Click to enlarge

Grokster yesterday said it would stop distributing file-swapping software and cut off support for its peer-to-peer network as part of a settlement with the recording industry and Hollywood, reports the New York Times. The agreement comes four months after the Supreme Court unanimously ruled that Grokster could be held liable for copyright infringement by users of its software, and sent the case back to a trial court. The settlement should end the four-year-old legal battle for Grokster, which agreed to pay up to $50 million in damages, though it doesn't have the money.

Grokster's co-defendant, Streamcast Networks, which runs the file-sharing network Morpheus, apparently plans to keep fighting the good fight in court.

The recording industry has said that its legal campaign is meant to deter those who run the biggest file-sharing networks and advertisers that support them.

Grokster said it intends to create a "safe and legal" service and referred users to a new site, www.grokster3g.com. The company will likely be absorbed by Mashboxx, which has a deal to license music from Sony BMG Music Entertainment.

Meanwhile, some 9.2 million people are using peer-to-peer networks at any given moment, up from 8.8 million in June, according to data service BigChampagne. "I don't think, practically speaking, we're expecting to see much impact in the peer-to-peer landscape" as a result of the settlement, said BigChampagne CEO Eric Garland. "People moved on from tools like Grokster some time ago."