PARIS — A small Swedish software company said Tuesday that it would buy the Pirate Bay, a notorious Internet file-sharing service whose founders were recently sentenced to prison for copyright violations, and hoped to turn the site into a legal source of free music and movies.
The company, Global Gaming Factory, said it had agreed to pay 60 million Swedish kronor, or $7.75 million, for the Pirate Bay, which says it has 20 million users worldwide. The site, the most prominent target of the international recording industry and Hollywood movie studios in their battle against digital piracy, continues to operate despite the guilty verdicts against its four founders in April.
Hans Pandeya, chief executive of Global Gaming Factory, said the company planned to turn the Pirate Bay into a legal provider of digital content through a new business model.
“Content owners hate file-sharers, but this is going to change,” Mr. Pandeya said.
Under the new system, he said, the Pirate Bay would generate revenue from several sources, including advertising.
Also, Global Gaming Factory plans to employ new peer-to-peer technology from a Swedish company called Peerialism, to develop an ultra-fast file-sharing network that could be used to ease the strain on Internet service providers. Global Gaming Factory, a publicly traded company in Stockholm, said Tuesday that it had agreed to acquire Peerialism.
Internet service providers, some of which have complained that file-sharing traffic is clogging their networks, would be charged for the use of the new network.
Individual file-sharers who participate in the network, meanwhile, would get paid for doing so, Mr. Pandeya said.
“There’s tremendous value being created on the Internet, but what do the file-sharers get? Nothing,” Mr. Pandeya said. “What do the content owners get? Nothing.”
Previous efforts to bring unauthorized file-sharing services in from the cold have generally involved changing the business model to charge individual users for music or other content. These initiatives, including the revamped Napster, have generally had only limited success.
“There’s a huge number of unanswered questions,” an analyst at Forrester research, Mark Mulligan, said. “It will be hard to persuade the record labels to create a legal file-sharing site.”
Record companies have grown more flexible about the kinds of services they are willing to license. Universal Music Group, for instance, recently announced an agreement with a British Internet service provider, Virgin Media, to make available unlimited downloads of music, with no copy protection.
John Kennedy, chief executive of the International Federation of the Phonographic Industry, which represents major record labels, said that while the announcement by Global Gaming Factory “raised a lot of questions,” he had no objections to the Pirate Bay turning into a legitimate service, despite the implications of the site’s name.
“We’re always interested in the bad guys becoming the good guys,” Mr. Kennedy said. “I’m capable of having a sense of humor about the name, as long as they are paying for the rights.”
The Pirate Bay, whose founders remain free pending an appeal, posted an announcement of the planned sale on its site, saying that it was “time to invite more people into the project.” It tried to reassure users about Global Gaming Factory’s intentions, noting that if the new owners altered the site substantially, “nobody will keep using it.”
“That’s the biggest insurance one can have that the site will be run in the way that we all want to,” the notice said.
But comments posted on the site in response to the announcement suggested that users were wary.
“This is a sad day for Internet, pirates and freedom,” one contributor said. “Commercial control can’t lead to anything good.”
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