Swedish gaming group agrees Pirate Bay acquisition

The Pirate Bay, seen by many as the bane of the world's entertainment industries, is to be purchased by Swedish firm Global Gaming Factory, according to both entities. GGF primarily provides "digital distribution of advertising, software, and services to the large groups of tourists at Internet cafes and the gamer community at gaming venues," via software installed on PCs at cyber cafes across the world. According to GGF, the deal is scheduled to be closed in August 2009, subject to the firm obtaining financial backing, the approval of the deal at a general meeting of existing shareholders, "and that GGF and the board of directors consider that the acquired assets can be used in a legally and appropriate way."

Hans Pandeya, chief executive of GGF explained the deal today saying: "As a result of the acquisitions of The Pirate Bay and Peerialism, GGF will have a strategic position in the international digital distribution market. File-sharing traffic is estimated to account for more than half of today's global Internet traffic. The Pirate Bay has a global brand and holds a key position with over 20 million visitors and over 1 billion page views per month." The deal is valued at a total of 60 million Swedish Kronor ($7.8m, £4.7m).

In an associated deal, GGF has also agreed to buy the 17-employee firm Peerialism. The firm has developed new software, which GGF hopes to rapidly integrate into The Pirate Bay. The software is based on new peer-to-peer technologies, according to GGF and "makes better use of networks resources whilst reducing ISP traffic and significantly lowering the cost of media distribution." This technology originated in research projects at the Swedish Institute for Computer Science and Kungliga Tekniska Hogskola, the Swedish Royal Institute of Technology.

In a blog post, the Pirate Bay stated that, "a lot of people are worried. We're not, and you shouldn't be either!" The post went on to say that, "if the new owners will screw around with the site, nobody will keep using it. That's the biggest insurance one can have that the site will be run in the way that we all want to. And you can now not only share files but shares with people. Everybody can indeed be the owner of The Pirate Bay now. That's awesome and will take the heat off [sic] us." The file-sharing network also explained how its new funds would be spent. "The profits from the sale will go into a foundation that is going to help with projects about freedom of speech, freedom of information, and the openness of the nets."

The post also promised that those who had been involved in running and creating The Pirate Bay would continue to be "active in the politics of the Internets [sic]" and that the new deal would allow them to go "into the next gear." This shifting up may be in response to the increasing political success of Sweden's Pirate Party--which is, by some reckoning, now the third largest political party in Sweden, having seen explosive growth since it was formed in May 2006 directly as a response to police raids on The Pirate Bay and having a seat in the European parliament.

The Pirate Bay's four founders were recently ordered to pay $3.6 million in damages (£2.1 million) to a conglomerate of music and film industry firms, as well as receiving year-long jail sentences for their part in facilitating the illegal downloading of copyrighted material.

The deal is reminiscent of Napster's acquisition in 2002 after the company shut down its illegal peer-to-peer services following a number of high-profile and commercially catastrophic legal decisions during 2001. After a judge blocked its acquisition by media conglomerate Bertlesmann, the then-defunct firm's assets were snapped up by Roxio, which was itself later bought for $121 million by Best Buy in 2008 after the firm had rebranded itself as Napster and launched a modestly successful legal music distribution service.