Tiscali deal with file-sharer sparks dispute over legitimacy of service. (International).

The recording industry is voicing concerns that a newly-struck deal between peer-to-peer (P2P) file-sharing service KaZaA and Italian internet service provider (ISP) Tiscali will further jeopardise the development of legitimate online music services.

The agreement, struck last week, will see the leading European ISP's high-speed broadband internet service advertised on the KaZaA website, while at the same time Tiscali pays KaZaA-owner Sharman Networks a "bounty" for every user signing up to the service.

The move gives KaZaA a key legitimate ally in the face of on-going litigation and debate surrounding peer-to-peer services, while commentators suggest it further highlights the vital importance of high-speed internet access to such operations.

The deal has incurred the wrath of record companies, who believe the partnership can only harm legitimate services, with the RIAA having already filed a suit against KaZaA in a federal court in Los Angeles alleging copyright infringement.

IFPI CEO and chairman Jay Berman said in a statement, "I am shocked that Tiscali, a company already hosting a legal service, believes that by entering into an agreement with an unauthorised service it will promote the development of legitimate online musical offerings."

He has branded as "absolute nonsense" Tiscali's claim that "this is an important step in creating a legal market". "The `bounty' that Tiscali is willing to pay to encourage consumers to adopt its broadband services will be paid at the ...