THE 1311.1.130ARD BY CHRISTIE ELIEZER

Sharrr:.:_ Nikki Network Hemm With the cases settled, Sharman CEO Nikki Hemming talks about the future of P2P, licensing content and retaining users as the service goes legit.

Nikki Hemming emerged into the spotlight after 2002 when the -based CEO of Shar- man Networks acquired the controversial peer-to -peer (P2P) file- sharing software Kazaa Media Desktop. Within three years, the software was used to download an estimated 300 mil- lion files -including music, movie segments, software and computer games -both sanctioned and unsanctioned. 's Music Industry Piracy Investigation unit estimated Sharman's monthly turnover for 2004 -05 at $200 million Australian ($154 million). In the past two years, Sharman was at the center of high -profile copyright infringement court cases in California and Australia. These were settled in July 2006 after 12 months of dis- cussions. Sharman paid the movie and music industries $110 million, installed filter software in Kazaa and is in negotiation for licenses with labels and studios. The details of Sharman's ownership and structure remain protected by the laws of , the Pacific Islands tax haven where the company is registered. During the Kazaa court case, the Australian Record Industry Assn. insinuated that Sharman's real owner was Hemming's close associate, Kevin Burmeister, who runs Brilliant Digital Entertainment and commercial P2P content distribution network Altnet, which is utilized by Sharman. But it was never proved. CAREER HIGHLIGHTS Hemming plays her cards close to her chest on future strategies, partly for commercially sensitive reasons, therefore it's a slightly longer term 1992- Part of the partly because Sharman's agreement with the movie and music industries has a no- criticism clause. But she be- 1995: management team proposition. But [Sharman] is in- lieves Sharman's leadership in technology and the major labels' knowledge of marketing will create a No.1 des- that helped Virgin tending to participate in the market tination software with a one -click solution where consumers can find, choose, organize and play their content. Europe evolve from with more than one model to ensure Despite Kazaa's position in the media spotlight, little is known about the 39- year-old, London -born Hemming. budget software we're capturing consumers' de- publisher to market A Virgin GM in mands the board. former employee of Richard Branson's Interactive and one -time of theme park Segaworld Syd- leader in entertain- across ney, she rarely grants interviews, preferring to challenge herself with shark diving and mountain climbing. She ment software. next plans to trek through Peru to Machu Picchu, commonly known as the Lost City of the Incas. 1993: Selected by the Why have consumers not em- chairman of Virgin as braced subscription models? How soon do you anticipate be- ket in the future, cooperatively with to settle required a 50/50 round the youngest participant The [IPUF] model was before its fore Sharman starts announcing the industry. table agreement to go forward to- in an equity position time, and there were not enough in the Virgin company. its first licensing deals and in gether. There's no other way to get players involved in the model in 1995: Established Virgin which territory? When Napster went legit, it lost to that point, so all the indications order to deliver seamlessly. So when Interactive in Very soon, actually. It's our goal to users. What have you got in place that I've had are that we're not just Australia from a zero a consumer is purchasing they don't secure licenses on a worldwide basis to stop that happening to Kazaa? willing to work together but we're base and created a see the back end, they just get the so we can take advantage of the fact That boils down to relying on our ex- excited about the prospect. publishing model experience they are looking for. Par- there is a worldwide audience for pertise in being an industry veteran since followed by tially there are technical boundaries, many international us. We're determined to remain at in P2P and understanding the con- At the same time, the people you're publishing houses. and partly there's not been enough the forefront and put out something sumer market so that we deliver a negotiating with would have some innovation in this subscription 2002: Established Sharman that consumers are going to find product that hits the sweet spots of legitimate suspicions about Shar- Networks and made model at the moment. very desirable. what they are expecting from a P2P man's setup. Do you agree you'll Kazaa a market application from which you can have to clear the air with your leader. Sharman was originally set up to What is your game plan for the choose licensed content. We haven't future partners? 2006: Oversaw settlement invest in Internet opportunities. In Kazaa software? been sitting on our hands while we've The air is already cleared. We went between Sharman which areas can money be made? and global record The first thing is to be at [the] fore- been negotiating a settlement. We've out of our way to deal with any and Our primary investment in the In- labels /movie studios. front of technology by creating it. been preparing ourselves for our fu- all concerns on this subject. The ternet is Kazaa. I'm going to take To stay innovative. To watch the mar- ture, and we've geared up for a pretty [Australian] record industry's most a hard -line corporate position and ket for emerging trends. Most im- strong entrance into the market. senior lawyer [Richard Cobden] say that if I've identified some portantly, you have to not be afraid didn't have one question left on the innovative, and we're happy to work sweet spots [elsewhere], they're not to experiment. We start from a good You're going to negotiate with peo- subject. Anyone who says otherwise with them. something I want to publicize. I'd base in that we have a lot of advan- ple who have had you followed, is simply making mischief. rather capitalize on them and then tages in creating a flourishing dig- raided your house and office, and When Sharman first bought Kazaa, talk about them. ital content destination and have called you a gangster. Have you got What role will Kevin Burmeister you envisaged use of a subscrip- taken our audience with us. We have a problem with that? and his two companies play in the tion model. Is that still a viable When was the last time you paid an incredibly powerful brand and a Business is not about individuals, "new " Kazaa? proposition? for a CD or to see a movie? lot of technical expertise. We have and it'd be pretty foolish of me to We have a joint -venture agreement There are various subscription mod- I went to see "The Sentinel." It a unique understanding of this viral take personally things that have hap- with Altnet Corp., which has been els. I think you're referring to IPUF wasn't as good as "In the Line of power that comes from peer to peer, pened in the past. In terms of nego- in place for a long period of time. [Intellectual Property Use Fee]. Fire." I don't recall the last CD I and that's going to be a facet in a tiations, we've concluded the first We have technology that we are de- That's a model that certainly bought, it was this year. I'm dated very successful future of selling big negotiation with them already. veloping, he has technology that he shouldn't be dismissed. What it does by my music collection, which is content digitally. I'm very confident We've shaken hands and we've is developing. Altnet are a great com- require is that all parties in the in- '80s- centric. The last CD I heard was we're going to be leading the mar- moved forward. Mutually agreeing pany to collaborate with, they're very tegration chain participate, and Annie Lennox's "Diva."

AUGUST 26, 2006 i www.billboard.biz I 23