Bertelsmann Settles With EMI Over Napster Investment Dispute

from the over-and-done-with dept

Tue, Mar 27th 2007 12:20am — Mike Masnick

Back in the days of the original Napster, the only major label to recognize that Napster represented an opportunity, rather than a threat, was Bertelsmann (BMG). Berteslmann eventually invested in Napster before the court system shut it down and forced the assets to be sold off. After all of that happened, various other major record labels decided to punish Bertelsmann by suing the company for investing in Napster. This was quite surprising -- because usually you have shareholders suing a company for its mismanagement rather than other companies suing shareholders for what a company did. It was a case that investors of all stripes (especially venture capitalists) should have been watching closely, as a finding against Bertelsmann could mean that other investors could be held liable for what the companies they invested in did. As the case went forward, things got awkward last year when Universal Music, who had kicked off the lawsuits against Bertelsmann, bought BMG, leading the two companies to quickly settle. The latest news is that Berteslmann has now settled with EMI as well, while still not admitting any liability. It's good that Bertelsmann never needed to admit liability, but it would have been nice to have a judge point out that making investors liable for what their portfolio companies do is simply not reasonable.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

6 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

mit, 27 Mar 2007 @ 3:11am

This could have been a major case of shooting yourself in the foot
[ link to this | view in chronology ]
fuse5k, 27 Mar 2007 @ 3:44am

music industry
I bet bertelsman were just hanging on until they were bought up by a major.

Its all the same in the music industry... The big four(or is it three) buy up all of the other companies when they sign a good artist.
[ link to this | view in chronology ]
John, 27 Mar 2007 @ 6:16am

How much more consolidation can we see in the music industry. If I'm correct, it's still a big "4" right now...I can't see music improving at the rate these large company's keep growing. Long live independent labels!!!!!!!!!!!!!!
[ link to this | view in chronology ]
Anonymous Coward, 27 Mar 2007 @ 8:33am

Investors liable?
Every stock holder in xyz corporation liable now? Let the suing begin!
STUPID STUPID STUPID!!!!
[ link to this | view in chronology ]
Woadan, 27 Mar 2007 @ 12:36pm

Hello?
The article states that Universal bought BMG. However, that is untrue. Sony and BMG merged.
[ link to this | view in chronology ]
|333173|3|_||3, 28 Mar 2007 @ 6:49pm

Already Liable
Indiectly, tehy are liable in practice, becasue any payout eh company has to make comes either from increasing prices (which may not be practical), or reducing dividends to shareholders. Whenever the latter option is taken, the shareholders are effectively paying the fine.
[ link to this | view in chronology ]