Kazaa Settles With Music Industry For $100 Million, Promises To Go Legit

'Services based on theft are going legit or going under,' says RIAA head.

Kazaa has become the latest rogue downloading service to settle with the music industry.

The Recording Industry Association of America announced on Thursday (July 27) that the peer-to-peer network reached an out-of-court settlement with the major music companies to settle international litigation against the operators of Kazaa brought in the U.S. and Australia.

Kazaa's owner, Sharman Networks, has agreed to pay the world's four major record companies — the EMI Group, Sony BMG Music Entertainment, Universal Music Group and Warner Music Group — more than $100 million, according to a spokesperson for the International Federation of the Phonographic Industry, which brought the action along with the RIAA. Under the terms of the settlement, Kazaa will also introduce filtering technology that will ensure it doesn't distribute copyright-infringing music or movie files in the future.

"This is welcome news for the music community and the legal online music marketplace," said RIAA Chairman and CEO Mitch Bainwol in a statement. "Steadily but surely, we are passing another important marker on the remarkable journey that is the continuing transformation and development of the digital marketplace."

The Motion Picture Association of America announced simultaneously that it has also settled litigation against Kazaa owner Sharman, whose FastTrack network it had previously called the "leading unlawful peer-to-peer file-trading" system.

Since the Supreme Court ruled against peer-to-peer networks Grokster and Streamcast in 2005 (see "Grokster Settles With Music Industry, Vows To Go Legit"), saying that companies that promote copyright infringement can be held liable, the days of rogue P2P systems appeared to be numbered. In addition to Grokster going legit, over the past year such services as iMesh and Bearshare have settled with the RIAA, as have other services in Taiwan and Korea.

"A little more than a year ago, the U.S. Supreme Court struck a wise balance between protecting innovation and the rights of creators," Bainwol said (see "File-Sharing Networks Can Be Liable For Copyright Infringements, Supreme Court Rules"). "This meaningful decision has helped bring legal and moral clarity to the marketplace. Services based on theft are going legit or going under, and a legal marketplace is showing real promise."

Last year, the Federal Court of Australia found Kazaa's operators guilty of authorizing widespread copyright infringement. At its peak, Kazaa, one of the most popular P2P networks, had 4.2 million simultaneous users worldwide, according to the RIAA statement. In May 2003, Sharman declared Kazaa the most downloaded software ever, at 239 million downloads.

For complete digital music coverage, check out the Digital Music Reports.