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Thursday, June 05, 2003

Bad Times in Bertelsland

Hard on the heals of the news of the closing down sale at Telefonica's Terra Lycos comes more on Bertelsmann's legal problems. Now we all know the AOL Time Warner story, but the US does have some success stories, something to work with for the future. My question: where are the European success stories? Where is our future?

EMI has become the second large music company to sue Bertelsmann, accusing the German media giant of infringing copyrights through its financial support of Napster, the failed internet song-swapping service. In a lawsuit filed in New York on Wednesday night, EMI's recorded music division claims Bertelsmann's decision to invest in Napster allowed the service to continue operating when the music industry was trying to shut it down. EMI's lawsuit follows a flurry of legal claims seeking compensation from the financial backers of Napster, which filed for bankruptcy last year.

In February, a group of music publishers and songwriters, including the writers of Jailhouse Rock, filed a $17bn class-action lawsuit against Bertelsmann. Last month, Universal Music, the world's largest music group, filed its own claim. Universal and EMI are also both suing Hummer Winblad, the venture capital group that invested in Napster, on the same grounds as they are pursuing Bertelsmann. EMI's suit comes as Bertelsmann and AOL Time Warner are holding discussions about merging their recorded music operations. EMI, which is the only major music group not to be part of a media conglomerate, has previously held merger talks with both Bertelsmann and Warner, but has been unable to agree a deal and now risks being left out.

Like Universal, EMI is claiming damages of $150,000 for every case of copyright infringement. The music industry has so far failed to recover any damages, however, as Napster collapsed into bankruptcy last year after Bertelsmann's bail-out failed. "With this suit, EMI is fighting to protect our rights to control and receive the benefits of our copyrights and the rights of our artists to share in and enjoy the benefits and be compensated for their valuable creative endeavours," EMI said. Bertelsmann declined to comment. EMI's Music Publishing operation, which is the world's largest, is not involved in the current lawsuit, but could join the class-action lawsuit against Bertelsmann. Bertelsmann shocked the music business when its chief executive, Thomas Middelhoff, announced plans to rescue Napster. Mr Middelhoff, who stepped down from Bertelsmann last year, had said he intended to create a legal version of Napster.
Source: Financial Times

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