Kazaa has been branded the world's biggest "copyright piracy engine" by five record labels which today launched a legal case against Sharman Networks, the company behind the internet file-swapping website.

At a hearing before Australia's Federal Court in Sydney into alleged copyright violations, lawyers for record labels including EMI, Sony BMG and Warner told the court that Kazaa was responsible for three billion music downloads a month and the cornerstone of its popularity was unlicensed sharing of music files.

"The Kazaa system is an engine of copyright piracy to a degree of magnitude never before seen," Tony Bannon, the labels' lawyer, said.

The conventional music industry has led a worldwide drive against illegal downloading, aligning its own fate with the defeat of unlicensed sites where music is available for free. Last week, the world’s third-largest music group, EMI, said the industry was improving after the firm’s digital music revenue more than quadrupled in the six months to September 30 and as it tackled illegal online file exchanging.

Mr Bannon said that Kazaa had 100 million users worldwide. Other estimates suggest the figure is three times that.

Sharman Networks is registered in the Pacific island state of Vanuatu but has operations in Australia, where its chief executive Nikki Hemming is based.

Ms Hemming and chief technology officer Phil Morle have also been named in the lawsuit along with partner companies Altnet, its US parent Brilliant Digital Entertainment and the Australian company LEF Interactive, which provides management services for Sharman Networks.

Sharman Networks says it warns users against copyright violations, but the labels' lawyers have dismissed those claims.

The defendants were capable of stopping copyright infringements by Kazaa users but chose not to do so as it would ruin their business, Mr Bannon told the court.

"They are trading off the copyright-infringing activities of its users."

The five labels, which also include Universal and Australia's Festival Mushroom, contend that Sharman was fully aware of how the software was used and did nothing to stop the infringements.

The trial is expected to last around three weeks.

Kazaa, like dozens of similar services that have appeared around the world such as Gnutella and Morpheus, allows millions of users to download music, films or video games online - free of charge.

Record labels in Britain stated last month that they would sue persistent downloaders of internet music tracks, adding that they had their sights set on 28 computer users.

The lawsuits, following similar action from American labels, were announced as part of a major European crackdown on illegal file-sharing, involving 459 legal actions against music fans in Britain, France, Italy, Denmark, Germany and Austria.

"This is not the National Health Service. This is music - you buy it," said Pete Waterman, the pop impresario behind acts such as Kylie Minogue and Steps, who also sits on the council of BPI, the trade body grouping UK record labels.

"There are only a relative handful of people in the music industry who make much money - 95 per cent of musicians out there can't afford to buy their guitars," Mr Waterman added.

The BPI, which represents both minor and major UK labels, said it was not going after occasional downloaders, but against "uploaders" who make thousands of tracks available for free to anyone with an internet connection.

In a separate case in The Netherlands last year, the Dutch Supreme Court ruled that Kazaa was a legal operation not in violation of copyright.

Sharman Networks was also party to a separate case brought by the music industry in the United States against Grokster, another file-swap program, which also failed.

• Top of the Pops is being axed from BBC1 after 40 years, it was announced today. The show will move to BBC2 after ratings slumped to less than three million despite a revamp last year. The new-look Top of the Pops will move from Fridays to a Sunday evening slot.

  BBC bosses hope the mix will boost audiences by attracting older viewers. Explaining the move, BBC director of television Jana Bennett said: "In the changing world of music and television, Top of the Pops will find a stronger home on BBC2 in its new format.

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