Millions of music fans will be given free music downloads or money to compensate for flawed anti-piracy software on CDs from label Sony BMG.
British singer Dido is one of the artists affected
The final approval to the settlement for lawsuits against the music giant was granted by a US judge on Monday.
Sony BMG was accused of using copy protection program on CDs that left computers vulnerable to hackers.
The episode caused much embarrassment for the world's second largest music label.
The dispute began in November 2005 after software developer Mark Russinovich found that anti-piracy software XCP used by Sony employed virus-like techniques to hide itself on PCs.
This cloaked technology, he said, could be exploited by hackers. Following the reports, several lawsuits were taken against the record label.
At the same time, other consumers took action over Sony CDs that were being protected with another anti-piracy technology known as MediaMax.
According to the settlement, consumers who bought a CD with the XCP software can receive a replacement disc. They will also receive either a cash payment of $7.50 and one free album download, or three free album downloads.
Those with discs with MediaMax will only get free downloads.
Lawyers said as many as 20 million CDs containing MediaMax were sold. The software had been loaded onto 27 titles.
Discs containing XCP were recalled in November and the record label also provided a method to remove of hidden files. Fifty-two Sony BMG titles contained the technology.
CDs by artists such as The Coral, Alicia Keys, Dido, the Foo Fighters and the Backstreet Boys were amongst the affected discs.
Under the terms of the settlement deal, the record label must also stop using the CD software.
US District Judge Naomi Reice Buchwald gave the final approval at a hearing on Monday. The deal was tentatively approved in January.
In a statement, Sony BMG, said it was pleased with the settlement.