Bertelsmann settle final Napster claim

October 2007

Music Publishing

Bertelsmann AG has agreed to pay US music publishers, led by the Harry Fox Agency, $130 million to settle a copyright infringement case brought on by the German media giant’s deal with the Napster P2P service. BMG owner Bertlesmann and venture capital fund Hummer Winblad were targeted as they had both provided funding to the P2P firm in its final phase, mainly in a bid to help the Napster chiefs develop a legitimate royalty paying P2P. If approved by a federal judge, the deal announced Friday by the National Music Publishers Association and BMG would end the four-year lawsuit that accused Bertelsmann of contributing to Napster’s copyright infringement as an original investor — before the online music company changed its business model and became a recognised distributor of licensed music via paid downloads. That deal allowed Bertelsmann to end its involvement in a copyright infringement suit with the other major labels. Bertelsmann has made similar deals with other record labels amounting to $154 million. In all the deals, the company does not admit to any wrongdoing. Napster eventually was shuttered by U.S. courts in 2002 over copyright violations but has attempted to re-establish itself as a legitimate online music distributor.

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