Bertelsmann Offers to Pay Music Publishers $130 Million for Napster Investment

Over 27,000 music publisher affiliated with the Harry Fox licensing agency stand to collect $130 million from Bertelsmann (the "BMG" in Sony/BMG) as payment for that company's investment in the original Napster P2P service.

The amount, significantly lower than initial publisher claims, would have to be approved by the U.S. District Court in San Francisco.

Billboard provides some background:

Several record companies first filed the suit in 2000 against venture capital firm Hummer Winblad, which invested about $13 million to helplaunch Napster, and Bertelsmann, which invested (or loaned, as arguedby 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 unitof Bertelsmann, rights in that publisher's songs were not part of thecase.

The suit claimed that Bertelsmann and Hummer Winbladshould be liable for direct or, at the very least, secondary copyrightinfringement for enabling illegal music file sharing over the P2P
network of the original Napster, which filed bankruptcy in 2001 andthen sold its name.

(Bertelsmann is off the hook as far as Universal's publishing division goes, having settled that aspect of its liability last fall as part of its publishing division's acquisition by Universal.)