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Kazaa goes legal

In what the recording industry calls a win situation, four record labels have settled a lawsuit with popular P2P sharing network Kazaa. Under the settlement, Kazaa will pay more than $100 million to four to EMI, Sony BMG, Universal Music and Warner Music. Kazaa will also commit to going fully legitimate said the report.

According to the International Federation of Phonographic Industry, Kazaa has contributed to a significant amount of "damage" in the music industry. IFPI chairman and CEO John Kennedy said "these are very substantial damages being paid -- in excess of $100 million -- and Kazaa will go legal immediately. They've had time to prepare for this." Representatives for the MPAA also said that Kazaa will be implementing technology that will prevent users from transferring copyrighted material over the network.

The original developers of Kazaa, Niklas Zennstrom and Janus Friis sold Kazaa to Sharman Networks in 2002. Since then, Sharman had been dealing with the MPAA and the RIAA over the legality of Kazaa users transferring copyrighted material. Neither Zennstrom nor Friis was available for comment.

Zennstrom went on to create Skype after selling Kazaa to Sharman. Zennstrom ended up selling Skype to eBay for roughly $2.6 billion in both cash and stock.


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RE: How can these developers be billionaires?
By masher2 (blog) on 7/27/2006 5:36:43 PM , Rating: 2
Primarily because the purchaser isn't buying the protocol as much as they're buying the installed user base. When you have a few million users, your product is valuable...regardless of what its based upon.


By Dfere on 7/28/2006 8:03:24 AM , Rating: 2
Agreed.

The best products are not always the most profitable. Distribution networks, and even domain names carry a lot of weight too.

Unfortunately, consumer purchases are hard to predict, and there is a lot of inertia. Buy Skype, you now can license skype phones, and possibly try to figure out other/secondary revenue streams, have a marketing database, record marketing info (who calls who and when), etc etc. Then you slam customers with added costs until a competitor finally arrives or perople change their consumption. It adds up to huge potential for the short run.


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