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'Honest Thief' confronts music industry

Dutch company PGR says it "will become to file sharing what the Swiss are to banking." It's the latest threat to the entertainment and recording industry.

A Dutch company calling itself an "honest thief" has become the latest threat to an entertainment and recording industry beset by swelling numbers of file-swapping services.

Operating in the Netherlands, Internet services company PGR--doing business as The Honest Thief--plans in the spring to license its software and provide legal advice to others who hope to set up the newest incarnation of peer-to-peer services.

The recording industry has succeeded in dismantling services like Napster and Aimster by taking legal action in the United States. But The Honest Thief, whose Web site went live on Friday, plans to take advantage of a Dutch appeals court ruling last March that essentially paved the way for the Netherlands to become a legal haven for file-sharing activities.

The appeals court said that file-swapping service Kazaa was not responsible for the illegal actions of people using its software. That decision is being appealed to higher court.

"Call it file-sharing or shoplifting, here in Holland we call it good business," Pieter Plass, founder of The Honest Thief, said in a statement. "With our file-sharing service and our new software, we hope The Honest Thief will become to file sharing what the Swiss are to banking."

The music industry sees things differently.

"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," said Jay Berman, chief executive of IFPI, the trade group representing the international recording industry and an affiliate of the Recording Industry Association of America. "It's hard to see how someone can claim they are making some 'honest money' by stealing other people's works."

Although only a few nations have shown permissiveness toward file-swapping service, the ruling underscored the mounting pressure on the copyright industry's struggle to retain control internationally of protected intellectual property such as music, movies and software.

"After two-plus years of legal wrangling with peer-to-peer sites, the file-sharing services' technology and business models continue to evolve in such a way as to circumvent U.S. legal rulings," said Lee Black, an analyst at Jupiter Research. "The fact that it continues to move into international areas will always pose a problem for the industry--these things keep sprouting up, and consumers keep finding the content they want."

The industry continues to target other players, including Grokster, Morpheus and Sharman Networks, Kazaa's owner. But despite weakening file-swapping services through the courts, the industry faces a continuing threat.

Figures released on Thursday by Ipsos, a market research firm, showed that that despite efforts to curb illicit file sharing, half of all teens and 19 percent of all Americans over the age of 12 reported having downloaded music from file-swapping services in 2002.

Ipsos added that almost 10 percent of Americans reported downloading music in the past 30 days. Using the findings from its survey, Ipsos extrapolated U.S. census data from 2000, which suggested that nearly 20 million people have downloaded music illegally in the past 30 days.

For instance, Kazaa's software has been downloaded at least 192 million times, according to Download.com, a software aggregation site owned by CNET Networks, publisher of News.com. Many of those downloads have been upgrades or duplicate copies, however.