Grokster will stop distributing its peer-to-peer (P2P) software that had been blamed for massive copyright violations and had prompted a lawsuit that ended with the highest US court ruling that it contributed to piracy, the Recording Industry Association of America (RIAA) said.
"This settlement brings to a close an incredibly significant chapter in the story of digital music," said Mitch Bainwol, chairman and chief executive of the RIAA.
"This is a chapter that ends on a high note for the recording industry, the tech community and music fans and consumers everywhere. At the end of the day this is about our ability to invest in new music. An online marketplace populated by legitimate services allows us to do just that."
The RIAA, which spearheaded the legal effort against P2P networks, said that a consent agreement would be presented to court for approval.
"The settlement includes a permanent injunction prohibiting infringement - directly or indirectly - of any of the plaintiffs' copyrighted works," said the RIAA in a joint statement with the National Music Publishers Association.
"This includes ceasing immediately distribution of the Grokster client application and ceasing to operate the Grokster system and software."
In June the US Supreme Court ruled networks such as Grokster might be held liable for infringement if they encourage people to make unauthorized copies of copyrighted songs, films or other content. This opened the door for the music industry to pursue damages.
"The owners and operators of Grokster - like numerous other online services all across the globe - heard nine US Supreme Court justices speak in a unanimous voice - a voice that was heard loud and clear," Bainwol said.
"As the court articulated in no uncertain terms, there is a right way and a wrong way to conduct a business. This settlement makes clear that businesses are well aware when they are operating on the wrong side of that line."
The agreement by Grokster might not stop illicit music-swapping immediately, since millions of people have the software.
The Wall Street Journal, citing those familiar with the company, said that Grokster will likely be acquired by Mashboxx, a legal file-sharing service that has not yet launched.
If so, that would mark a continuation of a trend away from illicit music swapping to services in which customers pay a fee per song or a monthly subscription for copyright compensation.
This includes the new version of Napster, which was transformed into a pay-per-song service after its free service was shut down by the courts. Another P2P service called iMesh has announced "a legitimate P2P business model", according to RIAA, which represents the major record labels including Sony, Warner Music and Universal Music.
Supporters of the P2P networks had argued that holding them responsible for copyright violations would set a dangerous precedent for the technology industry and had urged the court to reaffirm the exemptions set in a 1984 case involving the Sony Betamax video recorder.
© 2005 Agence France-Presse
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