In this case the check writer is LimeWire, the once-huge file-sharing operation that finally shut down last year under court order. The company handed over $12 million to Warner Music Group last quarter as part of the $105 million settlement it reached with big music labels last spring.

If you argue, as Warner Music and the other labels previously had, that LimeWire was responsible for more than $1 billion worth of damage, then the check won’t mean much. Nor does it mean much to Warner’s operations — the payout amounted to 1.7 percent of the music label’s quarterly revenue.

Still, the big content companies almost never get any satisfaction in the piracy whack-a-mole game. So we’ll go ahead and note this instance now.

While we’re noting things: Warner’s revenue was up 5 percent for the quarter, buoyed in large part by digital sales, which were up 13 percent. The label still posted a net loss of $47 million, though.

The company has brought on Steve Savoca, who ran digital at U.K. indie label Domino Records, to run its U.S. content business. He’ll join, among others, Ken Parks, a former attorney for EMI Music who has been running Spotify’s New York outpost for a couple years; and at least two veterans from Limewire, the now-defunct file sharing service.

And Spotify CEO Daniel Ek would like you to know that the company is still looking for “rockstar engineers and product people” in the U.S., too. (You’re welcome, Daniel.)

Spotify still doesn’t have a U.S. launch date, though, because it still doesn’t have all the music label deals it needs. Sony and EMI have signed on, but the company still hasn’t inked a pact with Universal Music Group, the world’s biggest music company. It’d be nice if Warner Music Group were on board, too.

It’s increasingly likely that by the time Spotify does open up shop in the U.S., it will face competition from not just other streaming music services like Rdio, Rhapsody and MOG, but a new offering from Google.

Google wants to operate a “locker” music service which gives users access to all of their personal music files from a cloud-based server, and has begun testing the service internally. But just like Spotify, Google can’t launch without label deals–or, at least, it doesn’t want to launch without label deals–and so far it doesn’t have anything locked down.

Filesharing service LimeWire, officially shut down in December, and has sold off just about everything with value. But not everything, apparently.

Check out SoHo For Sale, a site that appears to be liquidating the former company’s furniture, piece by tasteful piece.

I’m not positive that everything listed here was part of LimeWire’s New York headquarters. But several LimeWire employees have confirmed that the beautiful product shots below were, in fact, taken in the company’s famously gorgeous office on lower Broadway.

“We’re the former occupants of a beautifully decorated SoHo cast iron, and we had great taste in furniture,” is the way the site described itself as of last Friday. That’s when I asked whoever runs the sohoforsale@gmail.com account for more details, and since then that language has disappeared from the site. But not from Google.

In any case, this really is some nice-looking stuff, no matter where it came from. I bet some of it ends up in a major music label’s office. Some samples, and asking prices:

8′x3′ Cypress (“90 percent sure [it's] Cypress”) two-piece conference tables, $2,500 each.

Solid Cypress (see above) tables, $2,750 each.

Custom day bed, $550.

“Vintage Argentinian Foosball table” – Sold! (Asking price $1,150)

The music file-sharing service, which basically called it quits in October after losing a federal court case, is turning off or shelving most of its related products. But it has found a home for at least one of them: Its LimeExchange.com services marketplace is being swallowed by Freelancer.com, which describes itself as “the world’s largest outsourcing marketplace.”

Terms of the deal haven’t been released; Freelancer.com says it will “migrate” LimeExchange’s users to its own platform.

What’s that? You had no idea the people behind LimeWire also ran a freelance marketplace? Me neither.

But now that I’m looking, I see that Lime Labs, which formally ran LimeExchange, also lists a domain registration/hosting business and an open-source Web site-building service among its assets. Anyone know what’s become of those?

Big picture: New York-based LimeWire and its affiliated companies look like they will all be wound down by the end of the month.  Not coincidentally, the following month there are supposed to be federal court hearings in which the major music companies are going to try to extract millions from LimeWire owner Mark Gorton for copyright violations.

I don’t know that shuttering all the related companies will help Gorton hang on to his money. But anything that helps him focus on his legal problems can’t be a bad idea.

Not for much longer, it seems. The company is also closing its online music store at the end of the year. And I’m told that it has essentially abandoned efforts to launch a new, legal music service that it had spent much of the past year building.

A sign on the Web retailer’s homepage tells customers that it’s no longer accepting new payments, and the company has told vendors via email that the store will shutter on Dec. 31. (You can see a copy of the note at the bottom of this post.)

