RealTime IT News

MP3.com Settles Suits with Warner, BMG

MP3.com's settlement with two of the five major record labels that brought forth copy-infringment suits last January bode well for its stock trading Friday. Shares for the online music provider shot up to 35 percent, or $6, to 23 1/4 in pre-opening trading.

Financial terms of the settlement have not been disclosed. However, Reuters reported that MP3 will pay Warner and BMG between $75 million and $100 million to settle their claims.

The resolution permits MP3 to include songs from Time Warner's Inc.'s Warner Music Group and BMG Entertainment in its database.

"The settlement agreement clearly affirms the right of copyright owners to be compensated for the use of their works on the Internet," said Paul Vidich, Warner Music Group executive vice president, strategic planning and business development

Further, WMG announced that it has entered into a North American license with MP3.com for use of WMG-controlled recordings on My.MP3.com's Beam-It and Instant Listening software services. These services allows users to insert copies of CDs they already own into their My.Mp3.com Music Manager.

The partnership puts MP3 in a better posistion to demonstrate how its technical infrastructure can enhance the digital music arena, said Robin Richards, MP3.com president and chief negotiator.

"The license agreement allows us to stabilize the digital music space from a consumer-marketing, royalty-tracking and copyright-protection perspective," Richards said. "We look forward to collaborating with WMG over the coming years on many new and unique promotions."

WMG will share the monies received in connection with the settlement and license agreement with its artists in accordance with the terms of their agreements.

Additionally, BMG Entertainment has granted MP3.com a license to use its catalogue of music.

The settlement works well for both parties, stated Kevin Conroy, chief marketing officer and president, new technology, BMG Entertainment.

"BMG vigorously enforces its copyrights. At the same time, we believe the best enforcement is the creation of legitimate alternatives for consumers," he said. "As we build our global digital distribution platform, we are interested in working with responsible Internet companies that help us create new avenues for music fans to access their favorite music in a way that protects our artists' rights."

Other labels in the suit are Sony Music Entertainment, Seagram Co.'s Universal Music Group and EMI Group Plc. The suit was filed last January as part of an anit-piracy crusade launched against MP3.

The BMG settlement comes only 24 hours on the heels of a BMG Entertainment deal with MusicBank, an online music service that will provide consumers on-demand streaming access to BMG's entire music catalog. A service patterned after My.MP3.com, MusicBank will allow customers to store, manage and listen to their entire CD collections via the Web without having to encode or upload the content.

MusicBank's system of verifying the ownership of BMG's CDs, either through retailer verification of purchase or through physical possession, will allow consumers secure access to their content through a web-based interface scheduled to launch this fall.