This out-of-court settlement with 13 different record labels comes just days after the trial got underway. The RIAA has been seeking to take LimeWire down since the mid 2000′s. They have always claimed that the LimeWire client, in allowing users to download digital music, has perpetrated “massive scale infringement.”

Last May Federal District Court Judge Kimba Wood found LimeWire and its CEO Mark Gorton guilty of copyright infringment. In the fall, the RIAA won and injunction against LimeWire that forced the sharing service to shut ‘er down. In December 2010, LimeWire went down for good.

The $105 million settlement that was reached last night is a far cry from the original damages claimed by the RIAA. In a mind-boggling claim, the RIAA said that damages caused by LimeWire could total $75 trillion. Let’s put that in long form, just to remember what that looks like:

$75,000,000,000,000.

Judge Kimba Wood scoffed at that outrageously comical figure, saying:

“If plaintiffs were able to pursue a statutory damage theory predicated on the number of direct infringers per work, defendants’ damages could reach into the trillions…As defendants note, plaintiffs are suggesting an award that is ‘more money than the entire music recording industry has made since Edison’s invention of the phonograph in 1877.’”

The figure was later dropped to just over $1 billion in damages. This settlement is obviously significantly lower than either of those figures.

From RIAA Chairman and CEO Mitch Bainwol:

We are pleased to have reached a large monetary settlement following the court’s finding that both LimeWire and its founder Mark Gorton personally liable for copyright infringement. As the court heard during the last two weeks, LimeWire wreaked enormous damage on the music community, helping contribute to thousands of lost jobs and fewer opportunities for aspiring artists.

The significant settlement underscores the Supreme Court’s unanimous ruling in the Grokster case — designing and operating services to profit from the theft of the world’s greatest music comes with a stiff price. The resolution of this case is another milestone in the continuing evolution of online music to a legitimate marketplace that appropriately rewards creators. This hard fought victory is reason for celebration by the entire music community, its fans and the legal services that play by the rules.

Mark Gorton said that he was “pleased that this case has concluded,” as quoted in The Guardian.

Last week, just as the LimeWire / RIAA trial was getting underway, CNET and parent company CBS were sued by “eccentric billionaire” Alki David for providing LimeWire and other P2P clients as downloads. The suit claims that in providing the software, CNET is complicit in illegal file sharing.

Although the service went offline in December of last year, I feel this signals actual closure to the saga. RIP, LimeWire.

In the latest round of who-can-we-sue, disgruntled “victims” of file sharing have taken aim at CBS’s CNET, specifically their software downloading site cnet.download.com.

Entrepreneur, FilmOn Founder and “eccentric billionaire” Alki David has filed a lawsuit against CNET alleging that they aided in copyright infringement by distributing P2P clients, most notably LimeWire but also Morpheus, iMesh and FrostWire.  Of course, LimeWire is already in its own mess.

Joining Mr. David as plaintiffs are a number of rappers and R&B artists that include members of 2 Live Crew, Pretty Ricky and Ying Yang Twins.  Fifteen plaintiffs are listed in all.

Whose fault is copyright infringement, if anybody’s? Is it the person who shares the files, the makers of the client, or in this case do you agree that CNET shares some responsibility? Tell us what you think.

Part one of the argument is that CNET is guilty of copyright infringement because they allowed users to download software that was used for copyright infringement.

The CBS defendants have been the main distributor of Lime Wire software and have promoted this and other P2P systems in order to directly profit from wide-scale copyright infringement…the CBS Defendants’ business model has been so dependent upon P2P and file sharing applications that entire pages of Download.com are designed specifically to list and categorize these software offerings.

So, blame Dick’s Sporting Goods for selling the hockey stick that was used to bludgeon someone to death with.  Got it.  Maybe we should sue Google for providing search results linking to CNET.  Actually, let’s just sue the internet.  Let’s sue Al Gore.

All ranting aside, the fact remains that while CNET was distributing LimeWire, is was a legal product. Limewire does not inherently have to be used for “copyright infringement.” File sharing does not necessarily equal copyright infringement.  Of course, P2P clients are used for the sharing of copyrighted files – nobody can deny that.

