Limewire Settles For $105 Million; How Much Of That Will Go To Artists?

from the you-get-three-guesses dept

Fri, May 13th 2011 7:17am — Mike Masnick

In a move that's hardly a surprise to anyone, Limewire and the RIAA have settled their lawsuit, with Limewire's Mark Groton agreeing to pay $105 million to the labels. This particular trial was only about how much he should have to pay, and a settlement was inevitable, because Groton was already found to be guilty, and the judge had already declared that he, personally, was liable, rather than just the corporation (corporate veil? pierced!). So, at that point, you knew he had to settle. Limewire had already settled with the music publishers, who freaked out when Limewire sought to dig deep into records the publishers did not want public. Either way, as we noted when Limewire lost, this sort of result was inevitable. Limewire really did act quite like Grokster, and it's really bizarre that Groton thought he could keep the site going without this result.

Of course, $105 million is significantly less than what the RIAA had been asking for -- with the judge practically mocking the labels at one point for suggesting that Limewire was on the hook for $75 trillion -- or "more money than the entire music recording industry has made since Edison's invention of the phonograph in 1877." $105 million is also significantly less than the $1 billion that was the whisper number making the rounds that the labels were demanding.

The real question, though, is what will happen to the money, and how much of it (if any) will actually go to any of the artists signed to those labels. If any RIAA label artists receive a check from this lawsuit, please let us know. I expect we'll be waiting a long, long time. In the meantime, we're still curious if this shutdown of Limewire has resulted in any increased sales. A couple months ago, we had an interesting discussion on the topic, and looked at some evidence on both sides. I think it may be too early to tell, but it'll be worth watching to see what the eventual evidence shows.

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Filed Under: money, settlement
Companies: limewire, riaa

53 Comments

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Jay (profile), 13 May 2011 @ 6:40am

Answer: Zero
Torrentfreak already has the exclusive

So it's become obvious to anyone that actually pays attention. The artists are used only as a mention of "piracy". They get no benefits with these laws.

All of this was started "for the artists". The RIAA has now shown that this is a farce. The same company also spent $3 million dollars, suing customers, to go after $400K. If this doesn't put the RIAA on a collision course with artists, I don't know what will.
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Hephaestus (profile), 13 May 2011 @ 7:07am

Does anyone know if this guy actually has the money to pay $105 million dollars? RIAA wins $105 million, makes a great headline, but the point is moot if he doesn't have the money.
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Brian, 13 May 2011 @ 7:23am

Re:
That's exactly what I was thinking. Not too many people that can personally pay a 105 million dollar settlement.
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fogbugzd (profile), 13 May 2011 @ 7:28am

Any increased music sales might not be linked to shutting down Limewire. The increased sales might be due to the start of Amazon and Google cloud music services. Both services increase the value of a music collection by making it easier to use from multiple devices and thus could increase sales. Yes, both services do have annoying restrictions. However, they are probably more useful in their current conditions than they would be if Amazon and Google had complied with the requests of the record labels.
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Huph, 13 May 2011 @ 7:35am

How Much Will Go to Artists
C'mon now. How much of Limewire's profits went to musicians?
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DannyB (profile), 13 May 2011 @ 7:38am

Let me play The Devil for a second . . .
(or possibly his advocate)

Imagine the RIAA arguing the following "logic".

Amazon and Google's evil unlicensed cloud music services are based on users uploading their music files.

Limewire, Grokster and other even worse piracy tools (eg, Rapid Share, FTP, HTTP, Email, the IntarTubes etc) are how you obtain these digital files to upload to cloud music services.

Therefore, Google and Amazon's evil unlicensed cloud music services are liable for contributory infringement.

-=-=-=-=-=-=-=-=-=-=-
(Next up . . . ISP's and companies that lay fiber optic and dig trenches are liable also.)
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Jay (profile), 13 May 2011 @ 7:41am

Re: How Much Will Go to Artists
That's one of the sticking points. The labels didn't want to negotiate. They just charged a LARGE startup amount.

Same as Napster, same as Grokster.

Same as Spotify, same as Grooveshark, same as Google...

