update: date=November 2008

Kazaa Media Desktop (once capitalized as "KaZaA", but now usually written "Kazaa") is a peer-to-peer file sharing application using the FastTrack protocol and owned by Sharman Networks.

Kazaa is commonly used to exchange MP3 music files over the Internet. However it can also be used to exchange other file types, such as videos, applications, and documents. The official Kazaa client can be downloaded free of charge, however, it is bundled with adware and spyware, even though there are "No spyware" claims found on Kazaa's website. Throughout the past few years, Kazaa's developing company has been the target of many copyright-related lawsuits.

History

Kazaa and FastTrack were created by Niklas Zennström, Janus Friis, and Priit Kasesalu (all of whom were later to create Skype and later still Joost). It was introduced by their Dutch company Consumer Empowerment in March 2001, near the end of the first generation of P2P networks typified by the shutdown of Napster in July of 2001.

Initially, most users of Kazaa were users of the Morpheus program, formerly a client of MusicCity. But once the official Kazaa client became more widespread, its developers used their ability to automatically update it, changing the protocol in February 2002 to shut out Morpheus clients when its developers failed to pay license fees. Morpheus later became a client of the Gnutella network.

Consumer Empowerment was sued in the Netherlands in 2001 by the Dutch music publishing body, Buma/Stemra. In November 2001, the court ordered Kazaa's owners to take steps to prevent its users from violating copyrights or else pay a heavy fine. Consumer Empowerment responded by selling the Kazaa application to a complicated mesh of offshore companies, primarily Sharman Networks, headquartered in Australia and incorporated in Vanuatu. In late March 2002, a Dutch court of appeal reversed an earlier judgment and stated that Kazaa was not responsible for the actions of its users. Buma/Stemra lost its appeal before the Dutch Supreme Court in December 2003.

However, the legal problems for Kazaa were only just beginning. Kazaa's new owner, Sharman, was sued in Los Angeles by the major record labels and motion pictures studios and a class of music publishers. The other defendants in that case—Grokster and MusicCity (makers of the Morpheus file-sharing software)—initially prevailed against the plaintiffs on summary judgment (Sharman joined the case too late to take advantage of that ruling). The summary judgment ruling was upheld by the Ninth Circuit Court of Appeals, but was unanimously reversed by the US Supreme Court in a decision titled MGM Studios, Inc. v. Grokster, Ltd..

Following that ruling in favor of the plaintiff labels and studios, Grokster almost immediately settled the case. Shortly thereafter, on 27 July 2006, it was announced that Sharman had also settled with the record industry and motion picture studios. As part of that settlement, the company agreed to pay $100 million in damages to the four major music companies—Universal Music, Sony BMG, EMI and Warner Music—and an undisclosed amount to the studios. Sharman also agreed to convert Kazaa into a legal music download service.Like the creators of similar products, Kazaa's owners have been taken to court by music publishing bodies to restrict its use in the sharing of copyrighted material.