"There are very substantial damages being paid -- in excess of $100 million -- and Kazaa will go legal immediately. They've had time to prepare for this," said IFPI Chairman and Chief Executive John Kennedy.
The music industry has pursued an aggressive legal strategy in its attempts to curb Internet piracy, filing lawsuits against file-sharing companies like Kazaa and Grokster, as well as individual users who uploaded copyrighted material.
The IFPI said in a report on Thursday that last year there were $4.5 billion in pirated CD sales, or more than one in three CDs sold worldwide, and that there were 20 billion illegal downloads -- roughly three for every human being on Earth.
The announcement follows the release of a music industry report that says more than 20 billion music tracks have been downloaded illegally in the last year.
Meanwhile, legitimate music services like Apple's iTunes have become wildly popular, offering legal alternatives to illicit file-sharing.
Kazaa follows other sites like Napster which now offers legal downloads.