June 12, 2000

Internet music company settles lawsuit with Warner, BMG

SAN DIEGO (AP) -- MP3.com, the digital music service that allows consumers to save songs on the Internet, has reached the first settlements in record industry lawsuits claiming copyright infringement.

MP3.com said Friday the settlements with Warner Music Group and BMG Entertainment include licensing agreements that will allow music from both companies to be stored on the service.

No other details on the agreements were available.

The settlements were the first between MP3.com and record companies over the issue. The Recording Industry Association of America also has sued another company, Napster Inc., for distributing software that allows users to copy each other's digital music files over the Internet.

Shares of San Diego-based MP3.com were up $2.50, or 14.5 percent, at $19.75 in afternoon trading Friday on the Nasdaq Stock Market.

U.S. District Judge Jed S. Rakoff in May ruled that MP3.com infringed on copyrights when it purchased tens of thousands of popular recordings and then copied them onto its computer servers so it could replay them for its subscribers.

The judge rejected the company's argument that it did not violate copyright law because it required subscribers to prove they already own the compact disc version of the recordings by briefly inserting them into their computers.

MP3.com disabled the service last month to prevent anyone from storing music produced by the major recording companies that filed the copyright lawsuit.

Sony Music Entertainment Inc., Warner Music Group, Arista Records Inc., Atlantic Recordings Corp., Bertelsmann AG's BMG and EMI Group and Capitol Records Inc. were among the companies that sued MP3.com in January.

The licensing agreements will allow consumers to access copies of Warner Music Group or BMG compact discs they already own with MP3.com. The record companies will share an undisclosed amount of money received in the settlements with its artists.

"This is an important moment for recording artists and copyright owners. This settlement ends an unfortunate period in our history with MP3.com," Paul Vidich, an executive vice president with Warner Music Group, said in a statement. "The settlement agreement clearly affirms the right of copyright owners to be compensated for the use of their works on the Internet."

Kevin Conroy, chief marketing officer and president of new technology for BMG Entertainment, called its agreement "a good settlement for both parties."

Michael Robertson, chairman and chief executive of MP3.com, said both sides in their negotiations worked to benefit consumers, artists and copyright owners.

"The digital music space is still in its infancy," Robertson said in a statement. "We look forward to working with WMG to expand its boundaries."

Warner Music Group has a roster of more than 1,000 artists and includes the Atlantic, Elektra and Rhino labels. BMG Entertainment owns more than 200 record labels in 54 countries, including Arista Records, RCA Records, Ariola and Windham Hill.