Kazaa has settled with the recording industry out of court.
The file-sharing company would not reveal the size of the settlement but recording industry trade group, the International Federation of the Phonographic Industry, called it a "substantial sum."
As part of the agreement, Kazaa will add filtering technologies to prevent users from sharing copyright-infringing files and it stated that it would work together with the record and movie industries to develop a legal model for distributing digital music and movies.
The settlement marks an end to legal battles in both the US and Australia against Kazaa by Universal, Sony and EMI. The lawsuits were filed against Sharman Networks, which owns and distributes the Kazaa software.
The parties were vague about Kazaa's future model however. Kazaa said it will make more announcements in the near future but it's too early now to say how exactly that will pan out.
The settlement follows a ruling last year in Australia where a judge found that Kazaa authorised the widespread violation of copyright works, ordering Kazaa to make changes to the way its system works.
The US Supreme Court last year said that file sharing software developers can be held liable for copyright infringements by their users but at the time Kazaa said that ruling wouldn't apply to it because Kazaa requires users to agree not to use the software to infringe on intellectual property.