Sony and Yahoo! Settle Infringement Lawsuit

Yahoo! concluded the second round of a five-part copyright infringement lawsuit this week in connection with its LAUNCHcast Web radio service.

After settling with Universal Music Group last year, the Sunnyvale, Calif.-based Web portal settled with Sony Corp.’s Sony Music Entertainment (SME) over similar allegations that its free Web radio service violated copyright law.

The original infringement suit was brought against Launch Media in May 2001 on behalf of Universal, BMG, Sony, EMI, and Zomba Recording Corp.

The crux of the argument is that LAUNCHcast violated broadcast licensing laws set forth in the 1998 Digital Millennium Copyright Act (DMCA) by giving its listeners too much control over what songs or bands they choose to listen to, which according to the record labels requires a separate copyright license.

LAUNCHcast allows users to create their own radio station based on personalized playlists.

Yahoo! will make a single payment to SME for back royalty payments in return for the nonexclusive rights to play Sony-owned music tracks in the future. Royalties will be paid per song under the terms of that license agreement. Neither Sony nor Yahoo! would disclose the amount of the back payment on royalty fees.

The other three infringement cases are still outstanding.

Yahoo! purchased Launch Media in June 28, 2001, just one month after the lawsuit was filed by the five record labels.

Launch Media’s royalty woes mirror a similar predicament many other Web radio stations are currently facing as they struggle to determine affordable royalty terms with the five major record labels, which cumulatively own a majority of all recorded music.

The DMCA created certain provisions for Webcasters, but according to critics, certain definitions and payment terms were not clearly defined and have left many Webcasters in the lurch and under the litigious scrutiny of many record labels.

From the date the DMCA was scribed to the present, online radio stations have been allowed to play whatever recorded music they choose, with the understanding that royalty payments would be owed at a later date.

However, one of the terms of that license agreement was that “interactive” or personalized radio services such as the one LAUNCHcast provides would not be allowed to make use of this agreement.

Representatives for Yahoo! were not available for comment.