Record companies face web hack, Kazaa countersuit

WASHINGTON: Big record companies, reeling from weak CD sales and the popularity of Internet song-swapping, face a backlash in court and in cyberspace as they battle to collect royalties on the web.

The parent of the Kazaa song-swapping service counter-sued the industry in the same Los Angeles federal court that is hearing the industry's suit against Kazaa, whose users can download digital songs, movies, and other files for free.

Meanwhile, technicians for the Recording Industry Association of America (RIAA) struggled to restore the trade group's website after a hacking attack knocked it offline last Friday.

Kazaa's parent, Sharman Networks Ltd., charged the industry with engaging in anti-competitive behavior because it sought to shut the site down rather than release songs in a format that would allow Kazaa users to make royalty payments.

The RIAA has spearheaded an aggressive legal battle against Kazaa and other Internet "peer-to-peer" networks since they emerged three years ago. The trade group shut down pioneer service Napster Inc. only to see successors proliferate; Kazaa claims its software has been downloaded 179 million times.

The RIAA has more recently begun to target individual users of song-swap services, incurring the wrath of music fans who view big record labels as a bully.

Sharman's counter-suit accused big record labels of violating antitrust laws, promoting their own online systems, MusicNet and pressplay, rather than cooperating with Kazaa. An RIAA statement dismissed Kazaa's claim as "laughable."

The RIAA and a motion-picture trade group won a recent legal round against Kazaa when a Los Angeles judge ruled that Sharman could be prosecuted in the United States even though it is registered in the Pacific island tax haven of Vanuatu.

In its counter-suit, Sharman said it has never knowingly allowed or promoted copyright infringement as it cannot control or monitor user behavior. The company said it purchased Kazaa from its founders to provide a distribution system that would pay royalties to artists and record companies.

© Reuters