But I simply don’t know if we should sue the tackle shop for selling the bobber used to snag and keep the fish from the catch-and-release pond. Should we?

But I digress.  The second part of the argument is that along with hosting downloads, CNET also wrote reviews for products like LimeWire, thus instructing users specifically how to break the law.

The CBS Defendants have not just distributed and profited from software applications used to infringe copyrights on a massive scale.  They also furnished articles and other content that explained how users could use P2P software to infringe.

On cnet.com, Download.com and other website, the CBS Defendants offered videos, articles and other media that instructed how to use P2P software to locate pirated copies of copyrighted works and remove electronic protections placed on digital music file sin order to prevent infringement.

Or as I call it, the Anarchist Cookbook argument.

Part 54 of the lawsuit provides my personal favorite complaint, simply for its leave-no-stone-unturned approach:

As part of their review process, the CBS Defendants tested the software that they reviewed and, in the case of P2P clients, infringed copyrights to do so.  In a video that Download.com posted to its website, the CBS Defendants again reviewed LimeWire, but this time demonstrated how it worked to Download.com users.  The message of the video is clear: LimeWire is really great at infringing copyrights.

The lawsuit seeks damages as well as an injunction barring CNET from offering P2P client downloads.

Here’s a video of Alki David ranting against CBS, thanks to Ars Technica.  David says that CBS “finds itself publicly exposed as an irresponsible hypocrite, that has ruined the lives of hundreds of thousands of people in the creative community and created copyright infringement damages into the trillions of dollars.”

“Hypocrite” is most likely a reference to past legal dealings between CBS and David’s site FilmOn. Last fall CBS along with Fox, NBC and ABC won a restraining order against U.K. based FilmOn in the U.S. The networks argued that because FilmOn was rebroadcasting their content over the internet, they were in violation of copyright law. Although the merits of Alki David’s lawsuit against CBS deserve a fair debate, it is not a stretch to see this current lawsuit as some sort of retaliation for previous actions.

CBS has responded to the lawsuit, saying:

“This latest move by Mr. David is a desperate attempt to distract copyright holders like us from continuing our rightful claims. His lawsuit against CBS affiliates is riddled with inaccuracies, and we are confident that we will prevail, just as we did in the injunction hearing involving his company.”

Also, does anyone see the awesome irony in Dentron Bendross of 2 Live Crew suing someone for copyright infringement, considering his group was part of one of the more famous fair use lawsuits ever?

Oh well.  It shouldn’t be too hard to discern where I land on the issue.  But what do you think? Let us know in the comments.

CNET Limewire Torrent Freak Report

But research published today by the folks at NPD Group suggests a decline in P2P music downloading since the demise of Limewire. According to NPD, Americans downloaded music via P2P client at a 16% clip in Q4 of 2007. In Q4 of 2010, when Limewire went down, that number had fallen to 9%. More statistics from the study:

The average number of music files downloaded from P2P networks also declined from 35 tracks per person in Q4 2007 to just 18 tracks in Q4 2010, although some downloaded just one or two tracks, while others took hundreds. NPD estimates there were 16 million P2P users downloading music in Q4 2010, which is 12 million fewer than in Q4 2007.

“Limewire was so popular for music file trading, and for so long, that its closure has had a powerful and immediate effect on the number of people downloading music files from peer-to-peer services and curtailed the amount being swapped,” said Russ Crupnick, entertainment industry analyst for NPD. “In the past, we’ve noted that hard-core peer-to-peer users would quickly move to other Web sites that offered illegal music file sharing. It will be interesting to see if services like Frostwire and Bittorrent take up the slack left by Limewire, or if peer-to-peer music downloaders instead move on to other modes of acquiring or listening to music.

Yeah, I’m going to go with the find other means option.

After the fall of Limewire, NPR reports an 11% rise in Frostwire use and a 4% rise in uTorrent use. These numbers seem low, especially the uTorrent rise. It might be helpful to note the information was gathered through online surveys. I’m not saying people lie, but people lie. With private tracker torrent sites like waffles.fm and what.cd popping up, people are going to feel more secure in using torrents to download music. (If you can score an invite to one of those sites)

Even with record companies suing for laughable amounts like $75 trillion, for some people that have been freely acquiring all their music since the early days of Napster, it could prove to be an impossible habit to break.

