Digital industry execs bare their souls

The RIAA's Hilary Rosen says she doesn't like to sue people.

But it was one of her unwanted efforts that helped Napster find a new friend in the recording industry, she told a group of industry insiders Tuesday attending the Webnoize conference in Los Angeles.

Rosen, who heads the Recording Industry Association of America, was holding forth on the state of the industry, being led through what has become a minefield of intellectual property rights, civil courtroom battles, and 40 million Napster users by interviewer Charlie Rose.

At one point, Rosen said she doesn't consider herself a person who likes to file lawsuits, although her agency has filed dozens in the past and just beefed up its investigations unit with the promise of even more litigation to come.

But the suit the RIAA filed on behalf of the RIAA's five member recording agencies against Napster helped the file swappers finally find a friend in the industry, Rosen claimed.

Last week, Bertelsmann inked a pact with Napster. The deal involves Bertelsmann, which owns one of the five record companies suing Napster, giving its enemy $50m. In exchange, Napster will start charging dues for use, among other conditions.

"If that lawsuit wasn't filed, there wouldn't be a deal between BMG [Bertelsmann's record company] and Napster," Rosen said. "I think it made Napster realise they wanted their money and they would have to make a partnership."

Although Bertelsmann inked a deal, Rosen doesn't expect the other four record companies to reach similar pacts.

"I don't think the line is so straight," she said. "A 9th Circuit decision is inevitable." The lawsuit against Napster is currently being heard by the circuit court in San Francisco.

The deal itself doesn't necessarily signal the beginning of the recording industry making peace -- and deals -- with what is viewed by some as an outlaw technology, she said.

Instead, it may have been "Bertelsmann's online play", Rosen said.

Even while they are battling Napster, Rosen's members are exploring their own online models, she said.

"[The Web] is opening up another multiple format marketplace," nearly a decade after the CD started its reign as the format of choice, she said. "All the record companies are looking at these services."

Appearing alongside Rosen was Jack Valenti, who heads the Motion Picture Association of America.

He said movies will be released online soon, legally, of course, and not through sites like Scour, the bankrupt movie-file-swapping Web site that was being sued by the MPAA for copyright infringements.

Valenti said the MPAA now has a "digital strategist" who is looking into ways for the seven MPAA members to go online.

"But we have to be sure we can deliver that one without getting ambushed," he said.

Valenti actually likes file swapping as a technology, although his agency's lawsuit claims it's costing his members tens of millions of dollars.

"If I weren't in this business, I'd be file sharing too," he said.

The two groups have been filing dozens of lawsuits against music and video Web streamers they claim are violating copyright laws by making the content available over the Web.

The RIAA's battles against Napster and MP3.com are generating headlines nearly every day.

Just hours before Rosen spoke on Tuesday, Seagram's Universal Music Group (UMG) won a $53.4m settlement with MP3.com. In exchange, MP3.com will be licensed to offer the entire UMG catalog through its My.MP3.com service.

UMG also will get a piece of the company, in the form of warrants to buy an undisclosed number of shares in MP3.com. The settlement ends, for now, MP3.com's legal troubles with the RIAA.

While Rosen's battles in court are well-known, the MPAA has taken on several Web players as well, from the well-known movie swapping site owned by Hollywood super-agent Michael Ovitz to online recording site RecordTV.com.

The company launched with a promise of being a "one-click Internet VCR". But chief executive David Simon said he voluntarily took down the Web site while negotiating a possible settlement. The two sides appear again in court next month.

Simon said the MPAA is playing a brand of hardball familiar to Napster's executives. He said his company is willing to use any reasonable security MPAA desires, as long as it makes business possible.

"We would much rather work out a deal if possible than spend the next few years in court," Simon wrote in an email. "However, we will fight this as far as necessary if we have no other choice."

The MPAA has also settled a lawsuit it filed against iCraveTv, which provides television broadcasts over the Web.

Bankruptcy has saved movie swapping site Scour from the MPAA's legal thumbscrews. The company laid off a majority of its staff and filed for bankruptcy a few months after the MPAA filed a trademark infringement case. Bankruptcy automatically stays any pending litigation against Scour. Take me to the MP3 Special

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