Nikki Hemming - v - Hilary Rosen

TechTV is well chuffed. It did a face-to-face with Kazaa Queen Nikki Hemming and former RIAA truth adjustor Hilary 'Reach Out' Rosen.

Given that Reach Out no longer rules the roost at the RIAA, it's not exactly fresh. But it's Hilary and Nikki. So who cares ; )

"In a rare television interview - she's sat for only one other interview, which apparently never aired - Sharman CEO Nikki Hemming answered a host of questions about the challenges she faces running such a controversial company," says Jim Goldman, Tech Live Silicon Valley bureau chief in an August 5 post which leads off:

"Hilary vs. Nikki - A bitter battle is brewing between the RIAA's former chairperson, Hilary Rosen, and Hemming. The debate is a kind of 'she said, she said,' with billions of dollars and the future of the entertainment industry hanging in the balance."

As Goldman himself points out, "Rosen has since left the RIAA for a commentator job with financial news network CNBC." Thus, it's a bit difficult to see where this bitter battle will take place.

But let's not quibble - it's good stuff anyhow, so we've featured it all , as it (presumably) aired on TechTV, below:

Now read on >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

At the center of the raging debate is Hemming, a 36-year-old British expatriate living and working in Australia. She's worked for Virgin Interactive, Segaworld (a Sydney theme park that ultimately failed), and now KaZaA.

Can KaZaA go legit?

"I think their attempt at trying to legitimize themselves will never work," Rosen said.

Hemming's response: "I have a favorite quote of mine, which I borrow from Einstein. And it goes something like: Great vision is often met with opposition from mediocre minds."

Rosen claims KaZaA is ruining, not expanding, the recording industry by allowing inferior copies of music to be downloaded with its software. "If you're using KaAaA today, you're getting, in my view, a crappy quality song -- not what the artist did in the studio, not what they wanted you to hear, not their finest work," she said.

Hemming emphatically disagrees. "Rights-managed content through KaZaA is as good as any rights-managed content anywhere in the world. We use the same technology to wrap and deliver premium files as iTunes, for example, so why would anyone have a problem with that?"

Quality aside, the bigger problem facing both sides is how to ensure that copyright holders of digital content get paid for their work. Millions of consumers can copy a single song file through KaZaA without paying for it. The company estimates that well over 240 million copies of its software have already been downloaded all over the world.

Hemming: RIAA won't talk

Hemming said she has offered several solutions to the record companies, including a pay-per-download KaZaA service.

"If the music industry had taken up the opportunity that was presented to them -- and was a completed piece of technology 14 months ago -- there would be a rough income to the music industry of between US$35 [million] and US$40 million already. That's been left on the table, and that's available right now," she said of the software.

Rosen said no offer has ever been made.

"I hear Sharman executives talk about, well, the record industry would only use this as a legitimate system," Rosen said. "Well, first of all, they've never asked. Second of all, they've taken virtually no steps to do what you would need to do to create a sort of realistic distribution system."

The worst possible news for the recording industry, however, seems to be that KaZaA isn't standing still, won't go away, and will not rest on its success.

Pay-for-play on the way

"Very shortly there will be a paid-for version of KaZaA that will be ad-free and enhanced and, I think, that will be a very exciting proposition to the users," Hemming said.

She said her service and this software -- indeed the entire P2P movement -- stands to revolutionize digital content, not destroy an industry. Hemming said it'll make the industry bigger by offering more choice and getting products to consumers much faster, just as VCRs and videocassettes transformed the movie industry.

"In the end, consumers and artists are brought together by this amazing technology, and they have a level of interactivity they've never had before," she said. "And the music industry is going to benefit, and the movie industry is gonna benefit, and emerging artists, and independent artists, and people who just want to share their views. They're all going to benefit. This technology is here to stay."

KaZaA's funky foundation

Despite that optimism, the company still faces attack from just about every angle.

"KaZaA and Altnet and Sharman, or whoever they portray themselves to be on any given day - because none of them wants to be responsible for each other, but there's cross ownership everywhere," said Rosen, taking a dig at the companies' murky corporate structure. KaZaA's parent company is Sharman Networks, and it owns a majority interest in its partner, Altnet.

Critics charge that KaZaA uses the somewhat confusing structure to insulate itself from legal attack.

Consider that KaZaA and Sharman Networks have set up its headquarters in Sydney, Australia, but the company is incorporated on the tiny island of Vanuatu. Its original code was developed in Estonia. But the company says this isn't about creating legal limbo, as the critics have charged; it's about creating a tax advantage similar to what an American company might enjoy by incorporating in the Bahamas.

They do agree on something

Hemming said that despite the legal hurdles it faces, Sharman will continue its global assault on the entertainment industry, hoping one day to reach agreement with the companies its doing battle with. Its relationship with Altnet may be a small step in the right direction, since Altnet lets content publishers manage copyright material on its site.

"We are a responsible business partner that could work with the music industry, right here, right now, that could deliver them millions of dollars that they're missing out on. It's very compelling. Come to the table," Hemming said, inviting the RIAA to negotiate.

While both sides continue the rhetoric, they do agree on at least one thing.

"P2P is unstoppable," Hemming said. It's a statement Rosen would likely agree with.

"I don't think you do stop technology," Rosen said. "I don't think we'd want to stop technology."