Lions Gate Puts Kazaa Net to Use

To the world’s largest entertainment companies, the controversial Kazaa file-sharing network is Public Enemy No. 1--a wildly popular source of free, downloadable music and movies.

But to Lions Gate Entertainment, an independent film studio based in Marina del Rey, Kazaa is the means to a more profitable end. Breaking ranks with mainstream Hollywood, the company is using Kazaa to promote its big fall film through the Internet--with the financial help of Microsoft Corp.

Kazaa’s software connects tens of millions of users to one another’s computers through the Internet, enabling them to easily find and copy digital songs, movies, games and other files. Major film and record companies call it the online equivalent of shoplifting, and they are seeking an injunction against Kazaa from a federal judge in Los Angeles.

Lions Gate faces the same piracy problem, with unauthorized copies of the film “Frailty,” episodes of the TV program “The Dead Zone” and many of its other productions freely available on Kazaa. Nevertheless, it has been using the network to distribute up to 10,000 trailers each day for its forthcoming film “The Rules of Attraction,” a satirical look at sex and drugs on an affluent college campus.

There’s no direct relationship between Lions Gate and Kazaa. Instead, Kazaa users are being steered to the “Attraction” trailer by Altnet, a Los Angeles-based service that helps copyright holders deliver files securely over the Kazaa network.

Nor is Lions Gate paying Altnet for its services, said Tom DeLuca, Lions Gate’s vice president of new media. The undisclosed tab is being picked up by Microsoft, which provided the software Lions Gate used to digitize the trailer.

“You can’t ignore these networks,” DeLuca said. “The audience for ‘Rules of Attraction,’ they’re the ones on the peer-to-peer networks.”

Altnet’s pitch to entertainment companies is simple: It offers cheap distribution while deterring piracy. By relying on Kazaa users to transmit more than 90% of its files to other users, Altnet can distribute files virtually for free. And by wrapping those files in electronic locks, it can protect against piracy and give copyright owners a way to demand payment.

To Lions Gate, using Altnet is a form of counterattack. “We know that piracy is a problem, and this is our move to try to take control of the situation,” DeLuca said.

Microsoft declined to comment about its dealings with Altnet, a subsidiary of Brilliant Digital Entertainment of Woodland Hills. Altnet also is partly owned by Joltid, a company owned by the developers of Kazaa’s network.

The major studios and record companies have kept their distance from Altnet, in part because they don’t want to complicate their lawsuit against the companies that created and maintain Kazaa. Kazaa’s backers are trying to convince U.S. District Judge Stephen V. Wilson that the network has a substantial legitimate use, which is a defense against contributory copyright infringement.

About 35 other companies have used Altnet to distribute independent label music, games, software programs, adult content and promotional material through Kazaa, said Kevin Bermeister, chief executive of Brilliant and Altnet.

Kazaa and Altnet collect a small fee each time one of these files is downloaded, and Altnet also makes money by placing files on the network and earning commissions when they are purchased.

About 150,000 secure music and video files are being delivered daily with Altnet’s assistance, Bermeister said. Only 1.5% to 2% of the free downloads are being converted to purchases.