Bertelsmann Music Group (BMG) and Music Publishing Companies Reach $130M Settlement Over Napster
August 31, 2007
Music publishing affiliates of the Harry Fox Agency have settled their lawsuit against Bertelsmann AG over the media conglomerate's early investment in the original peer-to-peer service Napster.
Billboard.biz has learned that Bertelsmann agreed to pay $130 million to publishers who are part of the class certified by the U.S. District Court in San Francisco, which must approve the settlement.
Documents seeking court approval are expected to be filed in San Francisco later today.
Several record companies first filed the suit in 2000 against venture
capital firm Hummer Winblad, which invested about $13 million to help launch Napster, and Bertelsmann, which invested (or loaned, as argued by Bertelsmann in court) about $85 million, after the lawsuit was filed.
Spearheaded by HFA, a class of more than 27,000 publishers later joined the suit. Since BMG Music Publishing was a unit of Bertelsmann, rights in that publisher's songs were not part of the case.
The suit claimed that Bertelsmann and Hummer Winblad should be liable for direct or, at the very least, secondary copyright infringement for enabling illegal music file sharing over the P2P network of the original Napster, which filed bankruptcy in 2001 and then sold its name.
Whether realistic or not, figures for potential damages against
Bertelsmann bantered about by individuals close to parties in that suit
reached into the hundreds of millions of dollars.
When Vivendi's Universal Music Group bid for Bertelsmann's BMG Music
Publishing unit last summer -- the most sought-after publishing acquisition in decades -- UMG sweetened that bid by including a settlement of their claims against Bertelsmann in the Napster suit. As part of the acquisition deal, Bertelsmann paid UMG $60 million. Not only did that deal pull Universal Music Publishing Group out of the suit, but Bertelsmann expected the settlement value to act as a benchmark for settlement discussions with other parties to the litigation.
Labels involved in the suit settled their claims over the last year. National Music Publishers' Assn. publishing members settled their claims against Hummer Winblad some time ago before rather than filing suit against the firm.
