Kazaa suspends file-swapping service

Kazaa said Wednesday that it took the step to avoid paying a fine that stems from a November court order, which requires it to bar people from swapping digital files of copyrighted music or face a fine of $39,620 (45,000 euros) per day. The fine was supposed to take effect in December, but it has yet to be enforced.

By halting downloads, "Kazaa took the most drastic measure it can imagine," the company said in a statement.

The decision to block downloads of the current software doesn't stop people from using previous versions to trade files. Nor does it stop people from downloading essentially the same software from other licensees of the technology and tapping into the same file-swapping network.

But it may help test legal systems' ability--and desire--to distinguish between operating a file-swapping network, as Napster did, and distributing software that contributes to copyright infringement.

Kazaa, like StreamCast Networks' Morpheus and Grokster, is being sued in the United States for contributing to copyright infringement, much as Napster originally was.

But Kazaa has also brought its own Dutch lawsuit against Buma/Stemra, a publishers' and songwriters' copyright organization. The two sides have been negotiating for several weeks but have been unable to reach an agreement.

Although these suits are similar to the case launched against Napster in 1999, Kazaa, Morpheus and Grokster may prove to be more difficult to shut down. Unlike Napster, the Kazaa file-trading service can theoretically operate without the company's intervention. Individual computers link to each other and swap files directly without transmitting searches through a central server at the company. Kazaa provides information that helps computers link up, but this isn't essential to the network's survival.

Halting distribution of the software on its site prevents some people from getting the latest version of the software, but it will do little to stop the actual trading. The company is nevertheless hoping a Dutch judge will rule later this month that it has done as much as it can to stem the flow of trading and will defer the penalties.

The Kazaa software has been one of the most popular downloads on the Net in recent months, with more than 960,000 copies of the program downloaded in the last week alone, according to Download.com, a software site run by News.com publisher CNET Networks.

Like Napster did before it, Kazaa is appealing to its millions of users for help, asking for people to write lawmakers or the copyright organizations suing it.

"We're under attack and we need your help," the company wrote on its Web site. "If Kazaa bows to the pressure that the major entertainment companies are putting us under, you will no longer have the freedom to transfer information."

John Borland reported from San Francisco and Jasper Koning reported from Hilversum.