The music publishers filed the lawsuit against LimeWire and its top executives in US District Court for the Southern District of New York. They  are asking $150,000 for each song illegally distributed  by the company which could bring total damages to hundreds of millions of dollars.

"Pervasive online infringement…
has consequences for everyone in the music chain."

The eight plaintiffs come from the ranks of North America’s top music publishers including companies affiliated with all four major label groups: EMI Music Publishing, Sony/ATV Music Publishing, Universal Music Publishing Group, Warner/Chappell Music, Inc., Bug Music, MPL Music Publishing, Peermusic, and The Richmond Organization. Named as defendants are LimeWire LLC, Lime Group LLC, LimeWire CEO Mark Gorton, former COO and CTO Greg Bildson, and M.J.G. LimeWire Family Limited Partnership. 

 “The pervasive online infringement facilitated by LimeWire and others like them has consequences for everyone in the music chain,” NMPA President and CEO David Israelite declared at the NMPA’s Annual Meeting in New York City yesterday. "Operations like LimeWire must understand the songs that make their illegal venture lucrative don’t appear out of thin air. Behind every song is a vast network of people – a songwriter, a publisher, a performer, a record label. They have robbed every individual in that chain by selling their site as an access point for music and then refusing to properly license the music. It is a scheme the U.S. Supreme Court spoke on five years ago in its landmark Grokster decision, and a scheme that the U.S. District Court ruled was a violation of copyright law in the record labels’ hard-fought case.”

Comments

WebProNews: We’re told the LimeWire software has been translated into Arabic and will soon be translated into Persian, while the software and website are translated into a total of 23 languages. How are languages chosen and what does this means for the global peer to peer community?
 
Zeeshan Zaidi: LimeWire has over 50 million users and they are located in virtually every country on the planet.  Ideally, we would love to have LimeWire’s software and website available in every language so all our users could enjoy LimeWire in their native tongues.  To that end, we "crowdsourced" the translation of our software, through the LimeWire Open Source Project, giving users the ability to translate the client into their own languages. This has been a great success and we hope to continue to add languages this way.  In addition, we have supplemented these efforts with professional translation, especially of the LimeWire.com website.
 
Languages are prioritized based on the size of the total internet population that speaks a given language, as well as the total LimeWire population of native speakers of a language that are currently using our software in English.  For example, we already had many users throughout the Middle East and North Africa using LimeWire in English, but with the addition of an Arabic translation, we can now make LimeWire accessible to entire online populations of the countries in the region — we’re very excited about this. With the next release in December, we are adding Korean, Greek, Norwegian and Persian to our list of translated languages. With each additional language, we connect more corners of the world to our network.
 
Sometimes our objectives when choosing languages go beyond reaching the most users — Persian is an example of this.  When the Iranian post-election protest movement was gathering steam last summer, and the Iranian government was blocking the flow of coverage and information about the protests, Lime Wire took action.  We didn’t take a stance on the elections themselves, but we are firmly committed to facilitating the free flow of information and strongly opposed to these forms of government censorship.  We featured video clips from the protests on our software’s home page, and encouraged users throughout the world to download and spread the videos.  However, at the time LimeWire did not have a Persian translation so we made that a priority. Coincidentally, Iranian activists have recently approached us letting us know that they want to be able to use LimeWire to share files amongst themselves and circumvent their government’s attempts to block their communications.  Again, while we are politically neutral, we will always take the side of internet and information freedom.
 
WPN: We’re told the latest version of the LimeWire software (5.3) improves BitTorrent performance, adds selective-downloading and file-prioritization within the torrent, and faster startup. Can you tell us a little bit about the release and what is on tap for future releases?
 
ZZ: With every new release of LimeWire we add new features that are exciting to our users.  We added BitTorrent functionality at the beginning of this year because there was a lot of demand for this, and we have been enhancing these capabilities with every release.  So LimeWire users can now share files through the BitTorrent protocol in addition to the Gnutella network.  The adoption rate of version 5.3 has been great and we are very pleased with the results.
 
