck with that).  Here's some of what they've made from P2P settlements.

- BearShare: $30 million

- Grokster: $50 million

- iMesh: $4.1 million

- P2P users: $100 million (estimated)

- Scour Networks: Declared bankruptcy

- Sharman/Kazaa: $115 million

Aside from the fact that there's no clear mechanism for getting this money to the artists who are supposedly losing their livelihoods due to all of this downloading, what's really shocking is how little a it all adds up to in comparison with how much the record labels might have made by agreeing to Napster's proposed plan, which would also have solved all of the device compatibility issues that still plague us today.

Napster reportedly offered the record labels $150 million per year for starters (plus $50 million per year to indies) for the right to continue to offer its practice of letting users trade unprotected MP3s with each other, albeit with a $10/month subscription fee. Napster's centralized servers would have provided a clear accounting method for paying artists their due (in fact, maybe that's why RIAA members prefer these settlements).

It's impossible to say what the world would look like if the RIAA members had agreed to Napster's proposition, but for now, users and labels alike seem set on continuing the cat-and-mouse game they've been playing for years, with users fleeing to networks that are harder to track (ironically, making any sort of eventual legitimate P2P service even less likely).

Read it here.  Finally, Kim Weatherall expresses her disappointment that due to this settlement we have missed out on big copyright decision to dissect:

Well well well. All the news today reports that Kazaa has settled with the American Music Industry, agreeing to pay $US115 million ($A151 million) and convert to a legal business model with licensing arrangements to be negotiated with record labels (see The Age here, Washington Post here, Techdirt here)

Now I can't help but wonder whether we have several Federal Court judges who, having spent quite a few days in February hearing the matter, and perhaps a bit of time writing a judgment, are now a little deflated.

Guess we won't be getting a Full Federal Court view on what constitutes authorisation of copyright infringement. The rather spare reasoning of Justice Wilcox will stand.

Sigh. And I was so looking forward to dissecting another big copyright judgment or two.

Comments

[Ronald Vaughan]

Good article...but I dis-
agree about the part about
"no clear mechanism to get
money to the artists..."

Actually,there IS at least
one: The Harry Fox Agency.

[Ronald Vaughan]

I just got my share of these royalties.
THIRTEEN CENTS! Out of $5 Millions...LOL!!