Four men behind The Pirate Bay, one of the world's biggest free file-sharing websites, were each sentenced to a year in jail on Friday for breaching copyright, and ordered to pay $3.6 million in compensation.

Analysts said the guilty verdict in the closely-watched test case could help music and film companies recoup millions of dollars in lost revenues, though they doubted it would stem the tide of illegal downloading.

In a broadcast on The Pirate Bay's website one of the four defendants, Peter Sunde, taunted the court, holding up a mock IOU note for 31 million Swedish crowns ($3.6 million) followed by the initials JK -- Internet lingo for just kidding.

That's the closest they're going to get to getting money from me, Sunde said.

International trade body IFPI, which represents some 1,400 record companies across the world, reported earlier this year that about 95 percent of music downloaded in 2008 was illegal.

On its website, The Pirate Bay scorned the ruling, calling it a crazy verdict.

It was lol (laugh out loud) to read and hear, the message read. But as in all good movies, the heroes lose in the beginning but have an epic victory in the end anyhow. That's the only thing Hollywood has ever taught us.

IFPI Chairman John Kennedy welcomed the court sentence which he said in a statement provided a a strong deterrent against copyright infringement.

This is 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 protected by law, he said.

The men linked to The Pirate Bay -- Sunde, Gottfrid Svartholm Warg, Fredrik Neij and Carl Lundstrom -- were charged early last year by a Swedish prosecutor with conspiracy to break copyright law and related offences. They denied the charges.

Companies including Warner Bros., MGM, Columbia Pictures, 20th Century Fox Films, Sony BMG, Universal and EMI also sought damages of more than 100 million crowns ($12 million) to cover lost revenues.

The Stockholm district court said in a statement the four were found guilty of breaching copyright laws and each sentenced to a year in prison.

APPEAL

Lundstrom's attorney, Per Samuelson, told journalists he was shocked by the verdict and the severity of the sentence.

That's outrageous, in my point of view. Of course we will appeal, he said. This is the first word, not the last. The last word will be ours.

The lawyers defending Sunde and Neij told Reuters their clients would also appeal the verdict.

The group that controls The Pirate Bay, launched in 2003, says that no copyrighted material is stored on its servers and no exchange of files actually takes place there so it cannot be held responsible for what material is being exchanged.

The prosecution said that by financing, programing and administering the site, the four men promoted the infringement of property rights by the site's users.

Industry experts were not convinced the verdict would have a lasting effect.

Every time you get rid of one, another bigger one pops up. Napster went, and then up came a whole host of others ... The problem of file-sharing just keeps growing year on year, and it's increasingly difficult for the industry to do anything about it, said music analyst Mark Mulligan of research firm Forrester.

Dan Cryan, senior analyst at media research firm Screen Digest, said the lack of international copyright law meant websites dedicated to illegal downloads could simply move on to a new country if legislation tightened where they operated.

Pirate Bay was brilliant at self-publicity, but the reality is there are lots of other torrent-tracker sites, he said.

The closing of the one that shouts the loudest won't make any difference.

(Additional reporting by Simon Johnson in Stockholm and Georgina Prodhan in London; Writing by Niklas Pollard, editing by David Cowell, John Stonestreet)