Kazaa CEO goes on the defensive
Mon Nov 17, 6:48 AM ET

By Jefferson Graham, USA TODAY

When the music industry began suing song swappers in September, Kazaa was characteristically quiet. It is the most popular peer-to-peer program, enabling users to swap free songs, movies and games that owners contend should be paid for. Nearly 300 million copies of the software have been acquired at Cnet's Download.com, and Kazaa says it has 60 million users. Kazaa CEO Nikki Hemming has ducked most media, until now. Wednesday, she's going public with a high-profile advertising campaign in newspapers, aiming to mobilize Kazaa users to fight back.

Hemming says she's trying to push Kazaa toward respectability by also offering paid, licensed downloads, which began in early 2002. Prices range from 99 cents a song or $4.99 for an album to $2.99 for movies. Major music labels have refused to sign on, but some independents have joined, mostly rappers. Hemming spoke with USA TODAY's Jefferson Graham by telephone from Australia. Edited excerpts:


Q: You rarely do interviews. Why now?


A: Being based in Sydney, I'm usually asleep when you're awake, so we've tried to communicate with press releases. But what we've done has been taken for granted, and our message needs to be shared.


Q: What's the idea behind the ad campaign?


A: We've been trying to get a positive solution with the entertainment industry for 18 months and have heard nothing but deafness. It's time to take a constructive stand and speak up for consumers. We want to encourage our users to buy the licensed content on Kazaa and mobilize them to write to lawmakers and the music industry.


Q: Let's play devil's advocate. The labels, who are suing Kazaa for copyright infringement, call you a "pirate." Why should they talk to you when so many people use your software to download songs instead of buying them?


A: We don't have the technical capability to stop that. What we can do is use our program to promote the content (people pay for). That sends a very strong message to consumers. Artists like Ice-T, Chuck D. and Russell Simmons are doing very well with us. The principle is now established that we can get consumers to buy. Imagine how many millions of artist dollars have been left on the table by the industry. The consumer has chosen peer-to-peer technology as their preferred method of obtaining content. I don't buy that everything about P2P is theft.


Q: Some studies have said use of services like Kazaa fell after the Recording Industry Association of America (news - web sites) sued 340 individuals for song-swapping. What's your take on the effect?


A: There's total confusion in the marketplace, but the number of users we have online at any given time, 4.2 million, is as strong as ever.


Q: The RIAA's hope is that people stop sharing songs on services like yours and ... go on to for-pay alternatives, such as Apple's iTunes Music Store. What happens to Kazaa if people do that?


A: The prospect of 60 million worldwide users stopping the use of technology they've been supporting for two years is a scenario that will never play out. Sharing content over the Net is a common thing, not just through us. Peer-to-peer is the most efficient way to share files. It's a normal thing to do. The core issue is consumer behavior, and whether 60 million users are criminals. I'd say that's just totally incorrect.


Q: Many people shy from programs like Kazaa because of the ad pop-ups that can take over your computer. What are you doing about that?


A: We sell a commercial-free version for $29.95. Otherwise, it's the traditional commercial model. The program is free, in exchange for advertising. The consumer proposition is simple. Buy it or get a few ads, six pop-ups in a 24-hour period. That's much better than how it works with commercial television.

If they really DID call Nikki a pirate,
she should sue them for defamation, and make them prove how she fits into USC Title 18, Chapter 81, Section 1652.
(You knew I was gonna post that , righ?)
~Coe

~Code..sorry

Thanks for posting the article, it jut a bummer that i don't get credit for finding it.

I enjoyed this article, but its too short.

I do like the fact that i am going to see kazaa advertising, because right now, the RIAA doesn't get any money from kazaa, and kazaa whether we like them or not, helps us because ppl are able to access music like George Ziemann's which in turn hurts the RIAA and there control.

Hey Code,

I'm sure the idiots at the RIAA would argue that because Australia is an Island they can be considered on the "high seas" and that trading files constitutes "robbery" so that's why they can call them a pirate.

To me it's at most copyright infringement (although hardly since the same content can be recorded digitally from the radio...hmm maybe we should sue the makers of radio technology too...yeah right), which is not mentioned in Title 18 as piracy, and Kazaa can't be held accountable for each users decisions. The technology by itself isn't illegal.

Nikki is high and she reeks of desperation.

lol...still you have those pesky murder and robbery elements of piracy...

Going to give directive credit
"Posted by directive"

she's probaqbly frustrated at the industries silence and is taking it public to force them to listen.

BTW Code I put a little special something in my project just for you about piracy

"she's probaqbly frustrated at the industries silence and is taking it public to force them to listen."

Yeah, but the record companies will NEVER do business with Kazaa. It really cracks me up that the P2P's ever even thought that they had the slightest chance of getting a licensing deal.

She is desperate because her user base is dropping and that means her advertising rates are dropping.

agreed mroop. she's trying to play both ends and it's not working.

