Sony Music Entertainment is suing Rhapsody International, the parent company of streaming service Napster, for $9.2 million in licensing fees and unpaid royalties, as well as a potential $36 million in damages from copyright infringement. In a lawsuit filed last Friday (August 1) in Manhattan federal court and viewed by Pitchfork, Sony claims that Napster failed to make royalty payments for over a year, while continuing to stream music from its catalog. Pitchfork has reached out to Sony Music’s representatives for comment.
In March, the Web3 startup Infinite Reality acquired Rhapsody International’s parent company for $207 million. At the time, Rhapsody allegedly owed over $6.5 million to Sony and its subsidiaries. The acquisition triggered a clause in the licensing agreements between Napster and Sony Music Entertainment that would have allowed Sony to break those contracts. Sony declined to do so on the condition 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 have since failed to make any payments on their outstanding balance or additional licensing fees since the acquisition, “all while Defendants continued to collect subscription fees from their millions of paying users.” Sony Music claims that in May, they sent a letter to Rhapsody informing the company they were in breach of contract, and that in June they terminated their licensing agreements with Napster.
However, Napster has continued to make music in Sony’s catalog available to stream, in what the suit describes as willful infringement. Sony Music Entertainment is seeking damages of “$150,000 per infringed work,” which based on the 240-song list that accompanies the court filing would amount to $36 million.
In 2022, Sony Music sued Triller under similar circumstances, claiming the shortform video app owed millions in missed royalty payments. The company admitted liability the following year and was forced to pay $4.5 million. According to a recent Billboard report, Napster has been accused of making late royalty payments by at least half a dozen other distributors and record labels, and has been sued by SoundExchange over unpaid royalties.
Napster launched in 1999 as a digital peer-to-peer file-sharing platform that rapidly became a hotbed of music piracy. The original site was shut down in 2001 after being sued by the Recording Industry Association of America. Best Buy acquired Napster in 2008, and in 2011 sold the company to Rhapsody International, which at the time ran a streaming service called Rhapsody.
In 2016, Rhapsody rebranded to Napster. Since then, Rhapsody International has been bought and sold several more times—first to London-based virtual reality live music platform MelodyVR in 2020, then to blockchain firm Algorand in 2022, and finally to Infinite Reality earlier this year.
Read our 2022 feature “The Obsessive World of Digital Music Collectors.”
