LimeWire and its former chief executive pay music labels $105 million to settle lawsuit


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LimeWire, the file-sharing site that a federal judge ordered shut down last October, and its former Chief Executive Mark Gorton on Thursday agreed to pay $105 million to settle claims that the company had encouraged users to illegally share copyrighted songs online.

The settlement is the latest development in an ongoing fight between the music industry and a host of online companies that have cropped up since the original Napster software opened the floodgates for digital music piracy in 1999.


LimeWire last year lost a court battle with music labels when U.S. District Court Judge Kimba Wood ruled that the company and Gorton were liable for infringing the copyrights of major record companies, opening the way for the labels to seek damages. Its software, which had been downloaded 200 million times, was designed to induce users to violate copyrights, Wood declared.

Thursday’s settlement, with Warner Music Group and Sony Corp.’s Sony Music Entertainment, is among the largest paid by a file-sharing company. In 2006, Kazaa paid music and movie companies $115 million to settle its lawsuits.

Calls to Gorton’s office were not immediately returned.

In the months following LimeWire’s forced shutdown, the percentage of people in the U.S. who used file-sharing services fell to 9% in the fourth quarter of 2010, down from 16% three years earlier, according to a survey by the NPD Group, a market research firm. The study noted, however, that the drop could be temporary as former LimeWire users seek alternatives, including Frostwire and BitTorrent.

Still, record labels are taking their victories where they can.

‘LimeWire wreaked enormous damage on the music community, helping contribute to thousands of lost jobs and fewer opportunities for aspiring artists,’ said Mitch Bainwol, chairman of the Recording Industry Assn. of America. ‘This hard fought victory is reason for celebration by the entire music community.’

-- Alex Pham