The Pirate Bay, a file-sharing site entangled in a court case over pirated music, will be bought by a Swedish software company.
Global Gaming Factory X (GGF) announced the deal Tuesday. The company, which provides digital distribution tools for Internet cafes, will buy The Pirate Bay for cash and shares amounting to $7.76 million. The acquisition is expected to be completed in August.
The Pirate Bay, a BitTorrent tracking site, is involved in a legal battle with major copyright holders, including Warner Brothers, MGM, and Columbia Pictures. In April, the Web site's founders were convicted by a Swedish court of copyright infringement, ordered to pay nearly $4 million, and sentenced to a year in jail. The defendants appealed the decision and were denied a retrial last week.
Hans Pandeya, chief executive of GGF, said in a statement that his company is looking for a business model that will pay copyright holders for content downloaded from The Pirate Bay.
"The Pirate Bay is a site that is among the top 100 most visited Internet sites in the world," said Pandeya. "However, in order to live on, The Pirate Bay requires a new business model, which satisfies the requirements and needs of all parties, content providers, broadband operators, end users, and the judiciary. Content creators and providers need to control their content and get paid for it. File sharers need faster downloads and better quality."
Also, GGF said Monday that it will acquire Peerialism, a peer-to-peer distribution and storage software company, for cash and shares equivalent to $12.9 million. Peerialism's technology will be incorporated into Pirate Bay's site.
"Peerialism has developed a new data-distribution technology which now can be introduced on the best known file-sharing site, The Pirate Bay," Peerialism Chief Executive Johan Ljungberg said in a statement. "Since the technology is compatible with the existing (technology), it will quickly allow for new values to be created for all key stakeholders and facilitate new business opportunities."
A blog post on the Pirate Bay site said that the organization was being sold for a "great bit underneath its value" to ensure it went to "the right people with the right attitude." The four Pirate Bay founders will be kept on as staff in different capacities. They said that they will still have some input into running the site and that users should not expect radical changes.
"If the new owners will screw around with the site, nobody will keep using it," the founders said the blog post. "That's the biggest insurance one can have that the site will be run in the way that we all want to."
Despite the apparent influx of cash, Pirate Bay co-founder and spokesman Peter Sunde told Swedish Radio, SR, that it won't be used to pay their fine.
"We are not getting the money, so we cannot pay any fine," he said.
Tom Espiner of ZDNet UK reported from London. CNET News intern Erik Palm contributed to this report.
Correction at 8:45 a.m. PDT: The purchase price for Peerialism has been fixed.
Swedish police on Friday reported making a major Internet piracy bust.
Authorities said they seized computer equipment belonging to a Stockholm-area man whom they suspected of violating local copyright law. The police, who carried out the raid on February 9, only disclosed the news Friday.
"We made a bust. A server and computers have been taken and are being analyzed now," said Mats Johansson, a precinct commander in Stockholm, told CNET News in an interview.
Johansson said the man, whose identity was not disclosed, was questioned and subsequently released. He is now the target of an investigation by government prosecutors.
The seized server contained 65 terabytes of digital data, consisting of films, TV series, computer programs, and the music equivalent of 16,000 movies, according to the Antipiracy Agency, an organization based in Sweden that's supported by a consortium of film and game organizations to fight Internet piracy.
The server was located in Brandbergen, south of Stockholm, the Swedish capital. The police raid took place just before the individuals behind The Pirate Bay Web site went to court to defend themselves against charges of helping millions of Internet users illegally download copyright-protected movies, music, and computer software.
The Pirate Bay has not been accused of being behind the site. Still, Peter Sunde, a spokesperson for the file-sharing site, said in an interview with the Swedish news site SvD.se that he did not believe the claims made by the Antipiracy Agency, which described the Stockholm arrest as the biggest digital copyright bust in the nation's history.
"More than 800,000 people have uploaded files to Pirate Bay, so I do not believe it is the source of the entire problem," Sunde told SVD.se. "But it is possible that it is a significant source."
The Antipiracy Agency claimed that the server was part of the Nordic FTP ring called "Sunnydale," comprising 10 servers. After the bust, the ring went down and could not be accessed online.
The Antipiracy Agency said that despite the site's high security, it was able to secure the evidence it needed, which it then turned over to police.
"The well-organized pirates on the scene seemed to have overestimated their ability to hide their identity and location, but the bust showed that we could find the responsible entity," Henrik Ponten, a lawyer who works for the Swedish Antipiracy Agency, said in a statement released to the press.
Attempts by CNET to reach The Pirate Bay for comment Friday were unsuccessful.
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