Napster Faces $9.2 Million Due Royalties Lawsuit from Sony Music

Sony Music Entertainment (SME) is suing Napster parent Infinite Reality (which rebranded as Napster Corp. in May) for allegedly failing to cough up north of $9 million in due licensing payments.

SME just recently fired off that straightforward unpaid-royalties complaint, roughly seven weeks after SoundExchange took legal action against Napster (and Sonos) for allegedly missing Sonos Radio payments.

As many will recall, Infinite Reality – which has closed several acquisitions, including one with a reported $500 million price tag, on the year – only announced the purchase of Napster in late March. Even prior to that, however, reports had pointed to possible late royalty payments from Napster and Rhapsody International.

Following all those angles to their logical conclusion, Sony Music’s owed-royalty qualms date back to well before Infinite Reality scooped up Napster. In fact, per the major’s action, it possessed – but opted against exercising – the right to terminate its Napster licensing pacts in connection with Infinite Reality’s buyout.

(Regarding the plural pacts, the suit technically describes distinct years-old contracts with SME proper as well as divisions like The Orchard and Foundation Media.)

But instead of pulling its catalog, SME secured a “commitment to get current on the substantial outstanding balance owed,” according to the legal text. Said commitment laid the groundwork for a payment plan: Rhapsody/Infinite Reality would forward $6.8 million across four installments, the first payable 15 days after Napster’s sale wrapped and the second due 30 days post-sale, the complaint claims.

As Infinite Reality completed the Napster purchase in March, once again, those two installments were allegedly due in April, with a third payable by May’s end. Unsurprisingly, in light of the action, the defendants allegedly failed to honor the plan – besides allegedly missing other monthly payments totaling $2.4 million.

Enter a late-June “formal notice” of breach and corresponding termination of the deals in question.

Despite the latter, the SME filing parties maintain that Napster is allegedly continuing “to unlawfully use and exploit substantial volumes of Sony Music recordings” without authorization, including in music videos.

All told, then, the Sony Music plaintiffs are demanding $9.2 million in payments before interest, damages from the alleged infringement, and an order blocking further allegedly unauthorized usages. When contacted for comment, a Napster spokesperson opted against weighing in on the claims themselves – while also reiterating a goal of “rebuilding” professional relationships with the majors.

“We have no comment on pending litigation,” the spokesperson said to DMN. “However, we deeply value our relationships with all of our partners. We remain committed to rebuilding Napster’s relationships with all of the major labels and are hopeful for a swift and amicable resolution.”