This is actually a very big story. Or it would have been 18 months ago when Kazaa really was enemy number one. The record labels and movie studios have reached a deal with Sharman Networks, the owners of the once market leading P2P network Kazaa. The deal will see Sharman pay the content owners $115 million in compensation, and will pave the way for Kazaa to try and launch a legitimate P2P network, which filters out copyright content not approved for sharing.
The out of court settlement is a considerable landmark in the music industry's fight against Kazaa. The P2P company successfully eluded the record labels' lawyers for sometime, but their fortunes changed in home country Australia where a court ruling stopped them from distributing their software to new customers. That came in the same year as the US Supreme Court's landmark ruling in the MGM v Grokster case, which removed the option of P2P makers using the so called 'Betamax' defence in copyright violation cases brought against them (the plea where technology firms say they can't be held liable for copyright violation committed by their customers, even though the customers use their technology to do it). Following those two rulings, Sharman clearly realised that they had to reach some kind of settlement in order to secure their long term future.
Of course yesterday's settlement doesn't safeguard Kazaa's future either, given that the legitimate P2P model, which normally involves charging users a subscription fee which is passed back to the content owners, is entirely unproven, and Kazaa may find their albeit large existing subscriber base isn't very loyal once fees are involved.
Nevertheless, John Kennedy, the boss of the International Federation Of The Phonographic Industry, was very upbeat regarding the settlement, telling reporters yesterday: "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. This is the best possible outcome for the music industry and consumers."