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Here is the letter does the complete letter change anything?
We have received your claim for damages
We regret to inform you that we are unwilling to pay this claim; our advisor suggests that the claim is excessive and extortionate. We used the images in good faith, our content is user generated and as such anyone can insert images on our site, as well as the intern we employed for a short time. We have only ever used rights free images. As soon as we were informed by you that there may be a copyright issue we removed the images immediately without disputing ownership of the images. There has been no financial gain from the use of these images; our site users are there to find out ‘What’s On’.
We also note that your name appears in threads on the internet with similar issues with full track histories with responses from a lawyer qualified in Copy write matters http://www.justanswer.co.uk/law/8qrgp-copyright-breach-contract-photo-questioni.html
We can however without prejudice offer free advertising within our website as I believe there is a natural synergy between what our sites offer. We have over 60,000 event listings on our web site, we would be willing to offer free access to this information to enhance your web site; we would supply and if necessary install links on your web site. We would obviously install links to your web site from our site. I feel this would benefit both our companies.
We could discuss this further if you are interested.
We have offered an apology and the option to work together hopefully this will satisfy you and bring this matter to a close.