Music Industry Piracy Investigations (MIPI) raids Sharman Networks, et. al. (KAZAA)

ZD Net Australia ^ | February 6, 2004 | James Pearce

[anonymous_user]

UPDATE:Music Industry Piracy Investigations this morning raided the offices of P2P companies Sharman Networks and Brilliant Digital Entertainment, along with the homes of key executives and several ISPs.

MIPI obtained an Anton Pilar order – which allows a copyright holder to enter a premises to search for and seize material that breaches copyright without alerting the target through court proceedings – yesterday from Justice Murray Wilcox, and began raiding premises in Queensland, New South Wales and Victoria this morning searching for documents and electronic evidence to support its case against the peer-to-peer companies.

In addition to the offices of Sharman Networks and Brilliant Digital Entertainment (BDE), MIPI raided the residences of Sharman Networks’ CEO Nikki Hemming, Brilliant Digital Entertainment Chief Executive Officer and President Kevin Burmeister and Phil Morle, Director of Technology at Sharman Networks. Monash University, the University of Queensland and the University of New South Wales were also raided, as well as four ISPs including Telstra.

"Telstra lawyers are presently working with lawyers from the record labels in order to determine exactly what information is being sought under the terms of the order," Telstra spokesman Warwick Ponder told ZDNet Australia  . "We have not been asked for and will not provide any BigPond subscriber information."

"Telstra has made it very clear for a long time now that it does not support copyright infringement or any other illegal activity," said Ponder. "At the same time Telstra clearly respects its obligation to protect customers information and privacy under the Telecommunication Act and Privacy Act under Federal law."

MIPI general manager Michael Speck told ZDNet Australia   the order was specifically targeted at the operators of the Kazaa network. "This is not about individuals, this is about the big fish," said Speck. "This is a signal that Internet music piracy is finished in Australia." The ISPs and Universities were raided to gain evidence about the operators of the Kazaa network.

The investigation into the Kazaa network has been ongoing for six months, and was precipitated by a significant change in the physical and technical structure of Sharman Networks, according to Speck. "The Kazaa operation infringes copyright within the terms of the Australian Copyright Act," he said.

"This action appears to be an extraordinary waste of time, money and resources going over legal ground that has been well and truly covered in the US and Dutch Courts over the past 18 months," said Sharman Networks in a statement. "This is a knee-jerk reaction by the recording industry to discredit Sharman Networks and the Kazaa software, following a number of recent court decisions around the world that have ruled against the entertainment industry’s agenda to stamp out peer-to-peer technology."

Sharman Networks became a target for the music industry when it purchased the Kazaa peer-to-peer file-sharing technology from its Dutch creators Kazaa BV in 2002. It has had a long relationship with BDE, and in 2002 had to defend against a backlash when it was revealed spyware had been included with the Kazaa software. BDE subsidiary Altnet was later formed and offered to pay people for hosting content on the Kazaa network.

"Kazaa operators know the difference and make the decision as to whether they facilitate legitimate or illegitimate downloads," said Speck. "It's very clear they are facilitating and authorising global copyright infringement."

Sharman disagreed, claiming it bought the Kazaa software "with the express purpose of building it into a legitimate channel for the distribution of licensed, copyright protected content which in turn financially benefits artists".

"There is no doubt this is a cynical attempt by the industry to disrupt our business, regain lost momentum, and garner publicity," said Sharman. "The assertions by plaintiffs are hackneyed and worn out. It is a gross misrepresentation of Sharman’s business to suggest that the company in any way facilitates or encourages copyright infringement."

Monash University and the University of Queensland have challenged the order, and the arguments will be heard before Justice Wilcox at 3.30 pm today.

Sharman Networks, Australian subsidiary LEF Interactive and BDE will face the record company lawyers before Justice Wilcox on Tuesday.

According to MIPI, there are around three million users simultaneously online and connected to the Kazaa network at any one time sharing around 573 million files. Over 850,000 tracks are made available by over 2,500 Australian users. If each downloaded track was purchased for US$0.99 the total would be over US$2 billion per month globally.

[anonymous_user]

Another blow to file sharing stealing. Your comments are welcome.

[Huck]

I use Kazaa now. If they go down, I'll find something else to use.

[proxy_user]

It is perfectly lawful to share files you own. You can put your resume, vacation pictures and spreadsheets up on Kaaza and offer them to the world.

You can sing your songs into a microphone, cut an MP3, and offer it to the world.

It is true that much of the material on Kaaza is in fact in violation of copyright. This is usually the case with things that have both legal and illegal uses, such as copy machines and VCRs. Courts have held the user, and not the manufacturer of the machine, liable.

[anonymous_user]

I use Kazaa now. If they go down, I'll find something else to use.

I think that's the point of the RIAA too. First Napster, then these guys.

[anonymous_user]

It is perfectly lawful to share files you own.

The key is anonimity. People have no problem trading files "underground" on P2P networks, but there are very few people stupid enough to hang out a free, copyrighted MP3 site.

If a person wants to share files photos and whatnot, why not just use the Web?

[apillar]

You would think they would realize that they are trying close the barn door once the horse got out...

