Gigs & Bytes: The Long And Winding Lawsuit
The recording industry originally filed its copyright infringement suit against the first Napster at the end of 1999. However, it took 18 months of legal wrangling before a court injunction ordered the file-swapper to shut down its servers, forcing it to close its doors.
It was during those 18 months leading up to the shutdown that Napster received investment capital, most notably an $85 million check from Bertelsmann. Copyright holders still wanted their pound of flesh after Napster sank into bankruptcy oblivion, and turned to those investors in order to satisfy their lust for compensation.
The record labels charged that it was Bertelsmann’s investment that kept Napster running during its final months. Plus, a former Bertelsmann executive eventually ended up as Napster’s CEO. In other words, without Bertelsmann, the labels argued, Napster would have ceased to exist long before an injunction forced it off the Net in July 2001.
Bertelsmann isn’t saying how much it paid EMI to settle the lawsuit, but published reports indicate the final figure is somewhere between $50 to $150 million. Last fall, Bertelsmann settled with Universal to the tune of $61.22 million.
But the settlement with EMI doesn’t mean Bertelsmann is out of the litigation jungle. At least not yet. Songwriters and music publishers are still looking for their own piece of the Napster lawsuit. But whether they’ll be able to hang in there and shoulder the lion’s share of legal expenses after EMI’s departure from the courtroom remains to be seen.
