EMI and UMG settle on Napster

January 2007

Record labels, internet

EMI Music and the Universal Music Group announced yesterday that they have reached a conditional settlement with investment firm Hummer Winblad over its $13 million investment in the late nineties in the original Napster. The settlement is conditional on trial Judge Marilyn Patel revoking her order against the record labels to produce certain documents which Humer Winblad had originally said would show that the label’s original moves to develop their own download websites were anti-competitive. Hummer Winblad had always defended to label’s claim saying that their funding was to develop a new legitimate Napster but clearly the Supreme Court judgment in MGM v Grokster would have been worrying the investment firm. Less obvious is why the labels wanted to settle unless the documents ordered to be produced by Judge Patel (using criminal law exceptions to privilege) really are that damning. There have long been suggestions that the record label’s Musicnet and PressPlay opetrations were set up to prevent the development of a competitive digital market (although with iTune’s dominance this clearly failed): Limewire recently used the allegation as a defence to actions by the RIAA.

MGM v Grokster see Law Updates August 2006 04-480 27th June 2005

Limewire see Law Updates November 2006

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