In the next release — 5.4 — we’re going to be adding additional features such as a video player and even better BitTorrent features.  It is our goal to continue to innovate on the software front and continue to provide our users with the best features.
 
WPN: It sounds like the LimeWire Store plays a key role in the future of LimeWre. Can you tell us about some of the plans for that?

ZZ: Many people don’t realize that in addition to developing file sharing software Lime Wire also operates a music store. LimeWire Store has over 4 million tracks available for sale a la carte or through a subscription service.  All tracks are fully licensed from record labels and music publishers.  Currently, the store is only available in the US.
 
There is a tremendous opportunity in expanding the nature and breadth of the offering of LimeWire Store and rolling it out internationally. We’re working towards launching a new paid subscription music service. We plan to couple this with other ways to monetize the user experience. This plan has tremendous potential for the industry, and if successful, will put lots of money into the hands of copyright owners.  Lime Wire is serious about this mission: we are in talks with the entire music industry to make it happen.  We’ve also assembled a team of talented and experienced media and technology executives so we can deliver on this vision.
 
WPN: You arrived at Lime Wire after working with Sony BMG, Arista and RCA overseeing online marketing and running digital business initiatives, as well as being a musician and an attorney. Can you discuss how your background influences your decisions at Lime Wire?
 
ZZ: As we’re planning the expansion of our store and the rollout of the new music service, my perspective is definitely informed by my background as an attorney, musician, and former record label executive. I care that consumers are provided with the best music search, discovery, sharing, and listening experience that takes advantage of cutting edge technology to give our users what they want when they want it.
 
As Lime Wire prepares for the launch of our new subscription music service, these are the company’s objectives and we’re determined to work in conjunction with the music industry to achieve them.
 
WPN: A representative for Lime Wire tells us file sharing is not about a battle between file sharers and the music industry, and that technology companies such as Lime Wire can work with labels and publishers to build and deploy services that consumers will like. How do you see this developing?
 
ZZ: Although there’s currently a lot of heated public debate about file sharing I do not view it as battle between file sharers and the music industry.  I have no negative feelings towards the music establishment.  Quite the contrary: I respect the magnitude of challenges that they are facing, because I used to tackle them myself.  It’s not easy to protect a revenue base coming from content when digitization is changing the way your consumers interact with and consume it.   My belief, though, is that technology companies such as Lime Wire can work with record labels and publishers to build and deploy services that consumers will love. One way of accomplishing this is through rolling out the music service that I describe above.
 
WebProNews would like to thank Zeeshan for sharing his responses with our readers. What do you think of Lime Wire’s future plans? Comment here.

 
Related Articles:

> Lime Wire CEO Talks Music Industry & Company’s Future

> MySpace Buys imeem, Rolls it Into MySpace Music

> Interview with Muxtape CEO Justin Ouellette

A while back Lime Wire began making big moves to establish its reputation as a truly legitimate player in the online music industry. They have the LimeWire Store, as well as the recently announced more social version of the file-sharing service, LimeWire 5. 

Chris Crum: Obviously file-sharing programs are often shed in a negative light with constant legal issues from the RIAA, MPAA, etc. What’s the picture looking like on that front these days? Has the tension eased, strengthened, or remained basically the same?
 

George Searle: I am encouraged, on the one hand, to see the music industry move away from their failed strategy of suing individuals, but discouraged, on the other, that their focus has not yet shifted from limiting customers. Having ISPs police and disconnect file sharers will do nothing to help the industry’s position; nor will it put a single penny into the pockets of artists, songwriters and publishers.  The challenge of making money in the digital world will require a more thoughtful process and sensitive, respectful, approach to users.  Lime Wire would like to help the music industry introduce a full range of commercial services to monetize file sharing and harness, rather than alienate, music consumers.

CC: Lime Wire has been forming partnerships such as with The Orchard, IODA, Redeye Distribution, Nettwerk Music Group, IRIS and even Comedy Central. Are there any other big name content partners in the mix at this point?

GS:  We’re very encouraged by our current partnerships, and are working with some of the best here.  We continue to expand these partnerships and work more closely with the partners we currently have. The total number of songs available in the LimeWire Store is now over two million, and greater success will attract further partnerships.  As we’ve said, we look forward to the day we can work together with the entire music industry to help expand their reach and deliver more to the consumer. We’re optimistic that this will happen

CC: Can you talk a little bit about your strategy for getting content partners on board, when the nature of file sharing programs in general have been such a thorn in the sides of these organizations for so long?

