Universal to Join Piracy Suit Against Bertelsmann

Universal to Join Piracy Suit Against Bertelsmann.

Universal Music Group said on Monday it is seeking to join a $17 billion suit brought by music publishers against Bertelsmann AG, alleging it aided the once-hugely popular Napster Internet music service in piracy.

The suit by the publishers, which included rhythm & blues pioneers Jerry Leiber & Mike Stoller, was filed in February accusing Bertelsmann of perpetuating Napster's success by investing more than $100 million in the service.

Universal, the world's largest record company and home to such artists as U2, Eminem, and Lucinda Williams, has been one of the more aggressive record companies in pursuing legal remedies to combat piracy. The industry has blamed file-sharing technology for much of the recent slump in record sales.

"Bertelsmann did not merely provide a loan to Napster; nor was it merely a passive investor in Napster," said Universal in a statement. "Rather, it took control of the Napster system to financially benefit itself at the expense of Universal and its artists."

A Bertelsmann spokeswoman declined to comment.

Bertelsmann owns the BMG family of record labels, the smallest of the big five record companies, with artists like Elvis Presley, The Strokes and Aretha Franklin.

Universal, which is owned by Vivendi Universal, filed its copyright infringement suit in U.S. District Court in New York and expects the suit to be combined with the publishers suit.

Last month, Universal and EMI Group Plc sued San Francisco-based Hummer Winblad Venture Partners, the venture capitalists that once backed Napster.

At its peak, Napster had some 60 million users downloading songs using its service. But after a federal court ruled the service ran afoul of copyright laws, the service shut down in 2001 and eventually declared bankruptcy last June.

When Bertelsmann invested in Napster in 2000, it had originally said it wanted to build a legitimate music subscription service.

But the lawsuit filed by Universal alleges, "Bertelsmann recognized it did not have the technical capacity or business model to implement such a service for some time."

AOL Time Warner Inc.'s Warner Music and Sony Music declined to comment on whether they would join the suit against Bertelsmann. EMI was not immediately available for comment.

But one label executive who requested anonymity said they had looked at the suit but decided it was not worth pursuing.

Source: Reuters