The industries throwing a two year old type tantrum, taking their ball and going home because the P2P networks wouldn't play by their rules

Maybe. But if I was one of these big companies, I would probably choose to do business with Apple, Microsoft, Walmart, etc. than these companies who in reality are making their advertising dollars by trading in other people's copyrighted material. People like Wayne Rosso who say things like, "We have your customers" - no company is going to cozy up to a guy like that who is rubbing their noses in dirt. Why work with them when there are so many other companies who want licenses? Yes, they have big user bases, but the users are using them because their "product" is free.

"Yes, they have big user bases, but the users are using them because their "product" is free."

Sounds a lot like radio to me.

"Sounds a lot like radio to me."

Really? Please tell me a radio station that will play the songs that I choose. That sounds pretty cool.

"Please tell me a radio station that will play the songs that I choose."

Take your pick. You could call and request, or just wait and tape record the songs you like. There are oldies, pop, rock and rap stations to tune into. My point is that the labels should treat Kazaa more like radio and cash in that way, and get a slice of any advertising revenues generated (They are already cashing in by gathering statistics about the songs that are hot on Kazaa and refining their CD marketing based on this data).

But that's just one idea. There are many more. The reason this site exists is because the RIAA members won't adapt to changing technology, period.

"Take your pick. You could call and request, or just wait and tape record the songs you like. There are oldies, pop, rock and rap stations to tune into."

Call in a request? LOL It sounds like you don't know much about radio. Since P2P's are the same as radio, why don't we just outlaw P2P's and stick with radio?

"My point is that the labels should treat Kazaa more like radio and cash in that way, and get a slice of any advertising revenues generated"

Kazaa wants licenses. They are not offering slices of advertising radio. The point is: why should any company do business with Kazaa when there are companies like Apple, Microsoft and many others to choose from? The answer is: There is no reason to do business with Kazaa.

"The reason this site exists is because the RIAA members won't adapt to changing technology, period."

That's your opinion. The RIAA is now licensing to many sites. They are coming online all the time. Do you read the news? I would say this site exists because of the business practices of the RIAA, not because they "won't adapt to changing technology." They are adapting, you are parroting last years' argument. Get with the times.

"Since P2P's are the same as radio, why don't we just outlaw P2P's and stick with radio?"

Because the RIAA controls the radio content.

"...why don't we just outlaw P2P's and stick with radio?"

1. The Constitution and the Bill of Rights.
2. For the same reason we dumped the horse and buggy for the motor car.

"Kazaa wants licenses. They are not offering slices of advertising..."

1. How do you know that? Inside info?
2. If true, it's because the RIAA won't work with them or allow anything else.

"I would say this site exists because of the business practices of the RIAA, not because they "won't adapt to changing technology.""

LOL!
A distinction without a difference if ever I heard one!

"Because the RIAA controls the radio content."

They do control the major stations. But if you are lucky to live in a metropolitan area there is still great radio. I like WFUV and they stream on the net at wfuv.org

tds67 - The point is, as I have said previously, there is no reason to do business with Kazaa when there are so many other companies to do business with - simple as that.

"A distinction without a difference if ever I heard one!"

You think that adapting to technology is synonomous with business practices? I can see this is a pointless discussion.

Six pop-ups in a 24-hour period? More like six pop-ups every five seconds.

"The point is, as I have said previously, there is no reason to do business with Kazaa when there are so many other companies to do business with - simple as that."

I admit, that is pretty simple. Too simple. Should Coca-Cola not sell to some grocery stores because they're already doing business with many others? Of course not. MORE business is always better than LESS business!

"You think that adapting to technology is synonomous with business practices?"

In this case, yes. Forcing consumers to buy CDs at inflated prices while resisting selling licences to all online music resellers is both bad business and yesterday's technology.

"Should Coca-Cola not sell to some grocery stores because they're already doing business with many others?"

Bad example. The reason Coke wants to be in a lot of stores is so that they can be in close geographical proximity to their customers. This is not applicable to the internet, where all stores are the same distance from the end user.

"Forcing consumers to buy CDs at inflated prices while resisting selling licences to all online music resellers is both bad business and yesterday's technology."

Wrong again. It won't matter if they license to every online site, as long as they license to enough online sites, and that will happen. If anything, it can be argued that the RIAA is adapting to technology TOO MUCH - see DRM.

I know I shouldn't say this cause I'll get slammed but

The industry does not want to adapt to new technology UNLESS it can completely control it like it does with every other kind of distribution like George said. that's why they won't do business with Kazaa. The industry wants to do it ALL their way. The other so called legitimate sites that are licenseed pay virtually all of their earnings to the industry who then does what it always has done for years, screw the artists. The reason the sites seek the licensees is because it's a lost leader for them to sell other items to make a profit on... for example Apples Ipod

well kazaa sould have market shar
weather it's from the big what is it now 3? lol or from some thing els is not the point kazaa will surive on indapendent sale of records/movies
thay will get many other licensing aggements from the smarter indapendents of the world
and the riaa will drop in market shar along with this incress in kazaa market shar
if kazaa gose public and asks the public at large to wright there state reps
about changing copyright/licensing
then it may change the way the public at large sees the big 3/5/4 or what ever thay are now
and it may help bring the riaa to thair knees

we can only hope

so my point is kazaa is hear to stay
the riaa is hear to stay also as this artical explanes hear http://www.boycott-riaa.com/article/9017
we can hrut the riaa but we will not be able to destroy it becose thay have to many companeys backing them inclueding hollywood (hollywood likes putting thair music in thair movies)
so keep up the good fight folks you are makeing the a bit more poor and so is kazaa but i might start a www.boycott-kazaa.com
thay are just about as bad as kazaa
and o yea pirate the word will not stop becose the riaa not go away :0P

