Bertelsmann settles a legacy Napster claim
OUT-LAW News, 21/01/2005
Media giant Bertelsmann has made its first settlement in a $17
billion lawsuit from music publishers over its funding of the
original version of Napster, the now defunct file-sharing service,
according to The New York Times.
The settlement with small record company Bridgeport Music will cost
Bertelsmann around $50,000, said The New York Times. Bridgeport
settled because "it was just not cost effective" to continue,
according to its lawyer. The roots of the dispute date back over
four years to when Bertelsmann, which owns BMG, one of the world's
largest music companies, invested more than $85 million in Napster
in the hope of turning Shawn Fanning's creation into a legitimate,
profitable subscription service. At the same time, several record
companies, including BMG, were suing Napster for copyright
infringement. The service shut down in June 2001, buckling under
the financial strain of legal battles. The Napster brand has since
re-launched under new ownership as a legitimate music download
service. In 2003 a group of independent music publishers and
songwriters turned on Bertelsmann, filing a $17 billion suit that
claimed that Bertelsmann's financial support to Napster facilitated
copyright infringement by prolonging the life of the service and
allowing millions of users to swap copyright protected music
on-line. The suit further alleged that Bertelsmann knowingly
colluded with Napster in the infringement of copyright, since the
funding was not conditional on the illicit sharing of music being
stopped. The settlement means that Bridgeport now drops out of the
suit, which will continue.
