Service reached settlement with IFPI Sept 14.

Kuro, Taiwan's largest peer-to-peer (P2P) network, has closed down its service and formed a "strategic alliance" with the local Yahoo! portal as part of its transition into a legitimate download site.

The shutdown of Kuro's copyright-infringing service is part of the terms of the $9.1 million-settlement it reached with the IFPI on Sept 14.

Kuro's 400,000 members are now directed to the Yahoo-Kimo Music site as part of a "strategic alliance" between Kuro and Yahoo-Kimo, Yahoo's Taiwanese subsidiary.

The first 100,000 Kuro members who subscribe to Yahoo-Kimo Music’s VIP service can download 10 songs for free, Kuro said in a statement.

Yahoo-Kimo Music charges NT$35 ($1.05) per download. Kuro will pay for the costs of the promotion campaign.

Eric Cheng, chairman of Chuang Lien Wang, Kuro’s new operator, said the company will launch a new service similar to the iTunes-iPod business model in the near future.

Chuang Lien Wang is a joint venture company established to run Kuro that is 20% owned by C-Media Electronics, a Taiwan-based computer audio product maker, 30% by Cheng and 20% by Kuro founder Fashionow. Unnamed investors own the remainder of the company’s stock

Kuro will also extend its partnership with Yahoo-Kimo Music to jointly boost the market, Cheng said, without elaborating how. Chuang Lien Wang general manager Victor Chen said merging with Yahoo-Kimo Music is one possibility.

C-Media Electronics's expertise in audio products and Fashionow’s know-how in running digital music site will make the new Kuro attractive to Taiwanese music lovers, Cheng said.

Yahoo-Kimo Music started providing online music listening and downloading services in March and reportedly has a small base of subscribers. The company declines to provide an exact figure.