RealTime IT News

MP3.com Settles with UMG for $50 Million

Mere minutes before a federal judge was due to award damages to Seagram's Universal Music Group in its copyright infringement suit against MP3.com, the online music site settled with UMG to the tune of $53.4 million and struck a licensing deal for an undisclosed amount.

However, indications were that MP3.com could have been forced to pay nearly five times the settlement if the decision on the dollar amount were left in the hands of Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York. Rakoff had said in his ruling that MP3.com may have to pay as much as $25,000 for each CD copied to its My.MP3.com music storage locker service. UMG's suit claimed MP3.com had illegally copied about 10,000 CDs, putting the damages at an estimated $250 million.

MP3.com admitted responsibility for 4,700 CDs.

UMG filed suit against MP3.com over the company's My.MP3.com music storage locker, which gave users the ability to "unlock" songs on MP3.com's servers and place them in their lockers, provided users initially proved ownership of the CDs containing those songs. Users accomplished this by placing the CDs in their CD-ROM drives while "unlocking" the songs.

But UMG -- as well as the other music labels that brought separate cases against MP3.com -- argued that the songs had to be illegally copied to MP3.com's servers before users could unlock them.

Universal struck a deal to buy "a significant amount" of MP3 warrants. The company also agreed to license its entire music catalog to MP3.com for use in the music storage locker.

The settlement puts to rest the last of the lawsuits brought by the five major record labels and the National Music Publishers Association. MP3.com has settled with the other four labels and also arranged licensing deals that amount to about $20 million each. However, MP3.com is not out of the legal woods yet. A number of independent labels have brought suit and at least one class action remains on the table.