Bertelsmann Settles Napster Lawsuit
September 6, 2006
If there ever were a music store that had the best shot in converting the millions of file-sharers, Napster would have been it. Bertelsmann certainly believed this, as it invested nearly $100 million in the now defunct P2P network. The German media giant also tried to purchase Napster’s intellectual property, however the takeover was rejected by the courts.
This situation left Bertelsmann in a bit of financial trouble. Although it never took over Napster’s intellectual property rights, it did fund the company with vast amounts of cash before it closed. In a bizarre twist to the online copyright wars, Bertelsmann’s fellow music publishers turned and sued the German media giant for promoting piracy.
Ever since this failed venture, Bertelsmann has been trying to dig itself out of litigation by settling with various publishers. However todays announcement
is by far the most progress made to date, as a settlement has been made with Universal. The two media companies have announced that Bertelsmann will settle with Universal for $60 million.
The settlement will act as a “…reimbursement of legal fees and expenses and covers the resolution of the legal claims of Universal’s recorded music and music publishing businesses, as well as those of BMG Music Publishing. Bertelsmann admits no liability in making this settlement,” Bertelsmann said in a statement.
Although Napster was the very definition of file-sharing, Bertelsmann’s settlement is still $40 million cheaper than Sharman Networks, who agreed to settle for $100 million. And in an apparently unrelated event, Bertelsmann has agreed to sell BMG Music Publishing, which includes a catalog of over 1 million artists, to Vivendi. Until April of this year, Vivendi was known as Vivendi Universal, however is now simply known as Vivendi. It still owns the rights to Universal Music, which will secure this label’s position as the largest music publisher.
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