EMI has joined Universal Music Group in the legal onslaught against Bertelsmann over its financial support of pioneering peer-to-peer purveyor Napster, and industry sources say Sony Music may consider jumping into the legal fray as well.
The British music major, home to such acts as the Beatles and Radiohead, filed suit for contributory copyright infringement in New York District Court, arguing that Bertelsmann provided crucial funding that kept Napster operating as a haven for illegal file swapping.
“But for the conduct of Bertelsmann, Napster would have been shut down and its users’ infringement would have ceased long before July 2001,” when a court injunction shuttered the system, the complaint said. “Bertelsmann shocked the industry by throwing Napster a financial lifeline specifically to ensure that the system did not shut down.”
$85 mil investment
Bertelsmann, whose own music division BMG was a party to the industry’s original infringement suit against Napster, invested roughly $85 million in the Netco in what the conglom said was an attempt to build a legal, subscription-based alternative to its free service.
But Universal and EMI contend in their suits that the money was actually used to keep the illegal service afloat, maintaining the Napster brand and presence in consumers’ minds while the company worked on its fee-based successor.
Bertelsmann declined to comment on the litigation.
Napster, which filed for bankruptcy earlier this year, has since sold its assets to media-software maker Roxio, which plans to relaunch the company as a subscription service within the next year. Roxio also acquired label-backed service Pressplay to provide the backbone of its new music network.
Verizon request denied
Elsewhere in the courts Wednesday, an appeals court denied a request from telco Verizon to stop the Recording Industry Assn. of America from obtaining information about Verizon users that trade music on peer-to-peer sites.
The denial is seen as a first step toward potential lawsuits against individual users of file-sharing services — a step the music industry has so far been unwilling, or unable, to take. Case revolves around two specific peer-to-peer users, who are said by the labels to have traded hundreds of illegal files each.
A Verizon rep said the company would comply with the order and turn over information as requested, but vowed that the company would continue to fight the case when it goes to full trial this September.