LimeWire hasn’t responded to my request for comment. And it’s not clear why the company is closing up the shop, because in this case, LimeWire shouldn’t be dealing with any legal issues. LimeWire operated the store the same way that Apple’s iTunes does–it took product that music labels (not the big ones, but small independents) wanted to sell and delivered it to customers.

Meanwhile, people familiar with the company tell me that it has also stopped pursuing plans to launch a new, legal music service that had been building throughout 2010.

As recently as October, the company had been talking up the prospects of the new service, and had invited me to see a preview of it even after the court ruling that shuttered its illegal file-sharing service. But LimeWire later rescinded the invitation, and said that its lawyers had advised it not to discuss the new service.

My hunch is that LimeWire is stripping down all of its remaining assets in advance of January court proceedings. Those are going to determine how much the company owes the major music labels that successfully sued it for copyright violations.

LimeWire had already laid off at least 30 percent of its workforce following the October court ruling.

A federal court has permanently enjoined the New York company from distributing its software, which lets users upload and download free, often illegal, copies of songs and other media. But earlier this week a new version, “LimeWire Pirate Edition,” surfaced online, purportedly created by a “secret” team of software developers.

“We demand that all persons using the LimeWire software, name, or trademark in order to upload or download copyrighted works in any manner cease and desist from doing so,” said a statement on LimeWire.com. The statement also asserted that the company is “taking all steps to comply with the injunction.”

Read the rest of this post on the original site

A bit of a surprise: The company insists that it can keep its remaining employees working on a new music service.

LimeWire confirms that in the wake of last week’s shutdown, it let go of 29 of its 100-person workforce. Here’s CEO George Searle’s statement:

Following the court-ordered injunction, we reduced our work force to extend our runway for bringing our new music service to market.  Letting go of colleagues is never easy.  If we could have brought about another solution, we would have.

I don’t know whether LimeWire’s new service, which the company has been referring to internally as “Grapevine,” will also be based on peer-to-peer technology or not; I should have more on that later. But I do know that the service won’t have any hope of working unless it can get the big music labels to sign on.

That’s theoretically possible, because LimeWire and owner Mark Gorton have talked with the labels about that sort of thing before. But they’ve talked for a very long time, and have never reached a pact in the past.

For now, at least, the labels appear to be set on extracting a very large chunk of Gorton’s hide, via the damages phase in their federal court case. That’s supposed to kick off in January.

The company says it will comply with a court injunction to turn off “the searching, downloading, uploading, file trading and/or file distribution functionality, and/or all functionality” of its software, which remains one of the most popular methods of finding free–and illegal–music on the Web.

That means the company will stop offering downloads of its software, which you could still get on its site as of late Tuesday afternoon. And it also means that the company will disable the software that’s already been downloaded, according to people familiar with LimeWire’s plans.

I don’t know if LimeWire intends to cripple its client via a “kill switch” or some other method, but as of 20 minutes ago it hadn’t gone into effect–I was able to locate and download a version of the Clash’s “I Fought the Law” within a minute of booting up LimeWire’s software. (UPDATE for the technically minded, via a person familiar with the company’s plans: “They’ve taken down the relay severs on the Gnutella network which the Limewire client uses to figure out which other p2p clients have what info on them.” This should render existing clients effectively useless as anything other than a media player within the next nine hours, I’m told.)

LimeWire‘s client has been downloaded “hundreds of millions” of times, and is still responsible for the “vast majority” of usage on the Gnutella trading network, says Eric Garland, who runs the BigChampagne media tracking service. The company’s moves won’t affect other open source clients that run on the same Gnutella network, like FrostWire.

Meanwhile, LimeWire’s parent company, Lime Group, is prepping a new music service that it says will be legal, and should be due out in a month.

But the utility of that service depends on the participation of the big music labels, and at least for now the labels are still trying to extract a big piece of Lime Group’s hide. Court hearings in the damages phase of Lime Group’s hire are scheduled to resume in January. And this statement by industry trade group RIAA makes it clear that the labels aren’t feeling conciliatory:

“For the better part of the last decade, Limewire and Gorton have violated the law. The court has now signed an injunction that will start to unwind the massive piracy machine that Limewire and Gorton used to enrich themselves immensely. In January, the court will conduct a trial to determine the appropriate level of damages necessary to compensate the record companies for the billions and billions of illegal downloads that occurred through the Limewire system.”

Today’s announcement comes after Lime and the labels spent weeks trying to negotiate an out-of-court settlement; Federal District Court judge Kimba Wood actually handed down the injunction in August.

