German media giant Bertelsmann said today (Jan. 20) it has settled a lawsuit filed by a rival music label alleging it aided online piracy by teaming up with the former file-swapping system Napster.

German media giant Bertelsmann said today (Jan. 20) it has settled a lawsuit filed by a rival music label alleging it aided online piracy by teaming up with the former file-swapping system Napster.

Bertelsmann, the world's fourth-largest media group, will pay $50,000 to Michigan-based Bridgeport Music, one of the many labels which sued Bertelsmann for a total of $17 billion because it lent Napster money in 2000, a Bertelsmann spokesman said.

In return for the settlement payment, which is enough to cover Bridgeport's legal costs related to the lawsuit, the small label will withdraw its lawsuit, Bertelsmann said.

Among the wide range of music labels suing Bertelsmann are the market leader, French conglomerate Vivendi's Universal, and Britain's EMI .

Bertelsmann itself jointly owns the second-largest label, Sony BMG, with Japanese electronics group Sony.

The plaintiffs allege that by lending around $90 million to Napster in 2000, Bertelsmann kept the group operating eight months longer than it would have otherwise and that it therefore had control over the company.

Bertelsmann rejects the charge and says it never controlled Napster, which went bankrupt in 2002. Napster was since bought by software firm Roxio, which is now using Napster as its company name.

--Reuters