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Earnings: EMI, WMG Napster Settlements Hurt Bertelsmann

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Settling with rival labels over claims Napster infringed their copyright hurt Bertelsmann’s bottom line in the first quarter. After paying a total EUR 114 million ($154.5 million) in settlements to EMI Group and Warner Music Group, the German media group posted a total loss of EUR 117 million ($158.5 million).

Labels began suing Berteslmann in 2003, claiming its investment in the then-controversial original incarnation of Napster was tantamount to copyright theft. The group had bankrolled the network to the tune of $85 million, before its outright acquisition was blocked on a technicality, forcing the original Napster out of business. EMI settled out of court with Bertelsmann for an undisclosed amount in March before WMG followed suit a month later for $110 million. How much did that leave EMI with? You do the math – the difference between the total settlements and WMG’s is $44.5 million, though the label’s payout remains undisclosed. Bertelsmann also settled with Universal for $61 million back in September.

For some context, Bertelsmann posted EUR 60 million earnings in the same quarter last year. But it wasn’t just the Napster effect that hurt the company. Sales, too, unexpectedly fell from EUR 4.46 billion to EUR 4.38 billion.