Here’s LimeWire CEO George Searle’s description of events, via  blog post:

As of today, we are required to stop distribution and support of LimeWire’s P2P file-sharing service as a result of a court-ordered injunction.

Naturally, we’re disappointed with this turn of events. We are extremely proud of our pioneering history and have, for years, worked hard to bridge the gap between technology and content rights holders. However, at this time, we have no option but to cease further distribution and support of our software.

It’s a sad occasion for our team, and for you–the hundreds of millions of people who have used LimeWire to discover new things.

While we have enabled open sharing and discovery for the past decade, LimeWire is mostly the product of the people who used it. You made LimeWire. Thank you for letting us being part of that. Your support and enthusiasm has fueled everything that we do.

During this challenging time, we are excited about the future. The injunction applies only to the LimeWire product. Our company remains open for business.

We remain deeply committed to working with the music industry and making the act of loving music more fulfilling for everyone – including artists, songwriters, publishers, labels, and of course music fans.Our team of technologists and music enthusiasts are creating a completely new music service that puts you back at the center of your digital music experience.

We’ll be sharing more details about our new service and look forward to bringing it to you in the future.

And here’s a LimeWire PR rep’s description of what’s going on:

As a result of a court ordered injunction, we are required to disable “the searching, downloading, uploading, file trading and/or file distribution functionality, and/or all functionality” of LimeWire’s P2P file-sharing software.

Please note LimeWire’s official statement on this legal development is as follows:

“While this is not our ideal path, we hope to work with the music industry in moving forward.  We look forward to embracing necessary changes and collaborating with the entire music industry in the future.”  – LimeWire Spokesperson.

An important point of clarification, LimeWire is not “shutting down”, in specific regarding our software, we are compelled to use our best efforts cease support and distribution of the file-sharing software, along with increased filtering.  And, that is what we are doing.

No confirmation from Google (GOOG) yet. But assuming this is a done deal, it’s a big one in the intellectual property world: Von Lohmann has been a prominent advocate for tech companies in legal fights and is best known for backing the likes of YouTube, LimeWire and Grokster in their battles with copyright owners.

The Swedish site has been out all morning. TorrentFreak pins the outage on legal pressure from Hollywood studios, via an injunction granted by a German court against broadband provider CB3ROB, which had been routing the site’s traffic to the Web.

But if you’re looking to nab free music and movies via the site’s BitTorrent hub, you probably won’t have to wait long. As CNET points out, The Pirate Bay has lost bandwidth providers in the past and usually pops back up in fairly short order.

Meanwhile, if you want to grab your stuff via other means, there are plenty of options. LimeWire, for instance, which lost what appears to be a significant court case last week, is still up and running.

You can read all of U.S. District Court Judge Kimba Wood’s ruling at the bottom of the post. But the short version is that Wood, using the Supreme Court’s Grokster decision as a guide, found that LimeWire is indeed guilty of copyright violations. In her words:

LimeWire… (1) is aware that LimeWire’s users commit a substantial amount of copyright infringement; (2) markets LimeWire to users predisposed to committing infringement; (3) ensures that LimeWire enables infringement and assists users committing infringement; (4) relies on the fact that LimeWire enables infringement for the success of its business; and (5) has not taken meaningful steps to mitigate infringement.

LimeWire is unusual among post-Napster, post-Grokster file-sharing operations in that it operates out in the open, in the U.S. The company, based in New York City and owned by investor Mark Gorton, actually sells a smattering of music itself with the blessing of some of the smaller music labels. But while the company has been engaged in a long back-and-forth with the big guys, it has never reached a settlement.

Meanwhile, almost all of the music available on the service (93 percent, according to a study used in the lawsuit) and even more of the stuff actually downloaded (98.8 percent, via the same study) is protected by copyright and should not have been there. Court documents state that LimeWire generated revenue of $20 million in 2006.

LimeWire does tell its users they shouldn’t steal music. This is the warning you get when you try to do so:

But that’s not enough, Wood ruled. And certainly not when the service was going out of its way to court users searching Google (GOOG) for free tunes. From her ruling:

LimeWire conducted a marketing campaign through Google AdWords, whereby Google users who entered certain search queries, such as “replacement napster,” “napster mp3,” “napster download,” “kazaa morpheus,” “mp3 free download,” and dozens of other phrases containing the words “napster,” “kazaa,” or “morpheus,” would see an advertisement leading them to the LimeWire website.

The next step in the case is a June 1 conference. Here’s LimeWire CEO George Searle’s statement, which doesn’t include a vow to appeal the ruling:

LimeWire strongly opposes the Court’s recent decision. LimeWire remains committed to developing innovative products and services for the end-user and to working with the entire music industry, including the major labels, to achieve this mission. We look forward to our June 1 meeting with Judge Wood.

