IP: Now tell me why this is at all ethical -- they sent a virus!!

[David Farber <dave () farber net>]

April 3, 2002
In Free Music Software, a Hidden Fee-Based Service
By MATT RICHTEL


Twenty million users of Kazaa, a popular Internet network that lets people 
freely exchange music files online, have unknowingly received software that 
could make them participants in a second network — one that plans to charge 
them fees for access to songs, movies and other media.

The pay software's creator, Brilliant Digital Entertainment (news/quote), 
said that it intended to send an update to the users' computers to activate 
the pay network, called Altnet, within the next six weeks.

Kevin G. Bermeister, chief executive of Brilliant Digital, which is based 
in Los Angeles, said that users of Kazaa would be given the option of 
activating Altnet.

Any user who decided to do that would then have two simultaneous networks 
running: the one the person initially chose, which allows the free exchange 
of songs, and another that would charge for songs.

Mr. Bermeister said Altnet would provide a platform through which record 
labels and other media companies could charge for their copyrighted material.

The online music experience will "be back in the content owners' control," 
he said.
Although that might be thought to please record companies, a spokesman for 
the Record Industry Association of America, Matthew J. Oppenheim, said the 
industry was still trying to understand the deal.

The industry has sued Kazaa, saying its service abets rampant music piracy, 
which costs the record companies tens of millions of dollars.

There was also no clear explanation of why consumers would want to pay for 
songs on Altnet that they could already get at no charge through Kazaa.

Mr. Bermeister said users might be persuaded to purchase songs because they 
would find the quality of those songs — which would be monitored for 
quality — higher than the quality of the music copies they downloaded from 
strangers.

The Kazaa network is operated by Sharman Networks, based in Sydney, 
Australia, and Brilliant Digital is a Sharman partner.

To a typical consumer who downloaded Kazaa from the Web, Brilliant Digital 
was largely invisible. It was the provider of software used to display 
advertising to users of Kazaa, which was supposed to be supported by 
advertising.

The inclusion of software to create a second network — embedded within the 
Brilliant Digital software — was first disclosed yesterday on CNet's News.com.

The Brilliant Digital plan also envisioned compensating some users who 
would permit their computers to be used as special hubs for the 
distribution of content like advertising and music files. That disclosure 
quickly brought hundreds of online comments, many of them critical, from 
Kazaa users who objected to what some described as "sneakware."
Mr. Bermeister said the inclusion of the Altnet component had been done 
with the full knowledge of Sharman Networks and its chief executive, Nikki 
Hemming.

Mr. Bermeister said that he and Ms. Hemming were close friends and that he 
had encouraged her to make Sharman's investment in the Kazaa technology. A 
spokesman for Sharman Networks declined to comment on the issue.

Brilliant Digital filed a statement with the Securities and Exchange 
Commission to explain its intention to deploy Altnet. It said the company 
was doing so with cooperation from Sharman Networks.

But the move raises the question of whether the Altnet network could 
supersede Kazaa; Mr. Bermeister was apparently retained to build an 
advertising base for Kazaa. Mr. Bermeister said it was possible that "to 
some extent" Altnet would make Kazaa irrelevant.

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