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Dutch Firm Opens New Front in Music File-Swapping

A Dutch Internet company on Thursday said it had developed software that could be used to compensate musicians whose songs are swapped online, a move it said could cut out the embattled music industry.

PGR BV, a privately held company has its own new file-sharing service known as The Honest Thief and is helping companies start up services like the popular Kazaa and Morpheus services in the Netherlands, which has emerged as something of a haven for such operations.

“We are the first, but certainly not the last, to eliminate the record companies from the equation,” said Pieter Plass, founder of PGR BV.

Last March, an appeals court in Amsterdam ruled that Kazaa was not liable for any abuse of its software, which is being used by millions of people around the world to swap copyright-protected music, pictures and movies.

Plass says his firm has developed software, to be available in the second quarter of this year, enabling file-sharing providers to capitalize on the unused computing power of their members. That in turn would allow them to raise money to compensate artists for the use of their material, he said.

He said the software, known as ThankYou 2.0, enables a peer-to-peer file-sharing client to turn the computers of digital music fans into a node in a network of computers linked through the Internet.

By leasing out the unused processor power on those multiple PCs to research facilities – a technology known as “grid computing” – Plass said the software could generate revenues that would be distributed back to the musicians.

“The record companies are not dead yet, but they’re certainly on life support. And The Honest Thief pulls the plug,” said Plass, who is also chief executive of a construction-management firm in the Dutch city of Arnhem.

Plass said the record industry, which fought a legal battle to shutter Napster and has a lawsuit pending against Kazaa, had been “quite hostile” to his initiative.

Record-label executives believe the Netherlands ruling in favor of Kazaa will eventually be reversed and have said they will press ahead with an effort to enforce their rights world-wide.

“We don’t believe that the Netherlands is a haven for unauthorized peer-to-peer services, and we have every intention of proving it in the courts. It’s hard to see how someone can claim they are making some ‘honest money’ by stealing other peoples’ works,” said Jay Berman, Chairman and chief executive officer of International Federation of the Phonographic Industry.

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