The Race to Kill Kazaa

The servers are in Denmark. The software is in Estonia. The domain is registered Down Under, the corporation on a tiny island in the South Pacific. The users - 60 million of them - are everywhere around the world. The next Napster? Think bigger. And pity the poor copyright cops trying to pull the plug.

By Todd Woody

On October 2, 2001, the weight of the global entertainment industry came crashing down on Niklas Zennström, cofounder of Kazaa, the wildly popular file-sharing service. That was the day every major American music label and movie studio filed suit against his company. Their goal was to shutter the service and shut down the tens of millions of people sharing billions of copyrighted music, video, and software files. Only problem: Stopping Napster, which indexed songs on its servers, was easy - the recording industry took the company to court for copyright infringement, and a judge pulled the plug. With Kazaa, users trade files through thousands of anonymous "supernodes." There is no plug to pull.

Nor, as attorneys would soon discover, was there even a single outfit to shut down. That's because on a January morning three months after the suit was filed, Amsterdam-based Kazaa.com went dark and Zennström vanished. Days later, the company was reborn with a structure as decentralized as Kazaa's peer-to-peer service itself. Zennström, a Swedish citizen, transferred control of the software's code to Blastoise, a strangely crafted company with operations off the coast of Britain - on a remote island renowned as a tax haven - and in Estonia, a notorious safe harbor for intellectual property pirates. And that was just the start.

Ownership of the Kazaa interface went to Sharman Networks, a business formed days earlier in the South Pacific island nation of Vanuatu, another tax haven. Sharman, which runs its servers in Denmark, obtained a license for Zennström's technology, FastTrack. The Kazaa.com domain, on the other hand, was registered to an Australian firm called LEF Interactive - for the French revolutionary slogan, liberté, égalité, fraternité.

Confused? So were the copyright cops. "It's hard to know which one to sue," complains Michael Speck, an investigator with the Australian Record Industry Association. Hollywood lawyers figured the best way to bring Kazaa to justice was to squeeze Sharman. Trouble was, Sharman, which operates out of Sydney, had no employees. All its workers, including CEO Nikki Hemming, are contracted through LEF. The names of Sharman's investors and board members are locked away in Vanuatu, a republic that bills itself as an asylum whose "strict code of secrecy" is "useful in any number of circumstances where the confidentiality of ownership, or control, want to be preserved."

Why all the subterfuge? It's an international business model for the post-Napster era. A close look at Kazaa reveals a corporate nesting doll that frustrated Hollywood attorneys for more than a year. From Estonia to Australia, they pleaded with courts to force Kazaa's operators out from the shadows. Meanwhile, every week that Sharman was able to hold the law at bay, countless copies of Kazaa software were being downloaded. In the last six months alone, PC users have downloaded more than 90 million copies. Kazaa has 60 million users around the world and 22 million in the US - an irresistible audience to marketers. Last year, Sharman raked in millions from US advertisers like Netflix and DirecTV, without spending a penny on content. The chase could have gone on forever.

And then, suddenly, a few days before Thanksgiving, it ended.

Hollywood's disdain for file-sharing can be measured in the 10-foot stack of papers that make up Metro Goldwyn Mayer Studios v. Grokster et al., which sits on file in the Los Angeles federal courthouse. In the suit, a roster of entertainment conglomerates accuse FastTrack-enabled services Kazaa, Morpheus, and Grokster of profiting from a "21st-century piratical bazaar." Record labels and movie studios want the services closed and fined $150,000 for each illegally traded song or movie. Given the billions of files changing hands every week, the damages could be astronomical. [...]

Wired

;)

STUUUUUUPIIIIIIIIIIID!!!!!

U.S. - IRAQ INVASION LIKELY TO BEGIN WITH STATE of the UNION, Tuesday

The Race to Kill Kazaa