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Music-Swapping Firm May Fold

May 22, 2002

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LOS ANGELES (AP) _ Kazaa, the company behind a popular file-swapping Web site, said it will fold because it cannot afford to defend itself against copyright infringement charges brought by the major studios and labels.

The Dutch company maintains it has not violated any copyright laws by enabling customers to copy and share music and movie files by computer. But Kazaa lawyers said Friday that the firm cannot afford to defend the charges.

``Plaintiffs have engaged in Rambo-style litigation,″ Kazaa said in a court filing Friday, complaining that the studios and labels are using hardball legal tactics to squash it.

The collapse of Kazaa, however, is not expected to slow trading activity on the company’s network, one of the most popular file-sharing sites in the world. Kazaa said it has sold the network to another firm that the music and film industry has not sued yet.

The Web site and the software behind it are now owned by a privately held firm called Sharman Networks, based in Vanuatu, an island in the Pacific.

Lawyers for the seven major Hollywood studios and five major record companies and music publishers said Kazaa is playing a corporate ``shell game″ to dodge responsibility.

They contend that Kazaa’s two founders, Niklas Zennstrom and Janus Friis, continue to be involved in the operation of the Web site and made substantial money from the sale.

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