That's probably why the big labels still use the middleman to sell their songs. they could easily set up their own pay for download site but having Apple, Microsoft, Walmart etc.... do it for them. These companies spend the money while the labels rake in virtually all of the profits. a very sweet deal

I see that Nikki Hemming is hung up on this 99 cents per song "standard" too. How did this get to be the default standard per track?

"six pop-ups in 24hrs"

err... more like 6 in 24 seconds...

I still say The RIAA should Boy out KaZaA, they would make so much money with the advertising that they wouldn't need cds anymore, but then again The RIAA is a bunch of morons so they have no clue to what is good for them.

YAARRGGGH!
Pirates Ahoy!

Yarrgh, wasn't it Clinton that said "it takes a pillage"?

Just heard CD sales were up, but so is the number of P2P traffic.

YARRGH me thinks we need to run up the skull and bones.

It's good that Nikki intends to start taking public relations with her P2P users more seriously. But rather than go on the defensive (as the title of this article implies) I think she should go on the offensive by attacking the unfairness of existing copyright laws (both the life of the copyright and the draconian penalties).

She should not say that all copyright law is bad; copyright law is needed to fulfill its original purpose, to "promote the creation" of works, etc. But if there were recorded content in the public domain, then P2P users could freely trade such public domain content (along with copyrighted content if the creator gives permission) without fear of being sued (or fined) for copyright infringement.

The copyright laws are the real root of the problem (that is where the RIAA derives its power) - and Nikki & other P2P execs should launch a huge publicity campaign to highlight the unfairness of copyright law. This will be most likely to persuade the baby boom set that the RIAA doesn't have all the 'moral chits' on its side.

compmore...many thanks my friend!

You're doing some great work on that project..
~Code

As compmore said, the RIAA does not want to do business unless it can completely control every aspect.

They've already done it with radio and tv(BET, MTV, VH1, Clear Channel).

They want to get rid of free P2P such as Kazaa, Grokster, Imesh, Morpheus, Limewire, Bearshare, etc not because it hurts their sales(it doesn't), but because when they launch their full scale online music store, theirs will be the only one around.

I must say that the 6 pop ups in a 24 hour period is a lie. you get about 6 per hour at times. I would have no problems with 6 pop ups per hour. My problem is spyware. You use kazaa your computer resources get eaten up and your computer runs slowly. Spyware sends information out such as what web pages you visted sure the problem is someone can use spyware to send stuff out such as credit card information, and this spyware always run even when kazaa is not running. Thats why I used kazaa lite for a long time, I dont use it anymore, but if you installed kazaa lite instead of kazaa your computer will run much faster then it would with kazaa, and even if your not running kazaa becuase you installed it the is always running and your computer runs slower, if you uninstall kazaa the spyware does not get uninstalled, This is why I used kazaa lite, if the only problem was a few pop ups once in a while when the program is running I wouldnt have a problem, spyware is a security risk and I wont have it installed on my computer.

Dont get me wrong she makes some good point here but I dont agree with spyware. like I suggested before if you make people sign up for a 1 year plan at $5 a month to download all the radio played they desire they would make back more money then they claimed they lost. Most of what people download are radio singles, becuase they dont want the whole album and although you can be some singles there are some single songs that dont sell singles, you have to buy the whole album to get the song, why not let them download that and from there you can charge for other songs and albums, at reasonable prices. if they want 1 song fine charge then $1 if they want to buy more offer them better deals for the packages with more songs. You have to make sure they have a 1 year plan otherwise people will download like 300 songs in a month and then cancel there membership and subscribe again when they want more songs.

mroop

"The RIAA is now licensing to many sites. They are coming online all the time. Do you read the news? I would say this site exists because of the business practices of the RIAA, not because they "won't adapt to changing technology." They are adapting, you are parroting last years' argument. "

Oh? Let's see you pay for and download an MP3 file from any of these sites. It can't be done because THEY AREN'T OFFERING IT! I don't want a windows media file, and I don't think that the offering of 99cents each is a fair price either.

-----------------------------
"Take your pick. You could call and request, or just wait and tape record the songs you like. There are oldies, pop, rock and rap stations to tune into."
-----------------------------

Now, now,Tds67. Radio request shows don't completly let you get your choice music, by album, by genre, in the best quality, and for free.


Try your local public library instead.