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Following Napster’s Lead, Kazaa Launches Subscription Service; Can Pay Through Phone Bill

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Updated: The latest peer-to-peer downloading service to try its hand at a legal music-subscription service: Kazaa. The company announced plans to go legit in some unspecified way three years ago when it settled its outstanding disputes with the music industry for more $100 million, but seems only now to be getting around to launching the effort full-force. Kazaa will announce a digital-music subscription service Tuesday, according to a report in the Sydney Morning Herald. Kazaa’s website outlines how it will work. For $19.98 a month, users can download unlimited music and play it on up to three PCs as long as they keep on paying up. They also get to download unlimited ringtones to one cell phone. And, as CNET points out, users will have the option to pay for the service through their phone bills — an option that has been discussed for years as a way to minimize friction during the purchasing process and appears to be a first for a music subscription service.

Kazaa seems to be replicating Napster, which was relaunched as a music subscription service after its own legal troubles, and is now part of BestBuy. The strategy makes sense, considering that the peer-to-peer services have big name recognition among a demographic that may have aged slightly but certainly remains interested in music. Indeed, Kazaa representatives tell the Morning Herald that they think customers will be “intrigued to go back to a brand that they spent a lot of time on and lived with for so many years.”

On price, however, Kazaa is going to have trouble competing with Napster and others, like Microsoft’s Zune Pass and Rhapsody. The trend lately has been for subscription services to undercut the competition, and Kazaa is not doing that. In mid-May, for instance, Napster cut the price of its on-demand streaming service to $5 a month. And, like *Microsoft*, it lets users keep some tracks each month.

As we’ve mentioned before, it hasn’t exactly been easy-going for other peer-to-peer companies that have tried to resurrect themselves as legal services. Presumably the next to forge ahead will be The Pirate Bay, which hopes to sell itself to Global Gaming Factory X. The company’s new owner says it wants to compensate content owners and strike deals with all the major content companies.