See a pattern?
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Capitalist Lion Tamer (profile), 13 May 2011 @ 7:41am

Re: Answer: Zero
I saw that on TF. Now, I'll have to go redo my chart. I indicated that they'd be tossing 1% to the artists they care so deeply about, among other expenditures.

The updated chart would be one solid color -- Legal Defense Fund - $105 million.
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Nathan F (profile), 13 May 2011 @ 7:50am

Re: Re:
Well since the courts decided he was personally responsible instead of his company (LLC and INC protections didn't apply) then I figure the company can help the man out and give him the money to pay it.
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DannyB (profile), 13 May 2011 @ 7:53am

Re: How Much Will Go to Artists
> C'mon now. How much of Limewire's profits went to musicians?

An excellent point!

Thank you for pointing out how evil the RIAA is!

This is sort of like geometry proofs in high school:
1. Limewire == evil! (according to RIAA)
2. Limewire doesn't pay artists. (your post)
3. RIAA doesn't pay artists. (artists have publicly said so)
4. Therefore: RIAA == evil!
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The eejit (profile), 13 May 2011 @ 8:04am

Re: How Much Will Go to Artists
IT was spent on open source music.
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Josh in CharlotteNC (profile), 13 May 2011 @ 8:04am

Pierced Veil
So, now that the corporate veil has been pierced, how long until the CEO of Universal is held personally liable for defrauding artists of their royalties?

http://www.techdirt.com/articles/20110404/12211913771/record-labels-may-owe-artists-cl ose-to-2-billion-lawsuits-ramp-up-with-rick-james-lead.shtml
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Hephaestus (profile), 13 May 2011 @ 8:23am

Re: Re:
It probably going to be another case of ... we won this huge settlement, we are proud that we did, this will learn them, and we are sure no one will ever do this again.

These people are insane. They keep repeating the same mistakes over and over again.
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ReallyEvilCanine (profile), 13 May 2011 @ 8:25am

Depends what you mean by "artist"
How Much Of That Will Go To Artists?
The bullshit artists on the board and in the legal department? Most of it.
The musical artists who wrote and performed? Not enough for a Big Mac.
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Josef Anvil (profile), 13 May 2011 @ 8:29am

Could the system be anymore broken?
"RIAA spokesman Jonathan Lamy previously told TorrentFreak that the �damages� accrued from piracy-related lawsuits will not go to any of the artists, but towards funding more anti-piracy campaigns. �Any funds recouped are re-invested into our ongoing education and anti-piracy programs,� he said."

So the courts hand over $105 million to the RIAA which, after paying the legal team; if they can even collect that sum, has earmarked that money to bribe (lobby) Congress. So the government awards money to an organization that plans to give that money to the government. Job done.
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Jay (profile), 13 May 2011 @ 8:34am

Re: Could the system be anymore broken?
"ongoing education"

Remember, this is also going to "train" the agents that are going after piracy. The great deeds of the RIAA in fighting piracy directly and in the classrooms
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Chosen Reject (profile), 13 May 2011 @ 8:36am

I really hate this "inducement" stuff. If the advertising for what you're selling makes you liable for what others do with it, shouldn't the people behind X10 security cameras be registered sex offenders by now?
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buck lateral (profile), 13 May 2011 @ 8:37am

Re:
Read the article. It was a settlement, not an award. There wouldn't have been a settlement if he didn't have the money.
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Lesath (profile), 13 May 2011 @ 8:41am

I say about three fiddy, give or take three fiddy.
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NullOp, 13 May 2011 @ 8:48am

Money
How much money will go to the artists is hard to determine but my first guess is NONE, ZERO, ZIP, ZILCH, etc. No doubt there will be a great explanation but in the end only the labels will benefit...
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cc (profile), 13 May 2011 @ 8:50am

Re: Re: Answer: Zero
A chart? Pfft, how 1997.

