Audiogalaxy reaches legal settlement

By Ann Harrison
Network World Peer-to-Peer Newsletter, 06/24/02

The Audiogalaxy file trading service recently reached an out-of-court settlement with the recording industry in which the company agreed to obtain permission before allowing users to exchange copyrighted music. The Audiogalaxy software has been downloaded at least 30 million times by users of the system. As of this writing, song trading on the service has halted.

Audiogalaxy had been trying to filter copyrighted music for the last year in an attempt to keep the music industry from filing a lawsuit. This effort failed and a suit was file last month by the Recording Industry Association of America (RIAA), the National Music Publishers' Association and the Harry Fox Agency.

The settlement now requires Audiogalaxy to obtain permission from songwriters, music publishers or recording companies before permitting copyrighted works to be shared on its service. The company must also pay the music publishers and recording industry an undisclosed amount of money to settle the lawsuit.

Since Audiogalaxy has based its service around offering free music, it's unclear how it is going to hold onto visitors to its site if it needs to charge for file swapping - which it most likely will do to appease copyright holders. Presumably Audiogalaxy will launch some sort of digital rights management system and ask users for micro payments as Morpheus is attempting to do.

How Audiogalaxy will compete against the free music files still available on the Web is anyone's guess. No service has yet demonstrated the long-term viability of an effective business model that satisfies the need for a file-trading site to generate revenue while appeasing music fans and copyright holders.

The RIAA is still busy suing a host of other file trading services including StreamCast Networks and its Morpheus software, Madster (which was once known as Aimster) Kazaa BV, Grokster, and MP3Board.