Kazaa and the Recording Industry Ass. of America (RIAA) have settled out of court in a deal which will see the P2P operation hand over $100m to the industry. It'll now join fellow former industry pariah Napster as a fully paid-up digital music distributor.

Kazaa's parent company Sharman Networks will cough up the damages to the recording industry's four biggest players - Universal Music, Sony BMG, EMI and Warner Music.

The Kazaa takedown was particularly important for the industry because of the operation's successful business model, which was supported by advertising. At its peak Kazaa had 4.2m users.

International Federation of the Phonographic Industry boss John Kennedy said: "Kazaa was an international engine of copyright theft which damaged the whole music sector and hampered our industry's efforts to grow a legitimate digital business.

"It has paid a heavy price for its past activities. At the same time Kazaa will now be making a transition to a legal model and converting a powerful distribution technology to legitimate use."

RIAA CEO Mitch Bainwol said: "The winners are fans, artists and labels and everyone else involved in making music, and our partners in the technology community." ®

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