Kazaa pays labels $100M and goes legit

Kazaa owner Sharman Networks will pay the money to the world's four major labels. It's unclear if independent labels -- who account for a growing 20 percent of global music sales -- will see a slice of the settlement.

Kazaa will also introduce filtering technologies ensuring that its users can no longer distribute copyright-infringing files.

John Kennedy, chairman and CEO of the International Federation of the Phonographic Industry (IFPI) said: "Kazaa was an international engine of copyright theft, which damaged the whole music sector and hampered our industry's efforts to grow a legitimate digital business. It has paid a heavy price for its past activities. At the same time Kazaa will now be making a transition to a legal model and converting a powerful distribution technology to legitimate use.

"This is the best possible outcome for the music industry and consumers. Our industry will have a new business partner and consumers will experience new ways of enjoying music online, with more choice. This is a win-win scenario."

EMI Music vice chairman David Munns said: "After investing the significant time and resources required in this truly global effort, we are very pleased to have reached this settlement. This is a victory for anyone in a creative industry that has had their works stolen and distributed through an illegitimate peer-to-peer network. While the award may seem like a vast pot of money, it will merely offset the millions we have invested -- and will continue to invest -- in fighting illegal pirate operations around the world and protecting the works that our artists create."

Munns called the settlement "a big step forward in the development of a vibrant, legitimate digital music marketplace."

The settlement follows a landmark ruling in the Federal Court of Australia last year which found the Kazaa operators guilty of authorizing widespread copyright infringement.

Kazaa is one of the world's most popular peer-to-peer networks. At its peak it had 4.2 million simultaneous users worldwide.