Kazaa

Kazaa was the file-sharing network that inherited Napster's crown in 2001, built by Niklas Zennström and Janus Friis on their FastTrack protocol and famously bundled with adware. Sued worldwide, its operator Sharman Networks settled for over $100 million in 2006 and went legal; the service faded out around 2012.

Timeline

2001

March 2001 Launch

Kazaa launches on FastTrack

Decentralised P2P; no central server to shut down.

2002

January 2002 Acquisition

Sold to Sharman Networks

Ownership moved offshore amid Dutch litigation.

2003

2003 Peak

The world's most downloaded software

Kazaa Media Desktop tops download charts for years.

2004

6 February 2004 Legal

Australian raids on Sharman Networks

Music-industry investigators raid Kazaa's Sydney offices and homes of executives.

2005

27 June 2005 Legal

MGM v. Grokster reshapes P2P liability

The US Supreme Court's inducement standard leaves FastTrack-style networks legally doomed.

5 September 2005 Legal

Australian court rules against Sharman

Kazaa found to authorise copyright infringement.

2006

27 July 2006 Legal

Kazaa settles for over $100 million and goes legal

Global settlement with the major labels.

2012

2012 Shutdown

The legal Kazaa service quietly disappears

The subscription reboot never found an audience.

Ownership

Consumer Empowerment 2001–2002 Founded Zennström & Friis; sold under Dutch legal pressure

Sharman Networks 2002–2012 Acquisition, undisclosed Incorporated in Vanuatu, run from Australia

Key figures

Metric	Value	As of	Confidence
Downloads ▲	389 million	July 2006	Estimated Cumulative client downloads widely cited around the settlement

Confirmed official figures · Reported media, cites a source · Estimated analyst or our estimate

Why it shut down

Official line: Sharman Networks settled global piracy suits for over $100 million in July 2006 and converted Kazaa to a licensed music service, which faded away and quietly disappeared around 2012.

Our analysis: Kazaa inherited Napster's users and Napster's lawsuits. Its FastTrack network had no centre to unplug, so the industry sued the company across three continents until the 2006 settlement gutted it. The legal successor service never mattered; its founders had already used the same P2P stack to build Skype.

History

Heir to Napster

Kazaa launched in March 2001, built in Amsterdam by Niklas Zennström and Janus Friis with Estonian engineers on their FastTrack protocol: decentralised supernodes, no server to seize. When Napster went dark that July, Kazaa caught its users, adding video and software sharing, and its installer's bundled adware became as famous as the downloads. Facing Dutch litigation, the founders sold the operation in 2002 to Sharman Networks, a company structured across Australia and Vanuatu specifically to be hard to sue.

Sued on three continents

It was sued anyway: by Dutch rights groups, by the RIAA and MPAA, and in Australia, where a 2005 federal court ruling found Sharman authorised infringement. In July 2006 Sharman settled globally for more than $100 million and promised a licensed Kazaa; the resulting subscription music service was ignored and quietly vanished around 2012. The real epilogue happened elsewhere: Zennström and Friis took FastTrack's peer-to-peer architecture and built Skype on it in 2003, turning the machinery of the piracy wars into a $8.5 billion telecom product.