Firm behind eDonkey to pay $30 million to avoid piracy claims

LOS ANGELES - The firm behind popular online file-sharing software eDonkey has agreed to pay $30 million to avoid potential copyright infringement lawsuits from the recording industry, according to court documents filed Tuesday.

New York-based MetaMachine Inc. was one of seven technology firms to receive letters from the recording industry last fall warning them to shut down or prepare to face lawsuits.

Since then, the operators of BearShare, i2Hub, WinMX, Grokster and Kazaa have reached similar agreements.

"With this new settlement, another domino falls, and we have further strengthened the footing of the legal marketplace," Mitch Bainwol, chairman and chief executive of the Recording Industry Association of America, said in a statement.

Under terms of the latest agreement, MetaMachine and its top executives, Sam Yagan and Jed McCaleb, agreed to immediately cease distributing eDonkey, eDonkey 2000, Overnet and other software versions.

The company also agreed to take measures to prevent file-sharing by people using previously downloaded versions of the eDonkey software.

A federal judge in New York, where the settlement agreement was filed, must still give final approval to the terms of the deal.

A call to eDonkey CEO Sam Yagan was not immediately returned.

The eDonkey Web site on Tuesday featured a message from the company telling visitors that the eDonkey2000 Network was no longer available, and a warning that people who steal music or movies are breaking the law.

The message concluded with "Goodbye Everyone."

EDonkey has been the most popular file-sharing network the last two years, but most of the computer users tapping into the hub of linked PCs have increasingly done so using an open-source version of the eDonkey software dubbed eMule, said Eric Garland, chief executive at BigChampagne Online Media Measurement, which tracks online entertainment.

Because many computer users still have functional versions of eDonkey or eMule, it's unlikely the shutdown of eDonkey's business operations will have much of an impact on people file-swapping on the eDonkey network, Garland said.

"These (peer-to-peer) networks have largely moved out of the hands of these companies and into the hands of developers and end users all over the world," Garland said. "A week from now, a month from now, six months from now - we're still going to see eDonkey populations."

Several file-sharing services have yet to reach settlements with the recording industry, including Warez P2P, Limewire and Soulseek.

In August, the recording companies filed a copyright infringement lawsuit against the firm behind LimeWire. That case is pending.