Music industry targets next Napster

By Anick Jesdanun
Associated Press

Australian businesswoman Nikki Hemming knew she was stepping into a legal firestorm when she formed a venture a year ago to take over the Kazaa file-sharing system. "I do consider myself a visionary," she said. The software claims to allow Internet users to trade files without using a central server. Associated Press

But Hemming, a key force behind the Kazaa file-sharing system, didn't quite bargain for the wrath unleashed by Hollywood and the music industry, which has treated her as a sinister sibling to Darth Vader.

The U.S. entertainment industry has fired lawsuit salvos aimed at pieces of the Kazaa network scattered around the globe: in Estonia, Australia, Vanuatu, Denmark, Sweden, the Netherlands and the West Indies.

So far, Hollywood seems to be winning.

Three weeks ago, a federal judge in Los Angeles ruled that Hemming's Sharman Networks Ltd., incorporated on the South Pacific island nation of Vanuatu with main offices in Sydney, Australia, is subject to U.S. copyright laws.

Many legal experts believe Kazaa's days are numbered, that it will soon be vanquished alongside its pioneering cousin, Napster.

Still, they give Hemming and her Sharman Networks credit for delaying a funeral through astute maneuvering and legal savvy.

"It's a tough environment to operate in when you need to be considering litigation as well as building the leading software program in the market," Hemming said by telephone from Sydney.

But Hemming, 36, whose previous ventures include video games and an Australian theme park, said she's up to the challenge.

"I do consider myself a visionary," Hemming said. "I have considered this just a phase in the journey."

The technology she champions is known simply as Kazaa. One of its developers, Niklas Zennstrom, thought the name, pronounced Ka-ZAH, "had a nice ring to it, like Yahoo."

Through Kazaa, tens of millions of Internet users around the world trade files by sharing them as peers. Kazaa's owners won't explain exactly how it works, but deny it requires a central server, as Napster did.

Entertainment companies believe that not only the technology, but also the maze of businesses behind Kazaa, are designed to avoid central control — and the law.

Zennstrom, 36, a Swedish telecommunications entrepreneur, said Kazaa's design is aimed at helping Internet service providers distribute multimedia files more efficiently.

"Peer-to-peer is not about users sharing pop artists' recordings," he said. "It is about a breakthrough technology that makes things more efficient."

The outcome of the lawsuits will likely rest on how involved Sharman and its networks are in operating Kazaa.

In the Napster case, the courts found the company liable for copyright infringement because its servers kept track of everyone's files.

Sharman argues that once it distributes the software, Kazaa users establish their own directories and are ultimately at fault for any infringement.

Sharman says its central servers in Denmark are used solely to run its Web site and distribute the software.

Hollywood believes otherwise.

Mark Ishikawa, who has researched Kazaa and may testify in the case, said Kazaa software shows signs of "calling home" when it cannot find a supernode, or a regional directory running off users' computers.

"Home," Ishikawa said, acts as a default or backup supernode. Once, he traced it to a computing data center on the Caribbean island of Nevis. The legal system there prevented him from uncovering the computers' owner.

Sharman officials deny direct involvement, but won't release system details, saying they are confidential.

Lawyers fighting Kazaa in court acknowledge frustration, but vow to keep up the pressure.

"It's a game of hide-and-seek," said David E. Kendall, lead attorney for the plaintiffs. "At the end of the day, there are not a lot of places you can hide and still run a business."