Today it's done with copyrighted video. Observe:
http://www.youtube.com/watch?v=M5QGkOGZubQ
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Anonymous Coward, 13 May 2011 @ 8:53am

Re: How Much Will Go to Artists
I think they tried, but the RIAA said "Artists? Who the f*** are those? You should be paying us you pathetic wretch!". And then they sued.
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Anon, 13 May 2011 @ 8:54am

Not just Artists
The RIAA claims losses of Billions in revenue and the several thousand jobs lost. I want to know if they're going to pay any of those people who lost jobs. I already know the answer, but wouldn't you think that some would be reserved for those people left unemployed?
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Anonymous Coward, 13 May 2011 @ 9:04am

Re: Re: Re:
Like winning lawsuits and getting SC decisions in their favor?

Groton will pay this; the judge ruled his business finances could be attached.
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Anonymous Coward, 13 May 2011 @ 9:09am

Re: Re: How Much Will Go to Artists
The RIAA isn't responsible for paying musicians, the labels are. And they do. Those cribs didn't buy themselves.

You look like a fool when you talk about something you know nothing about, as you try to rationalize your illegal downloading addiction.
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Anonymous Coward, 13 May 2011 @ 9:13am

Re: Pierced Veil
No one defrauded anyone of anything, Freetardo. The law had yet to define how licenses were to be seen.
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Anonymous Coward, 13 May 2011 @ 9:16am

Re: Answer: Zero
The labels will pay the artists more than you freeloaders do.
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Jay (profile), 13 May 2011 @ 9:16am

Re: Re:
So let me get this straight...

You can "award" 10x the supposed damages of infringement, but if it's a settlement, that's supposed to be within the limit of the person?

Yeah, this isn't abuse of the legal system...
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Richard (profile), 13 May 2011 @ 9:19am

Re: Re:
Which begs the question - if he had that kind of money to start with why did he bother with Limewire?
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Richard (profile), 13 May 2011 @ 9:26am

Re: Re: Re: How Much Will Go to Artists
The RIAA is the labels. It is their trade association - it acts on their behalf. Anything it wins would go back to the labels (and from there to the artists) unless they decided otherwise.

Also, how do you know that DannyB has every done any illegal downloading? The truth is - you don't.

As you said:

You look like a fool when you talk about something you know nothing about,
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The eejit (profile), 13 May 2011 @ 9:28am

Re: Re: Answer: Zero
Bull, bollocks and shit. I pay as much as I can to those I like, and the rest can go fuck themselves for their entitled attitude. There's a reason I refuse to pay the IFPI a penny - because I don't need to anymore. Their time is done.
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Jay (profile), 13 May 2011 @ 9:28am

Re: Re: Re: How Much Will Go to Artists
*laughs*

Done with the snide remarks there? Okay, quick rebuttal time.

"The labels will pay the artists more"

Prove it. Youtube paid the labels $500K. How much did the artists get?

"Those cribs didn't buy themselves."
Yep, and the labels have them and still want them. I'm just glad the indie scene is coming up stronger and more willing to use filesharing than the "Big Boys" that are represented by the RIAA.

So I'll be going to Jamendo. Meanwhile the big boys represented by the RIAA still get this one time big cash settlement. I'm sure that's going to justify Mitch Bainwol's paycheck. The reluctance to work with the labels in the future will be biting them in the butt a lot more than Google's cloud is crimped by inability to compete.
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The eejit (profile), 13 May 2011 @ 9:31am

Re: Re: Pierced Veil
And yet, the contracts defined them already, and the RIAA tried to wriggle out of their contractual obligations. Odd, that.
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The eejit (profile), 13 May 2011 @ 9:32am

Re: Not just Artists
No, that would be compassionate.
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Mike Masnick (profile), 13 May 2011 @ 9:34am

Re: Re: Answer: Zero
The labels will pay the artists more than you freeloaders do.

Kind of an interesting statement, considering multiple studies showing that the biggest file sharers also spend the most on music.

Besides, why do you continue to insist that all of us are "freeloaders"? I've pointed out multiple times that I buy all my music. I actually just got a stack of wonderful new CDs in the mail yesterday.
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Richard (profile), 13 May 2011 @ 9:35am

Re: Re: Pierced Veil
No one defrauded anyone of anything

Actually that's one case that hasn't been decided yet - but if it goes a certain way the judgement will be that fraud has occurred. So your conclusion is premature at least.

