STOCKHOLM (REUTERS/BLOOMBERG) - File-sharing service LimeWire, which shut down in 2011 under fire from the music industry, is making a comeback as a digital collectibles marketplace for art and entertainment, initially focusing on music.

Launched in 2000, LimeWire became the world's biggest outlet for people to share music, movies, and TV shows free of charge over the Internet, attracting 50 million monthly users at its peak popularity.

Blaming piracy as one of the main reasons for declining music sales, record companies sued LimeWire in 2006, forcing it to shut down five years later. But now, LimeWire plans to jump on the latest Internet bandwagon: NFTs.

A non-fungible token (NFT) is a crypto asset which uses blockchain to record who owns a digital file such as an image or video.

While NFTs would allow artists and musicians to have more control over digital copies of their work - repairing the damage caused by illegal streaming - the nascent market is rife with scams, fraud and market manipulation.

It was a complex process for the new team - led by co-chief executive officers and brothers Paul Zehetmayr and Julian Zehetmayr - to own LimeWire intellectual properties after 12 years of inactivity.

"It's a very iconic name. Even if you look on Twitter today, there's hundreds of people still being nostalgic about the name," said Julian in an interview. "Everybody connects it with music and we're launching initially a very music-focused marketplace, so the brand was really the perfect fit for that with its legacy."

LimeWire said it will partner with the music industry and the artists, who can sell pre-release music, unreleased demos, graphical artwork, exclusive live versions, as well as digital merchandise and backstage content.

The start-up will also launch its own utility token via a private sale within the next three weeks, which Paul said would be used like a loyalty program.

Julian said around 10 "really big mainstream" artists have signed on to be a part of LimeWire's offering so far.

Additionally, members of the management teams behind award-winning artists H.E.R. and the Wu-Tang Clan will be joining the start-up's board as advisers, along with Wyre CEO Ioannis Giannaros and NFT consultancy 6 Agency, which facilitated the purchase of a rare Wu-Tang Clan album from the United States government for PleasrDAO last year.

Unlike other NFT marketplaces that transact predominantly in cryptocurrencies, all assets on LimeWire will be denominated in US dollars so as to expand its marketability to mass audiences, with payment accepted in crypto or fiat currency.

The platform will also offer Bitcoin and Ether wallets and custodial services for the tokens themselves, facilitated through a partnership with blockchain payments firm Wyre.

The new LimeWire team, spread over Austria, Germany and Britain, plans to launch the service in May that would allow music fans and collectors to buy and trade a variety of music-related assets.

It plans to give up to 90 per cent of the revenue to the artists and looking to onboard one million users within the first year.

Prepared for all outcomes LimeWire's makeover as an NFT marketplace presents an interesting juxtaposition: Its new founders are taking a brand known best for its role in pirated music and introducing it into an industry still seeking to shake off a reputation for selling scams and overpriced image files.

But the Zehetmayrs are unconcerned, saying "the pros definitely outweigh any of the controversy". "After about 12 years of the platform being down, all the controversy that might have been in the past with the music industry has turned into nostalgia," Paul said.

In order to avoid any further legal complications attached to the LimeWire brand, upcoming cryptoasset regulation in Europe or even bad actors attempting to use the platform, the pair said they have incorporated stringent anti-money laundering checks and hired accountancy giant EY to thoroughly vet its proposed activities.

Ms Jeanine McLean-Williams, adviser to LimeWire and president of MBK Entertainment, which represents H.E.R. among others, said she was especially focused on the opportunity NFTs could provide in bringing more equality into the realms of crypto and music.

"I love that the team is smart, innovative and diverse," Ms McLean-Williams said in an e-mail. "As an African American female veteran in the entertainment business, I'm looking forward to getting more females educated about and involved in the world of NFTs."