Bertelsmann Finally Free Of Napster Blues

Q1 Down

BERTELSMANN almost swung to a first-quarter profit on THURSDAY, narrowing its loss from last year, thanks to the fact it no longer had to pay for its costly past as a friend to NAPSTER, writes FORBES. BERTELSMANN said its net loss for the quarter came in at 3 million euros ($4.6 million), up from a loss of 117 million euros ($180.2 million) the year before. Sales actually ticked down over the year, but a rise in operating profit helped crown the more significant victory: no more pay-outs for disgruntled victims of the former rogue file-sharer NAPSTER.

"Last year, we had NAPSTER impacting on net income," said a spokesman for BERTELSMANN. The first quarter of 2007 saddled the company with special items amounting to 114 million euros ($175.6 million); now, its charges are a comparatively paltry 3 million euros ($4.6 million).

This time last year, BERTELSMANN was still forking out millions of dollars in settlements relating to NAPSTER. The GERMAN firm bought $85 million worth of the website's assets in 2002, after the site went bankrupt, and ended up having to compensate labels like WARNER MUSIC GROUP and EMI for copyright infringement.

Privately-held BERTELSMANN has had problems with its other businesses as well over the past year, which led to a drop in annual profits to 405 million euros ($624.0 million), from 2.5 billion euros ($3.9 billion), in 2007. The company's music division, BMG, suffered from declining recorded music sales.

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