They put Napster out of business and dozens more popped up to take it's place, they take down kazaa and even more will pop up, this time in places like eastern europe or Russia where the RIAA, which pretty much ignore copyright info .

[anonymous_user]

I agree. They're fighting it from the wrong end, but I (and they) seem to have no idea what the "right" way is for fighting shared copyrighted material. Even the "unbreakable" DVD encryption didn't last long, did it?

The best thing they can do is to get creative, for example, they've been known to produce fake songs and upload them to P2P networks. They're the same size and length as regular songs, but are hacked up or have "don't steal" messages spoken over the track. Seems like a "good" way to advertise -- give people 30 seconds of a three-minute song and end it with, "If you like this track, please buy it on the new album..."

But, that's really evil. :)

[SamAdams76]

Another "blow" to file-sharing my foot. The RIAA is just pissing against the wind. The file-sharers (or stealers if you prefer that term) have many other avenues besides Kazaa, including FTP and direct e-mail which are virtually untraceable. As well, my son tells me that kids are selling CDs in school with 200+ MP3s on them for five bucks. Considering that you can get blank CDs for about a nickel each, we're talking about a 1000% profit margin here. My kid tells me you can get pretty much whatever you want. If you want the entire catalogue of say, Coldplay, just tell the kid in school and for five dollars, he'll hand you the CD next day in class. Not just the albums but a bunch of bootleg live tracks as well that this kid probably has on his hard drive.

Not saying that's right and if my sons buys any of these CDs, he's in for it. But the fact is that it is so easy and cheap to burn your own CDs, that paying $15.98 in a store almost seems ludicrous.

I mean, when you can get a stack of 100 blank CDs for LESS than the cost of a single pre-recorded CD, well, now the consumers realize just how much they have been ripped off all these years by the recording industry.

The recording industry has artificially kept the pricepoint of their product high and has thus brought a lot of this upon themselves. VCR tapes of movies costed $90 just 10 years ago. Now you can get VCR/DVDs of first rate movies for under $10 at Wal-Mart. And they sell by the millions and millions. The movie industry adapted their business model and they are being rewarded for it. Until the recording industry changes their business model and charges a more realistic pricepoint for their product, they will continue to be plagued by these pirates.

If you can download quality MP3s off the web for a reasonable fee, that kid in the hallway of my son's high school will be out of business overnight. And the recording companies will make millions of dollars with virtually no overhead at all. But they are stuck in their old ways. They choose to be dinosaurs.

[killjoy]

There is always Usenet. Usually full albums posted at 300+ kbs.

I used to buy at least a CD a week, usually more. I bought a lot of CDs from artists I discovered from first downloading their music. Not anymore. I will respect the music industry when they respect their consumers AND their artists. Until then, they can go out of business and I will not shed a tear. RIP.

[killjoy]

Now you can get VCR/DVDs of first rate movies for under $10 at Wal-Mart.

Am I the only one that finds the irony in a DVD of a movie can cost less than it's soundtrack?

[anonymous_user]

If you can download quality MP3s off the web for a reasonable fee, that kid in the hallway of my son's high school will be out of business overnight.

So we should let stealing set the pricepoint for music? Because I can steal a car, a new SUV should be $100.

Regarding the movie industry: They're next.

As soon as file compression and media storage catch up, kids will be selling entire Blockbuster stores worth of movies on a yet-to-be-developed storage media. Then movies will be instantly "overpriced" as well.

[anonymous_user]

Am I the only one that finds the irony in a DVD of a movie can cost less than it's soundtrack?

How many record albums gross $200 million in theaters?

[anonymous_user]

There is always Usenet. Usually full albums posted at 300+ kbs.

If I were the RIAA, I'd flood Usenet and P2P networks with about 100,000 faked MP3 files a day. Nelly, interrupted by Ethel Merman, etc.

When people would actually have to work for a half-hour to download a song, the value of the bootleg CD might increase beyond the $0.05 media cost.

[js1138]

Am I the only one that finds the irony in a DVD of a movie can cost less than it's soundtrack?

Ask yourself which is objectively worth more, a dozen good songs, or a Hollywood movie.

[Huck]

I am a musician, so often times I just need to listen to a song a few times before peforming it. I did a gig last week playing You Light Up My Life. I downloaded the leeann rimes version off of kaazaa, practiced it, did the gig.

[Kozak]

Ask yourself which is objectively worth more, a dozen good songs, or a Hollywood movie

A. the movie contains the songs.
B. When was the last time you found an album with 12 "Good songs"? If they even had 2 or 3 good songs much of the file swapping would end.

[steve-b]

The funadmental problem is that the recording industry's tactics are alienating their customers. It's as if a merchant, tired of losing money to shoplifters, started randomly strip-searching customers, hiring goons to break into houses to look for shoplifted wares, etc. In either case, even people who once agreed that the businessman had a legitimate complaint are going to turn against him.

[Grit]

Very well said.

[Grit]

When was the last time you found an album with 12 "Good songs"?

Well, you asked...

[dware]

If they go down, I'll find something else to use.

You should try Kazaa Lite - loads better - no spyware, less crashing and a smaller file to boot!