Kazaa Pays $100 Million, Vows to Go Legal

Sharman Networks, owners of the Kazaa peer-to-peer file sharing service, announced today that they have settled all litigation with four of the world’s largest music publishers (Universal, Sony BMG, EMI, and Warner Music) for $100 million, and immediately commits to “going legal” and using Kazaa to distribute only licences content. Sharman has also settled with the Motion Picture Association of America (PDF), which said Sharman “will continue operations while employing new technologies to prevent unauthorized distribution of copyrighted works,” although terms of the MPAA settlement were not disclosed.

“This settlement marks the dawn of a new age of cooperation between P2P technology and content industries which will promise an exciting future for online distribution in general and Kazaa users in particular,” said Nikki Hemming, CEO of Sharman Networks. “It has been our long standing goal for Kazaa to play a significant role in the growing market for licensed online distribution and authorized exchange of copyrighted content using peer-to-peer technology, and this settlement ensures that we will be working together with the content providers to the benefit of consumers, businesses and artists.”

The settlement may represent more of a symbolic and legal victory for copyright holders rather than a step forward from Kazaa, which has seen its user base decline significantly following action in the U.S. Supreme Court and an Australian courts (which found Kazaa violated copyright). Users intent on downloading unauthorized music and movies moved on to other services, while many consumers have shifted to legitimate download services like Apple’s iTunes Music Store, eMusic, and Rhapsody.