BTW a freetard is a type of Saint - somewhere between a Holy Unmercenary and a fool for Christ's sake. So what you dished out was a compliment.
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DannyB (profile), 13 May 2011 @ 10:12am

What illegal downloading addiction are you talking about?

It is interesting that you don't attack the message, just the messenger.
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DannyB (profile), 13 May 2011 @ 10:14am

Re: Re: Re: How Much Will Go to Artists
Oh, try this. On lines 3 and 4, replace RIAA with the name of any of the labels.
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jackwagon (profile), 13 May 2011 @ 10:47am

Re: Re: Re: Re: How Much Will Go to Artists
Agreed. Just about every member of the board of directors of the RIAA is a label rep.

http://www.riaa.com/aboutus.php?content_selector=who_we_are_board
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Stuart, 13 May 2011 @ 1:06pm

Re: Depends what you mean by "artist"
Which is exactly how much they deserve for being a part of the RIAA.
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Yeah Right, 13 May 2011 @ 3:06pm

Re: Re: Re: He's loaded
He runs three other businesses under the Lime brand: a $100 million - plus quantitative hedge fund, a medical software operation, and Lime Brokerage, which is gaining a reputation as one of the fastest trading systems on Wall Street.
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Khstapp, 13 May 2011 @ 3:12pm

Response to: Hephaestus on May 13th, 2011 @ 7:07am
From what I've read Lime Wire is effectively shut down and has no assets. The founder has a ton of money but those are his private assets that came from his hedge fund
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Brendan (profile), 13 May 2011 @ 3:19pm

Re: Re: Answer: Zero
I highly doubt that. I don't think that any of the many artists I've supported lately will see a dime from this settlement.
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artistrights (profile), 13 May 2011 @ 4:45pm

In the meantime, we're still curious if this shutdown of Limewire has resulted in any increased sales.

"Bucking a years-long trend of decline, U.S. music sales continued this year's upward swing, rising 1.6% through May 8, according to Billboard analysis of Nielsen SoundScan data."

Source: Billboard
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Anonymous Coward, 14 May 2011 @ 12:11am

Re: Re: Answer: Zero
That's a lie. Most musicians get most of their money from concerts, and not the labels, so clearly fans pay musicians more through buying concert tickets than through the labels.
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Anonymous Coward, 14 May 2011 @ 12:12am

Re: Re: Answer: Zero
That's a lie. Most musicians get most of their money from concerts, and not the labels, so clearly fans pay musicians more through buying concert tickets than through the labels.
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Anonymous Coward, 14 May 2011 @ 12:15am

Re: Re: Re: Answer: Zero
(and, as has been shown on techdirt, many artists don't care if their music gets pirated because that's not where they make their money, they make their money via concert tickets and other means. So, apparently, the larger audience gained through promoting piracy pays them more than what they would get through a smaller audience that buys their record label controlled music).
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Anonymous Coward, 14 May 2011 @ 4:34am

How Much Of That Will Go To Artists?

$0.001
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Anonymous Coward, 14 May 2011 @ 1:31pm

Re:
How Much Of That Will Go To Artists?

$0.001

How Much LimeWire Paid to Artists?

$0
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Jay (profile), 14 May 2011 @ 2:05pm

Re: Response to: Hephaestus on May 13th, 2011 @ 7:07am
I don't think he was protected though...

IIRC, those assets aren't protected even though he runs an LLC? Not positive, but I got the feeling that the labels literally wanted to make him pay as much as possible.
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The eejit (profile), 14 May 2011 @ 11:54pm

Re: Re:
What part of Limewire originally tried to get a distribution deal with thw RIAA wasn't clear? All the RIAA do is turn down new potential cash cows.
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Anonymous Coward, 15 May 2011 @ 10:15am

Re: Re: Re: Re: Answer: Zero
Hmm, except for some reason we don't see any artists complaining that Limewire got sued. Or that the PRO IP act is going to be passed.

Artists get paid for people attending their shows? Good. They're being paid to perform.

There's no reason why they shouldn't also get paid for producing recorded music that people want to consume every day.
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Anonymous Coward, 27 Oct 2015 @ 7:50pm

what about the other things that limewire downloaded like child pron
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