Defunct LimeWire Buries The Copyright Hatchet With Music Agency Merlin, Settles For $15M?

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Another hefty payout for the now-defunct file-sharing P2P service LimeWire, and, perhaps more importantly, another nail in the coffin for P2p services: Merlin, a rights agency representing independent labels, says that it has reached an out-of-court settlement with LimeWire over copyright infringement — a settlement its characterizing as its first big win against a P2P company.

Merlin — which represents labels that feature artists like Adele, Grizzly Bear, The National, Arcade Fire and The National — did not disclose the value of the deal, except to say that it was “commensurate” with the settlement reached by major music labels with LimeWire in May 2011, which totaled $105 million. The suit had originally been filed in July 2011, in the wake of that settlement, with Merlin seeking at least $5 million in damages.

At the time, the major music labels controlled 70 percent of the market in the U.S. while Merlin accounts for 10 percent. Billboard has done some back-of-the-napkin math and worked out that this could mean that Merlin’s settlement is worth about $15 million.

Update: We’ve since learned from sources that the $15 million a fair ways off the actual amount, but that the settlement is for more than the $5 million marker set in the original suit. Nor does it factor in legal fees and other costs in fighting the case in the U.S. [original article continues below]

LimeWire ceased operations in 2010 after a court injunction prohibited it from distributing its software. The directors of the company say that it is taking all necessary steps to comply with that, including asking those who have it to uninstall the software, and for others to stop trading on its name.

Merlin has pointed out that this is the first time that it has managed to eke out a major settlement over copyright infringement with a P2P service. One of the last big P2P settlements before the cases with LimeWire was with KaZaa, the P2P service originally founded by Skype/Rdio entrepreneurs Niklas Zennstrom and Janus Friis.

At the time, a landmark settlement of $115 million was reached. But apparently, with that action led by major labels like EMI and Warner Music via organisations like the RIAA, smaller players saw little returns.

Hence, the formation of Merlin and the independent action this time around.

“It is deeply satisfying to announce this settlement today. The exclusion of independents from past major settlements such as KaZaa was a key factor in the formation of Merlin, and I am proud to say that this time, via the actions of Merlin, our members’ rights have been properly protected,” said Charles Caldas, Merlin CEO. “We will continue to do everything we can to ensure that the labels we represent are never again left out in the cold.”

But it’s important, too, to note that this is not the first payout Merlin has had: it has deals in place with Spotify, YouTube, Google Music, Rdio (the irony!) and Simfy; and it has also reached other copyright infringement settlements with XM Sirius and Grooveshark, among others — although these may not have been on the scale of its LimeWire action.

The labels that are part of the Merlin rights association include some of the most popular names in independent music such as Epitaph, Merge, Warp, Yep Roc/Red Eye, Naïve, Naxos, Tommy Boy, One Little Indian, Kontor, Secretly Canadian, Beggars Group, [PIAS] Group,!K7, Sub Pop, Domino and Koch/E1.

With the number of P2P and other potentially-illicit content sharing sites closing in by the month — the very fact that LimeWire is no longer attests to this, as does the disappearance of Megaupload and others — there will be fewer targets for Merlin and its bigger cousins to aim their actions. But this news will at least encourage them to know that when they do, it won’t be in vain.

We’ll be trying to contact LimeWire to get their position on this story. If you are on the other, P2P side of this story and have a different take, let us know.

(photo: Chealion, Flickr)