And here’s the end-zone dance from Mitch Bainwol, CEO of the music industry’s lobbying group:

This definitive ruling is an extraordinary victory for the entire creative community. The court made clear that LimeWire was liable for inducing widespread copyright theft.

LimeWire is one of the largest remaining commercial peer-to-peer services. Unlike other P2P services that negotiated licenses, imposed filters or otherwise chose to discontinue their illegal conduct following the Supreme Court’s decision in the Grokster case, LimeWire instead thumbed its nose at the law and creators. The court’s decision is an important milestone in the creative community’s fight to reclaim the Internet as a platform for legitimate commerce. By finding LimeWire’s CEO personally liable, in addition to his company, the court has sent a clear signal to those who think they can devise and profit from a piracy scheme that will escape accountability.

We are gratified by the court’s careful and thorough analysis of the facts and applicable law.

Bigger question: What does this mean for the music industry? Assuming Wood’s ruling stands, this one will definitely feel good for the labels, and it would have been a very big deal had they lost. But it certainly won’t help them in fighting less formally organized P2P services or those set up outside the U.S.

Arista Records Summary Judgment Opinion

That’s the path that Jason Herskowitz has chosen. Old job: VP of product management at Total Music, Universal Music and Sony’s (SNE) attempt to create a service that offered either free downloads or free streaming music as a way to combat file-sharing. It collapsed earlier this year and Project Playlist bought some of its parts.

New job: VP of product management at LimeWire, one of the last (one of the only?) high-profile peer-to-peer file-sharing companies based in the U.S. Not surprisingly, the service was embroiled with industry lawsuits for three years running.

Here’s Herskowitz’s blog post announcing his new job and his pending move to Brooklyn (Welcome, Jason! Pretty sure we’re neighbors.) from Washington D.C. It’s not a crazy career move: A job is a job and there aren’t that many in digital music these days. Besides, I hear that LimeWire has nice offices.

Which reminds me: How is it, exactly, that LimeWire stays afloat when the labels have been able to force so many of its peers to shut down? Good question. I’ve asked around and heard murmurings that the labels and the file-sharing service may be able to work out some kind of agreement, but I’ve heard that every 12 months or so. So I’ll believe it in when I see it.

In the meantime, LimeWire continues to allow you to download just about any song (and many other things) you can imagine over the Web for free, without paying anyone a cent. Though if you do try to download a copyrighted song, you do get this stern warning from the service. I take it in the same spirit as the warnings head shops give you when they say the bong they’re selling is for tobacco use only (click to enlarge):

At a hearing yesterday by the House Committee on Oversight and Government Reform, Chairman Henry Waxman (D., Calif.) declared P2P networks a “national security threat,” claiming they’d caused federal employees to accidentally share sensitive or classified documents. “We used the most popular P2P program, LimeWire, and ran a series of basic searches,” Waxman said, referring to a bit of research done by his staff. “What we found was astonishing: personal bank records and tax forms, attorney-client communications, the corporate strategies of Fortune 500 companies, confidential corporate accounting documents, internal documents from political campaigns, government emergency-response plans and even military-operation orders. … It is truly chilling to think of what private information an organized operation or a foreign government could acquire with additional resources.”

Certainly is. But not nearly as chilling as the idea of government employees installing P2P software on government-issued computers holding classified government documents. No wonder the government got a C- on its 2006 Federal Computer Security Report Card.
The FBI is losing laptops like baby teeth, the Transportation Security Administration is misplacing hard drives with the Social Security numbers and bank account information of its employees, and now federal employees are jeopardizing the security of government emergency-response plans and military-operation orders by messing around with P2P clients.

Don’t try telling that to committee members like Rep. Jim Cooper (D., Tenn.), though. During yesterday’s hearing, he drew and quartered the lone representative from a peer-to-peer software company in attendance: LimeWire Chairman Mark Gorton. After suggesting that Gorton’s own home computer was likely leaking sensitive documents, Cooper lambasted him as “one of the most naive chairmen and CEOs” he’d ever encountered. “I’d feel more than a shade of guilt at this point, having made the laptop a dangerous weapon against the security of the United States,” Cooper said. “Mr. Gorton, you seem to lack imagination about how your product can be deliberately misused by evildoers against this country.”

Evildoers, huh. Is that a euphemism for federal employees doing government work on computers connected to peer-to-peer networks?