LimeWire founder faces the music with $105m record label payout

Mark Gorton has agreed on a settlement to record labels after 'wreaking enormous damage on the music industry'. It isn't as much as they had hoped for, but it's a start.

by Emma Haslett
Last Updated: 13 May 2011
Could the music industry finally be getting its own back against pirates? Mark Gorton, the ex-Wall Street trader who founded peer-to-peer file-sharing network LimeWire has agreed to pay the Recording Industry Association of America, the US music industry’s trade body, $105m (£64.5m) in an out-of-court settlement. It’s not exactly the $1.4bn the group had originally sought – but it’s the latest in a string of cases that’s beginning to show illegal downloaders their hobby might be more trouble than it’s worth.

The settlement came a year after LimeWire, the last widespread p2p network, was shut down for good by a US District Court Judge. The lawsuit had identified more than 9,000 songs and recordings made since 1972 that had been traded illegally on LimeWire, seeking damages of $150,000 per song. That might sound like a lot – but as the RIAA pointed out, the network had ‘wreaked enormous damage on the music industry, helping contribute to thousands of lost jobs and fewer opportunities for aspiring artists’. Ouch.

As part of its argument, LimeWire did point out that illegal downloads aren’t the only factor contributing to the fall of the music industry. A fall in CD sales, counterfeiting and bankruptcies of music retailers are all part of the problem. But the RIAA hit back, saying that since LimeWire’s closure, it had seen a modest growth in sales of recorded music – which suggests the problem was pretty widespread.

Of course, that $105m is small change compared to the sum it had originally been seeking – but the likelihood is that the RIAA hadn’t really imagined it would be able to extract that sort of money from Gorton. Instead, the idea of the lawsuit was to act as a deterrent against other would-be pirates. And, given Gorton (whose hedge fund was worth $117m in 2007) will be paying out of his own pocket, we’d imagine it’ll have the desired effect.

Following payouts by the likes of Kazaa, another file-sharing network that shelled out $115m in 2006, and Grokster, which paid out $50m, all the signs suggest that the record industry is winning its war against the peer-to-peer contingent that plagued it during the early noughties.

Or it will be, right until the moment someone comes up with another way to share music for free…

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events

Subscribe

Get your essential reading delivered. Subscribe to Management Today