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Kazaa to Offer Subscriptions
By Brad King
2:00 a.m. April 24, 2002 PDT
Kazaa, the largest file-trading network running, has a new business plan that includes a subscription service, audio and video media advertising -- oh, and an offshore tax haven.
Sharman Networks, the company that purchased Kazaa in January, announced a deal Tuesday with Internet advertising company Double Click, as well as the creation of a new, secure delivery system that will make the company profitable, said Nikki Hemming, Sharman's CEO.
Kazaa, an application that is downloaded onto a hard drive, comes embedded with software from Brilliant Digital Entertainment that allows companies to deliver advertisements. Double Click will then be responsible for selling Kazaa's advertising space, with the two companies splitting profits.
Soon, advertisements will be popping up while you wait. Users will be offered a premium service that allows them to pay for an advertisement- free version of the software, Hemming said.
"This is the next step," Hemming said. "In the next six months, you'll see a premium version of this player. With that, you'll also see some sexy applications added to the Kazaa player."
But Brilliant's software did a bit more than just allow advertisements to be delivered. It created a separated network that would allow companies to push content to Kazaa users. When news of those applications came to light, several users began hacking the Kazaa code, creating a spyware-free application called Kazaa Lite.
In just over two weeks, 80,000 people downloaded the new software. While that makes up less than 1 percent of the total Kazaa downloads over the same time frame, Hemming said her lawyers were preparing to deliver cease-and-desist letters to anyone involved with Kazaa Lite.
"There is a lot of concern around these sites, because they release unstable codes and it puts consumers at risk," said Hemming. "These are scam sites that create software."
Ironically, scam is a word that music industry officials in Australia and the United States have used to describe Hemming's new endeavor. That standing isn't likely to be enhanced after she announced that Sharman is registered in Vanuatu, a group of 80 islands in the South Pacific Ocean between Hawaii and Australia.
The country is one of a number of regions that offer tax havens by withholding account information from other governments and law enforcement agencies. While an international federation is pushing for the elimination of these tax shelters, Vanuatu and others have so far declined to voluntarily change their laws.
Hemming will run the business from Australia through a management company, LES, which will run the day-to-day operations of Sharman Networks and distribute profits from Sydney.
"We have a lot of international investors with international businesses, and (Vanuatu) gives us an easy way for everyone to handle their money," said Hemming.
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Original article
Kazaa
Sharman Networks
O.J.
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