Since Altnet began to offer links to content companies' authorised files it has been responsible for more than 20 million downloads per month, Bermeister said. The service uses several digital rights management tools and has become the largest purveyor of Microsoft Windows Media files, he added. Past and current customers have included Atari (formerly Infogrames), Sanctuary Records, artist Ice T, and even Microsoft has paid to have Windows Media promotional files distributed over the network. But Bermeister's close association with Sharman Networks and Kazaa, which remains the target of lawsuits from big record companies and Hollywood studios, may make it difficult for him to find customers in the largest content companies. Bermeister was instrumental in creating the modern version of Kazaa, introducing Sharman Networks chief executive Nicola Hemming to the original creators of Kazaa in the Netherlands. Hemming's original plan for the file-swapping service was long intertwined with Bermeister's vision of using it to distribute authorised conent, although Bermeister denies being one of Sharman's as-yet-undisclosed investors. The Altnet chief executive has spent a year talking to executives at the large content companies and claims to have won some friendly ears among new media executives. However, concerns about litigation and Kazaa's ultimate legality blocked any deals. Bermeister and Altnet played a key role in Sharman Networks' January countersuit against the record companies and movie studios, which accused them of antitrust law violations based in part on their refusal to deal with Altnet. Several content company executives privately said they felt betrayed by Bermeister's role in that filing. The legal landscape has changed somewhat since then, however. In April, a Los Angeles federal judge ruled that decentralised file-swapping network software was legal to distribute and that the parent companies of Grokster and Morpheus -- services similar to Kazaa -- were not liable for the copyright infringement of their software's users. Sharman was not directly affected by that ruling, but its own litigation with Hollywood studios and record companies is likely to follow a similar course. The content companies have said they will appeal the ruling, however. Even as Altnet launches its ambitious new service, parent Brilliant Digital is struggling on the edge of financial survival. In a federal securities document filed in late May, the company said it had "negative working capital of approximately $4,165 (£2,500)" and that there were substantial doubts about its survival. However, the filing said Brilliant Digital expects another round of financing to boost operations soon. The company is looking to a new patent licence for one new revenue source. It has acquired rights to a 1999 patent that Bermeister says covers the technique of identifying files on peer-to-peer networks using a "hash", or digital fingerprint based on the contents of the file. The company will approach virtually all other peer-to-peer services to seek licence rights, Bermeister said. The company also serves as a US business development agent for Sharman Networks and Kazaa and earned $20,000 in commissions last quarter, according to federal securities documents. The new Altnet service and Kazaa software are expected to be released in test form later this week.
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