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MP3.com to Pay Up to $30 Million in Settlement

A tentative settlement -- to the tune of $30 million -- has been reached between online music company MP3.com and National Music Publishers Association (NMPA).

Under the terms of the proposal, the trade group's licensing subsidiary, Harry Fox Agency, will allow about one million songs to be used as part the My.MP3.com service, which allows users to store music digitally and then access it via any computer.

The service relies on a database of more than 80,000 albums that MP3.com initially created without the permission of the music publishers or the record labels.

The decision is music to the ears of all involved, according to Edward P. Murphy, president and CEO, NMPA. "This is a triple win for music creators, Internet music providers and consumers," he said. "The American music publishing community has long viewed the Internet as presenting an enormous opportunity for growth, provided that creators and copyright holders are fairly compensated. We can now look forward to a productive and mutually beneficial relationship with MP3.com and similar services."

The final settlement of the case is conditioned upon the finalization of the licensing arrangement, which presently calls for a three-year agreement that MP3.com pay up to $30 million to HFA for the benefit of up to 250,000 music publishers and songwriters as part of two equal funds. One fund will support HFA publisher-principals for past uses of music on the MyMP3.com service.

As part of the other fund, designed to meet royalty terms, MP3.com will pay a quarter of a cent each time a song is accessed on the service and a one-time fee each time a user stores a song on the service.

The music provider's legal battles began in April when a U.S. District Court ruled that MP3.com broke copyright law by creating its database. Since then, MP3.com has settled with four of the five major labels: Time Warner Inc.'s Warner Brothers music group, Sony Music Entertainment, BMG, the music unit of Bertelsmann AG and EMI Group Plc.

Seagram Co.'s Universal Music Group is the only major label not to have reached an agreement with MP3.com. Following a ruling last month on damages by the same court, MP3.com could be forced to pay up to 250 million in damages.

MP3.com said it would appeal the decision.

The agreement requires the ratification of the member publishing companies and approval by the court. Independent publishers MPL Communications, which is controlled by music legend Paul McCartney, and Peer International Corp. also reached agreements with MP3.com.

"We believe the digital music space, through this agreement has been thrust forward by the music publishers," stated Robin Richards, president and chief negotiator for MP3.com. "All concerned should be tipping their hats to the Harry Fox Agency for stimulating and unlocking enormous value for artists, consumers, songwriters and publishers. Today, the American people won."