InfoSpace Settles Ringtone Royalty Lawsuit with EMI

Music firm, EMI has settled its ringtone lawsuit with US based InfoSpace, the company has announced in a stock market filing. The company did not disclose the terms of the agreement.

Infospace was sued by EMI in January 2007 for US$100 million over claims of unpaid royalties on ringtone sales. The complaint had alleged that InfoSpace and its subsidiaries Moviso and Premium Wireless Services were underpaying royalties and selling ringtones for songs to which they hold no licensing rights. The lawsuit also claimed that InfoSpace has "engaged in a deliberate effort to frustrate and obstruct the audit rights held by plaintiffs pursuant to license agreements."

EMI claims it turned over information it acquired to its auditors at Gelfand Rennert & Feldman, who concluded that InfoSpace was miscalculating royalties due to downloads through third-party Web sites operated by cell phone carriers Verizon and US Cellular; failing to report royalties for eight approved sub-licensees; and failing to pay royalties for compositions that appeared on its catalogue of offerings.

Last August, EMI substantially lowered the lawsuit though from US$100 million to just US$10 million plus "'many millions" of dollars in royalty payments. For it's part, InfoSpace denied EMI's allegations and counterclaimed for no less than $1.5 million based upon the EMI Parties' alleged breach of contract and tortious interference.

In the statement, InfoSpace says that the agreement concludes the EMI Litigation, and InfoSpace does not expect that the settlement reached with the EMI Parties pursuant to the Settlement Agreement will materially and adversely affect the Company's business or results of operations.

Industry analysts believe InfoSpace is gradually dismantling itself.

In September 2006 InfoSpace released news that a carrier partner would be working directly with major recording labels thus negatively impacting their core business. Following this carrier/label arrangement, InfoSpace sold the Moviso mobile content business to FunMobility, Atlas Mobile studio to Twistbox  and IOMO re-emerged as FinBlade The remaining portions of InfoSpace Mobile were acquired by Motricity in December 2007.

Between May 2007 and January 2008, the company paid shareholders $500 million in special dividends.

Posted to the site on 13th July 2008