GS: What’s happening in peer-to-peer and at LimeWire right now represents a unique opportunity for the music industry.  Together, we have a historic opportunity to build a new future of file sharing that compensates rights holders while maintaining the aspects of technology and community that make P2P attractive.  Our users initiate over 5 billion searches every month.  That’s 5 billion opportunities to reach fans with the right message, the right product and the right price.  We think that P2P can simultaneously support a number of services, including promotion, ad supported, sponsored, subscription, and a la carte paid downloads of music; and have had several promising meetings with Labels to develop a model that will compensate both the Labels and their artists.

CC: How critical of a role do the recently introduced social networking elements of Lime Wire play in future of the company?

GS:  P2P has always been inherently social, and with 5.0 we are bringing social to the forefront.  One exciting feature of 5.0 is that it allows the user to easily set up personal sharing networks on a file-by-file, friend-by-friend basis.  For example, you can share vacation photos with a limited circle of friends or work documents with your colleagues, and discover new files from other members of your social circle. All of this is built off your existing, trusted social contacts through Jabber compatible services like Gmail or LiveJournal.

Thanks to Mr. Searle for the interview. Read my interview with Justin Ouellette, CEO of Muxtape, another important player in the online music industry.

Readers of WebProNews will find my utter disdain of DRM as no secret. As of late, coverage of the music community’s marked disapproval of the practice has become widespread not just at this publication, but throughout the entire blogosphere as well.

At first, the cries against DRM were like voices in the wilderness with no clear direction of how to escape the darkness. As we enter 2007, however, a new day seems to be dawning in the realm of digital music. Perhaps there is a light at the end of the tunnel, a beacon of hope on the horizon that signals the downfall of DRM once and for all.

There are those who would challenge tyrannical music stores like Apple for the sanctity of digital music. Bob Caswell, herald of the people when it comes to taking on DRM, takes an in-depth look at those who would champion the cause:

It has the makings of an anti-DRM Justice League of epic proportions. Think of it, champions of the people standing against the forces of The Man, defending the rights of the consumer when it comes to content which has been bought and paid for within legal channels.

This can’t be music to Apple’s ears. The Lex Luthor of the music community, Apple is already up to its neck in legal woes entering the new year. Now they’re looking at the prospect of legitimate opposition to the restrictive DRM structure that the company has milked for all its worth.

What does a DRM-free alternative mean to the consumer? Choice.

Viable alternatives to the iTunes music store, and even the Zune marketplace, mean that music aficionados have free reign over the content which they purchase.

Pondering a switch from the iPod to the Zune? (Hey, it could happen.) With DRM-free content, you would actually have the ability to take your music with you instead of purchasing songs you already own all over again.

The future is rife with possibilities as more join the cause. With any luck, 2007 just may be the year that DRM dies.

Good riddance.

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Joe is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.

The music industry may finally have reason to jam in joyful celebration. Legal music downloads, led by Apple’s iTunes Music Store, have made significant headway against file sharing services.

In March, 1.7 million households downloaded at least one song from iTunes, about the same as those using LimeWire. A different P2P service, WinMX, had 2.1 million households in March, according to a report from NPD’s MusicWatch Digital service.

Paid downloads from rival services Napster and Real Networks were among the top ten services used to get music by households. Other P2P services like Kazaa, BearShare, Ares Galaxy, Morpheus, and iMesh rounded out the top ten.

“One of the music industry’s questions has been when will paid download stores compete head-to-head with free P2P download services,” said Russ Crupnick, president of the NPD Group’s Music and Movies division.

“That question has now been answered. iTunes is more popular than nearly any P2P service, and two other paid digital music offerings have also gained a level of critical mass.

The report stated that 4 percent of households with Internet access used a paid download store in March. Many of these consumers were over 30, which goes with the common wisdom that older consumers are more likely to be deterred by anti-piracy efforts than younger demographics.

The average age and income of the over 30 group was 33 and $83,000 annually.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.