Sony Music has filed a lawsuit towards Napster over allegations that the streaming service owes greater than $9 million in unpaid royalties — and has continued to illegally play the songs after Sony pulled the plug on their licensing deal.
Napster — not the notorious turn-of-the-century file-sharing web site however the small streaming service as soon as often known as Rhapsody — was acquired in March by Infinite Actuality, a digital media and e-commerce firm, for $207 million.
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However in a lawsuit filed Friday (Aug. 1) in Manhattan federal court docket, Sony accused the newly bought firm of failing to pay its payments. The case claims Napster owed greater than $9.2 million when Sony lastly terminated its contract in June — however has stored on utilizing the songs anyway.
“When firms exploit Sony Music’s sound recordings for business profit with out authorization, this not solely harms Sony Music by depriving it of compensation, but it surely additionally reduces the inducement to spend money on the creation and dissemination of recent music,” the corporate’s legal professionals write.
Regardless of Napster’s origins as an industry-shaking pirating service, the well-known title has been reused for many years on a sequence of authorized music companies. Most lately, Rhapsody rebranded below the Napster title in 2016; it had a little bit greater than 1 million month-to-month energetic customers on the finish of 2020, according to Music Ally.
Again in January, Billboard reported that Napster had been making late royalty funds to at the least half a dozen distributors and document labels, typically by as a lot as a yr. In June, SoundExchange filed another lawsuit towards Napster over accusations of $3.4 million in unpaid royalties.
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In keeping with Sony’s new lawsuit on Friday, Napster has did not pay royalties to the corporate for over a yr. By March, Sony says Napster had racked up an unpaid royalty steadiness of $6,787,466 throughout 4 totally different licensing offers.
When Napster inked the Infinite Actuality acquisition deal in March, the phrases of Sony’s licensing settlement gave the music large the appropriate to terminate its licensing settlement with Napster fully. However the firm’s legal professionals say Sony waived that proper in alternate for a promise by Napster to lastly pay the excellent royalty steadiness.
In keeping with Sony, Napster by no means did so — and on June 23, the label terminated the licensing deal, which means the streaming service not had any authorized proper to play the corporate’s catalog. However the lawsuit says Napster by no means truly eliminated the music from its platform and is now merely committing wholesale copyright infringement.
“Regardless of the termination of all of defendants’ licenses to make use of any of Sony Music works, defendants have continued to make use of and exploit SME sound recordings and music movies,” the corporate’s legal professionals wrote. “Sony Music has recognized a pattern of a whole bunch of sound recordings and music movies that had been out there by means of Napster.”
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Friday’s case may be very clearly not the primary copyright battle for Napster. Shortly after Shawn Fanning and Sean Parker’s pioneering service took the nation by storm in 1999, it was going through infringement lawsuits from numerous heavy-hitters, together with Metallica, Dr. Dre and the RIAA. These instances had been shortly profitable: a federal choose issued an injunction in 2001, successfully forcing Napster to close down.
The next yr, Bertelsmann introduced that it could purchase the service and switch it right into a licensed listening platform, however a chapter choose later blocked the sale. Within the years since, the Napster title has been purchased by a sequence of homeowners: first by Roxio, then by Greatest Purchase, and eventually in 2011 by Rhapsody, an early music streaming service, which rebranded itself as Napster in 2016.
The lawsuit from Sony didn’t say how a lot it was searching for in damages. However below U.S. regulation, copyright homeowners can search as a lot as $150,000 for each work infringed, which means damages can shortly add up when a whole bunch or 1000’s of songs are in dispute.
In an announcement to Billboard on Monday (Aug. 4), a spokeswoman for Napster stated: “We’ve got no touch upon pending litigation. Nevertheless, we deeply worth {our relationships} with all of our companions. We stay dedicated to rebuilding Napster’s relationships with all the main labels and are longing for a swift and amicable decision.”