In a ruling that will be heard around the world, the Stockholm District Court sentenced Gottfrid Svartholm Warg, Peter Sunde, Fredrik Neij and Carl Lundstrom, founders of The Pirate Bay, to one year each in prison, and to pay damages of 30 million kronor ($3.6 million) to several entertainment companies, including Warner Bros, Sony Music Entertainment, EMI and Columbia Pictures.

The founders were convicted Friday of violating Sweden’s copyright law by assisting millions of users to freely download music, movies and computer games on the Internet. With an estimated 22 million users, the Pirate Bay has become the entertainment industry’s enemy No. 1 after successful court actions against file-swapping sites such as Grokster and Kazaa. Mr. Lundstrom helped finance the site while the three other defendants administered it.

Defense lawyers had argued the quartet should be acquitted because the Pirate Bay doesn’t host any copyright-protected material. Instead, it provides a forum for its users to download content through so-called torrent files. The technology allows users to transfer parts of a large file from several different users, increasing download speeds.

The court found the defendants guilty of helping users commit copyright violations “by providing a Web site with … sophisticated search functions, simple download and storage capabilities, and through the tracker linked to the Web site.”

In a video clip posted on the Internet, Mr. Sunde called the ruling “crazy” and said he would appeal. He also dismissed the damages to the entertainment companies, saying “we can’t pay and we won’t pay.” Mockingly, he held up a hand-scribbled “I owe U” note to the camera. “This is as close as you will get to having money from us,” he said.

Judge Tomas Norstrom told reporters that the court took into account that the site was “commercially driven” when it made the ruling. The defendants have denied any commercial motives behind the site.

John Kennedy, the head of the International Federation of the Phonographic Industry, called the verdict “good news for everyone, in Sweden and internationally, who is making a living or a business from creative activity and who needs to know their rights will be protected by law.”

Watch The Pirate Bay’s video response: Pirate Bay Response To Verdict.

The Recording Industry Association of America (RIAA) has reportedly issued pink slips to 50 staffers so far this year. Although, the music trade organization refuses to comment on the layoffs, it appears that this could be the beginning of the end for the ineffective, and much maligned, organization.

The RIAA which made its living from harassing file-traders and suing 12 year-old girls on welfare may be on its last legs. With the major labels fighting to stay afloat, it seams that feeding money into an organization that has achieved absolutely nothing for the past 8 years may not be such a good idea.

Maybe the RIAA should apply for temporary security positions at Wal-Mart for Black Friday. The staffers at the RIAA certainly have a good idea on what it must feel like to try and stop a mob of crazed shoppers who are trying to get something for free…