TELECOM Digest OnLine - Sorted: Kazaa Talked to Record Firms About Music Swaps

Kazaa Talked to Record Firms About Music Swaps

Lisa Minter (
Thu, 9 Dec 2004 22:12:28 EST

SYDNEY (Reuters) - Kazaa, the world's most popular Internet
file-swapping system, told a court on Thursday it was worried about
users exchanging unauthorized files and held talks with record
companies in the United States about the problem.

Thirty record companies from around the world are suing Kazaa's
Australian owners and developers, Sharman Networks and Altnet,
claiming that file swapping through Kazaa has cost them millions of
dollars in lost sales.

Philip Morle, Sharman's director of technology, told the federal court
in Sydney the Distributed Computing Industry Association had hosted
and coordinated a number of discussions between Sharman Networks and
various U.S. record companies about the issue of unauthorized file

Sharman says it can count the number of members using its peer-to-peer
network but has no control over what its 100 million network users do
with its software or what files they swap.

The record companies allege Kazaa is responsible for copyright
infringement and conspired to harm the record industry by unlawful

Final evidence in the case is expected to be given on Friday with
closing arguments to be presented mid next week.

Federal Court Justice Murray Wilcox, who is hearing the case, is not
expected to hand down his verdict until early 2005, but has previously
said Kazaa would not be ordered to shut down as part of the copyright

The case echoes the 2001 shutdown of renegade song-swap service
Napster and follows a 2003 court decision in the Netherlands that
cleared Kazaa's software of liability for copyright infringement.

The music companies taking the court case in Sydney include
the local arms of Sony BMG Music Entertainment (BERT.UL), EMI
Group Plc and several other Australian firms.

Recorded music sales have tumbled in recent years, with global sales
down 7.6 percent in 2003 to $32 billion, according to the industry
group, International Federation of the Phonographic Industry (IFPI).

The IFPI has blamed rampant piracy, along with poor economic
conditions and competition from video games and DVDs, for the slump.

Supporters of file swapping argue that it can encourage people to buy
music by exposing them to a greater range of music.

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