Organisation: Kazaa

Analysis and commentary by Echo Research.

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Kazaa's #61 million settlement to the record companies last week appeared to signal an important victory for the music industry and the continuing demise of illegal downloading services. Headlines and comment were heavily unsympathetic to the peer-to-peer network: "Kazaa clobbered" (bbc.co.uk, 27/7), "Kazaa pays #61 million pirates' penance" (Guardian, 28/7), "When you once managed four million simultaneous users … and had your software downloaded 239m times you must expect to get it in the neck" ( www.trustedreviews.com, 28/7). Record industry reaction was predictably triumphant: "There are very substantial damages being paid … Kazaa will go legal immediately" ( www.reuters.co.uk, 27/7). And with Kazaa's statement that it would develop a new business model for the benefit of both customers and artists, it appeared the settlement marked a "big step forward in the development of a vibrant, legitimate digital music marketplace" ( www.hitheads.com, 27/7).

But further comment revealed a less clearcut picture for the future of downloading, legal and illegal, and Kazaa itself. Analysts claimed that the music industry's victory was pyrrhic, technology had already moved on, and illegal downloading would continue. More crucially, Kazaa was dismissed as "small fry" ( www.pcpro, 27/7) and "past its prime" ( www.reuters.co.uk, 27/7). It seems going straight may not be so straightforward for the former music pirate.