STOCKHOLM – A little-known Swedish software firm has snapped up file-sharing website The Pirate Bay with the hope of turning the source of legal controversy into a money-spinner that appeals to both users and content providers.
Global Gaming Factory X AB, which operates Internet cafes and provides software, said Tuesday that it had agreed to buy Pirate Bay for 60 million Swedish crowns ($7.7 million).
The website made world headlines in April when the three Swedish founders and a financial backer were each sentenced to one year in jail and ordered to pay a combined $3.6 million in damages for breaching copyright law with the free downloading site, which was one of the biggest sites of its kind on the Internet.
Swedish News Agency TT cited one of the founders, Peter Sunde, as saying that the money would not go directly to him or any of the others sentenced in April.
Sunde told TT that the money would be placed in a company outside Swedish borders and it would be used for Internet projects other than downloading sites.
Pirate Bay could not be immediately reached for comment.
Global Gaming said it believed the website was a viable business with its plans for a new, legal business model.
"We would like to introduce (business) models which entail that content providers and copyright owners get paid for content that is downloaded via the site," the company said in a statement.
USERS AS EARNERS
Global Gaming Chief Executive Hans Pandeya told a news conference that the revamped website would generate money via advertising, supplying storage space and helping telecom operators optimize Internet traffic.
He also said users would be able to earn money by supplying storage space, which would encourage people to use the site.
"That's what is interesting. If you can earn money by file-sharing, it's no big deal to pay for what you download," Pandeya said.
Analysts were unimpressed by the move, comparing it to Napster, an online file-sharing site that quickly lost popularity after it started to charge its users.
"It looks like they are going to Napsterize it," said Leigh Ellis, intellectual property partner at Gillhams Solicitors.
Mark Mulligan, vice president at research firm Forrester, said that many of Pirate Bay's around 20 million users would move on to other free downloading options.
"The bottom line is that most people who use file-sharing networks use it because it's free. They are not likely to start paying just because the owners have a new business model," he said.
"There has not yet been a single example of a legal file-sharing network which has made a successful transition to a legal business."