Remembering Kazaa

Napster’s Achilles’ heel

Napster was a giant with feet of clay. Its free on-line music sharing service was an instant success and brought fame to its 18-year old founder, Shawn Fanning. In 1999, Napster went from 1 to 50 million users in just seven months, making it the biggest threat the record labels had ever seen. According to Don Dodge, VP of Product Development at Napster, “they wanted us dead,” so they searched its weakness: Napster used a central server to store the directory of songs shared by its users. When the judge ordered that service closed, the server was simply shut down.

But it was too late. Many people realized that the future of music distribution was on the Internet and dozens of companies filled the vacuum left by Napster. Nearly all of them decided on P2P since they believed that no judge could shut down a central server since it did not exist. The most successful ones angered the record industry and were closed. Except one: Kazaa. It has a fascinating story and its continued law evasion is worthy of a John Grisham novel.

Decentralizing software: supernodes

Many rivals (e.g. Gnutella) realized that radical software decentralization brought problems. Each new search by a user was a new search in all the computers in the P2P network. As user numbers increased, the number of searches rose exponentially, thus jeopardizing the network. Kazaa BV, a Dutch company founded by Niklas Zennström from Sweden and Janus Friis from Denmark, found a solution. Computers logged on to the Kazaa network negotiated among themselves to search for “the best ones”, which then became “supernodes” that served the other users. According to Janus Friis:

We wanted to create a self-organizing network with “supernodes”. Supernodes create themselves spontaneously on the individual users’ computers. Your computer will automatically turn into a supernode if you have a powerful PC and a fast Internet connection. In this way you serve the other users’ searches and improve the efficiency of the network.

This technology was named FastTrack and enabled users to share all types of files, not only music. It was so good that, apart from using it internally, they licensed it to several competitors such as MusicCity, Grokster and Morpheus. Therefore, when the RIAA and MPAA decided to move in, they sued all FastTrack users at the same time. MusicCity, Grokster and Morpheus hired lawyers and prepared for a media and legal battle with help from the EFF. However, Kazaa had other plans: to disappear.

Decentralizing the company: a Pokémon against the RIAA

Three months after the lawsuit, Niklas Zennström disappeared and moved decentralization one step further: to the company’s actual structure. A few days later, he reappeared with a renewed Kazaa. A new company designed to evade the law of the physical world:

  1. Interface: Kazaa BV sold Kazaa’s interface (the name, logos and web sites of Kazaa, Kazaa Media Desktop’s distributor) to Sharman Networks, a company created a few days before with servers in Denmark, no employees (all of them, including CEO Nikki Hemming, had been hired by another company called LEF Interactive) and incorporated in Vanuatu, an island nation in the South Pacific. It is a tax haven with interesting legislation: Vanuatu does not accept international copyright treaties.
  2. Domain: The domain was registered in the name of LEF Interactive, a company incorporated in Australia and which acted as umbrella for Sharman Networks.
  3. Code: The FastTrack nucleus was transferred to another company incorporated in the British Virgin Islands: Blastoise Ltd, the same name as a Pokémon famous for its brutal attacks and its ability to hide behind its tortoise shell when threatened.

I can image the RIAA lawyer’s face when they were asked who they were suing, how much it would cost and how long it would last.

The fall of Kazaa

Kazaa evaded government action and became the most downloaded software in history. And even then, it failed. It never managed to make money despite trying everything:

  • Sale of advertising: The lawsuits scared legitimate advertisers and Kazaa was forced to resort to adware in order to survive. Computer Associates declared it “spyware”. Users got angry. Clones, like Kazaa Lite, appeared and rewrote the software to eliminate adverts.
  • Sale of processing capacity: In 2002, Kazaa tried to convert the computers using FastTrack into a gigantic parallel computer whose processing capacity could be sold. The problem was that it did this without warning users, who got even angrier.
  • Sale of licenses: With Grokster in court, it was impossible to continue selling FastTrack licenses.
  • Sale of products: An improved version called Kazaa+ was launched for $29.95. But more clones appeared, such as Kazaa Gold, an unauthorized alternative that promised “legal” music downloads. By then, user experience worsened due to the abundance of files with porn advertisements and false files.

What could Kazaa do? Sue its clones for breaching its copyright after doing everything possible to evade copyright laws? Sue the users who abused the system under the law that they had tried so hard to evade? In the book “Who controls the Internet?” Jack Goldsmith and Tim Wu state that, since Kazaa has escaped justice in the physical world, it has also undermined the necessary order, security and credibility to attract revenues. What do you think?

Tomorrow: Conclusions.

By David Blanco
Saved in: Internet | 1 comment » | 27 September 2006

One comment in “Remembering Kazaa”

[...] This series of posts is a bit sad because it only talks about governments’ success and the web’s defeat. It didn’t matter whether the key players were idealists, pragmatists or technocrats. They all resisted more or less energetically but were unable to avoid governments’ interference. Despite their initial good intentions: [...]

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