Intellectual Property Law

LimeWire Begs Music Industry for Second Chance

By David Kravets

LimeWire COO Zeeshan Zaidi

The company behind the file sharing software LimeWire is considering aggressively filtering out pirated content and is hoping to strike a deal with the music industry in which it would be permitted to live on as a for-pay music download service, a company executive said Monday.

“The biggest challenge right now is changing the behavior of a generation of internet users to get them to pay for music,” said Zeeshan Zaidi, LimeWire’s 35-year-old chief operating officer, in an interview two weeks after suffering a crushing defeat in a copyright lawsuit that threatens to leave the company insolvent.

On May 11, a federal judge ruled that LimeWire’s users commit a “substantial amount of copyright infringement” (.pdf) and that parent company Lime Group “has not taken meaningful steps to mitigate infringement.”

The ruling sets the stage for a potentially massive damage award against the company that could leave it insolvent. Attorneys for Lime Group and the Recording Industry Association of America are expected to return to court next month to haggle over the company’s fate.

Zaidi said in a telephone interview that the company wants to convert its 50 million monthly users into paying music customers, and become a player in the paid music-distribution business. For now, the bulk of LimeWire’s traffic consists of unauthorized copyright material — some 93 percent, according to RIAA estimates.

“One way to address what the court is talking about, short of shutting down the network, which I think is overreaching and drastic, is to filter the network of these files in question,” Zaidi said. “This is a way for us to move forward in the case.”

Zaidi’s plan could put LimeWire on roughly the same course followed by Napster after its 2002 courtroom defeat to the RIAA. Roxio purchased the Napster brand and domain name at a bankruptcy auction and attached it to a legitimate music download service, which exists today as an also-ran in a field dominated by Apple’s iTunes.

Similarly, Swedish entrepreneur Hans Pandeya had dreams of legitimizing the The Pirate Bay, the world’s leading BitTorrent search engine. His plan was to strike licensing deals with content providers and sell movies, music, games and software on the notorious site, but he never managed to pull off the acquisition of The Pirate Bay’s domain name.

To be sure, moving from the pirate model to the pay-to-play model has many built-in assumptions.

Foremost, converting copyright scofflaws into paying customers is a tough sell. And for LimeWire, it may prove to be a futile endeavor to get the major record labels — which just defeated LimeWire in court — to cut licensing deals.

“Suffice it to say, we’re talking to all of the major players in the industry to try to get the licenses we need to get this service off the ground,” Zaidi said.

Cara Duckworth, a spokeswoman for the RIAA, which represents Sony BMG, Universal Music, EMI and Warner Music, said “we intend to pursue damages.”

Mitch Bainwol, the RIAA?s chairman, said two weeks ago that, “Unlike other P2P services that negotiated licenses, imposed filters or otherwise chose to discontinue their illegal conduct following the Supreme Court?s decision in the Grokster case, LimeWire instead thumbed its nose at the law and creators.”

For now, LimeWire has about 5 million songs on its online retail store, none of them from the RIAA’s Big Four, Zaidi said. He declined to provide sales figures.

In its LimeWire lawsuit, the RIAA is seeking up to $150,000 per copyright violation, though the final damages have not been determined. It was the first case targeting a file sharing software maker following the 2005 Grokster decision, in which the U.S. Supreme Court cleared the way for lawsuits targeting companies that induced or encouraged file sharing piracy.

Zaidi said the recording industry should take the opportunity to partner with LimeWire, “to put the most amount of money into the pockets of artists and those who own their copyrights.”

The music industry, he said, “is in the driver’s seat. What happens next depends on what they choose to do.”

Image: Gubatron/Flickr

See Also:

• LimeWire Crushed in RIAA Infringement Lawsuit
• LimeWire Chairman Assures Congress: Privacy Safeguards Are in Place
• LimeWire Creator Brings Open-Source Approach to Urban Planning
• LimeWire Adds Private File Sharing
• Music Industry Squeezes LimeWire
• Limewire Adds Facebook Support, Bit Torrent Seeding

Full post as published by Threat Level on May 25, 2010 (boomark / email).