Swedish company to buy Pirate Bay

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.