File sharing company Grokster which helped users illegally download copyrighted songs, has agreed to settle a piracy case brought by the music industry and to pay damages of US$50 million.

It has also shut down its Web site, but says it “hopes to have a safe and legal service available soon.”

Its Web site yesterday carried this message: “The United States Supreme Court unanimously confirmed that using this service to trade copyrighted material is illegal. Copying copyrighted motion picture and music files using unauthorized peer-to-peer services is illegal and is prosecuted by copyright owners.

“There are legal services for downloading music and movies. This service is not one of them. Grokster hopes to have a safe and legal service available soon.”

 Wall Street Journal sources say Grokster will probably be acquired by Mashboxx, a legal file-sharing service. Mashboxx has reportedly agreed to pay just $1 for Grokster, plus a small share of future revenue.

The move follows the case in Australia against Sharman Networks, owner of file sharing network Kazaa, whereby the company was found to be offering an illegal service – and is currently awaiting assessment of damages. Sharman plans to appeal that ruling, but the Federal Court has ordered it must block all copyrighted files from being indexed by the Kazaa client by the end of November.

In the US, another file sharing service Napster was forced to shut down after protracted legal battle with record companies.

Yet another P2P company, Morpheus, is reported to be negotiating a settlement.

JBHIFI Pre order Ampere 728 x 90 media Grokster Out Mashboxx In
Wave 728x90px Grokster Out Mashboxx In
Flick of a switch 728x90 1 Grokster Out Mashboxx In
4SQM banner 728x90px SOUL Grokster Out Mashboxx In
Uniden PRO 728 x 90 Grokster Out Mashboxx In
728x90 7 Grokster Out Mashboxx In
720 x 97 1 Grokster Out Mashboxx In
LB 728x90 Grokster Out Mashboxx In
Incase LeaderBoard 728x90 Grokster Out Mashboxx In
Banner Shyla 728x90 Grokster Out Mashboxx In