Music-industry investigators raided the Sydney headquarters of Sharman Networks on February 6th, launching another lawsuit against the parent company of Kazaa, the world’s most popular file-sharing network. According to Music Industry Piracy Investigations — an organization funded by EMI, BMG, Universal, Sony and Warner Music — Sharman is responsible for the illegal sharing of music that’s worth more than $100 million each month. During the raid, documents were seized at twelve locations, including executives’ homes.
“This was the legal equivalent of a nuclear bomb being used to seize documents that we’ve already produced in the U.S. case,” says Nikki Hemming, Sharman’s CEO. “This is a desperate measure to discredit us and cause us disruption.”
Hemming argues that the raid is an attempt to compensate for the record labels’ legal losses around the globe. Recently, courts in the U.S. and the Netherlands have ruled that the record business cannot hold Sharman responsible for its users’ actions; now Australia has become the industry’s ground zero. Hemming’s lawyers have already asked to delay the case until the U.S. Ninth Circuit Court of Appeals rules on the record industry’s appeal. Hemming, an avid mountain climber who likes to work out to Queen and dive with sharks, remains confident about Kazaa’s future. “She’s a lion,” says Hemming’s friend Kevin Bermeister, who introduced her to Kazaa’s developers. “The music industry has met its match.”
Hemming says the record labels have given too much power to lawyers who aim to eliminate file-sharing, rather than letting creative executives develop new ways to expand the music business online. “The industry has to recognize that there are viable business models besides their own,” she says. “It’s time for them to take their companies back from the lawyers and enforcers.” Apple’s iTunes is a sign of progress, she says.
Independent labels are also beginning to experiment with file-sharing services to market and sell copy-protected content. Artemis, home to Steve Earle and the late Warren Zevon, announced on February 13th that it would sell its artists’ work on Kazaa through Altnet, a partner company run by Bermeister. Hemming says deals with other labels are in the works.
“I think in five years’ time,” Hemming says, “the entertainment industry will look back and realize that litigation was not the solution.”