Sony Music Entertainment (SME) is suing Rhapsody International, the parent company of streaming platform Napster.
In a lawsuit filed last Friday (August 1) in Manhattan federal court, Sony claimed that Napster failed to make royalty payments for over a year, while continuing to include music from its catalogue on the streaming service. It’s now seeking $9.2 million in licensing fees and unpaid royalties from Napster, as well as a potential $36 million in damages from copyright infringement.
In March, the Web3 startup Infinite Reality acquired Napster in a deal worth $207 million. At that time, Rhapsody allegedly owed over $6.5 million to Sony Music and its subsidiaries. The acquisition triggered a clause in the licensing agreements between Napster and SME that would have allowed the major label to break said agreements. Sony declined to do so, however, provided that Rhapsody agreed to a four-part payment plan, with the first three installments due in the following two months.
According to the lawsuit, Rhapsody has since failed to make any payments on its outstanding balance, nor has it made payment for licensing fees incurred since the acquisition. This has happened, SME’s legal action said, “all while [Napster] continued to collect subscription fees from their millions of paying users”.
Sony Music further claims that it sent a letter to Rhapsody International in May, informing the company it was in breach of contract. SME then terminated its licensing agreements with Napster in June as a result of the failed payments. Despite this, the label’s music has remained available for streaming via the service, which the lawsuit says is willful infringement.
SME is now seeking damages of $150,000 per infringed work, which would amount to $36 million based on the 240-song list that has been included in the court filing.
Napster was originally launched in 1999 by Shawn Fanning and Sean Parker, and was widely used for the illegal sharing of music files in the early years of the 21st century. The company filed for bankruptcy in 2002, and was ultimately closed down that same year after a number of record labels and Metallica issued lawsuits over copyright violations.
The firm was later acquired by global marketing agency Rhapsody in 2011, who oversaw its relaunch as a music streaming service.
