EMI and MP3.com settle suit

Settlement finally reached between MP3.com and British record label EMI
Written by Margaret Kane, Contributor

MP3.com has reached a settlement with EMI Group that will allow it to distribute songs owned by the British record label.

The deal settles a copyright infringement suit brought against the online music site by affiliates of five major record labels. MP3 has already reached settlements with Warner Music Group and BMG Entertainment.

The suit involved the My.MP3 service, which allowed users to store copies of songs from CDs they owned on MP3's site and listen to them later from any computer.

"EMI's Internet strategy is to create innovative, convenient and attractive ways for fans to access their favorite artists' music," EMI senior vice president Jay Samit said in a release. "This settlement ensures that copyright owners and creators are compensated fairly."

The settlement comes at an interesting time. A judge ruled earlier this week that online music site Napster would have to cease allowing users to trade copyrighted materials through its service. The ruling goes into effect at midnight Pacific time tonight.

The judge in that ruling made it fairly clear that she believes intellectual property rights are not diminished by switching to a new technology. The ruling has caused an uproar in the online music community.

While the ruling is a big win for the record labels, no one thinks it will eliminate piracy altogether. And the reaction of Napster fans seems to indicate that the record labels need to find a way to use the new technology, or risk losing their markets.

The settlements with MP3.com are at least a step in that direction.

The EMI, Warner and BMG deals would license MP3 to use their recordings on the "Beam-It" and "Instant Listening" software services, allowing some of the profits to be remitted to the labels and artists. Those services also allow a consumer to copies of CDs they already own into an online "storage locker" through the My.MP3.com Music Manager service.

Financial details of the EMI deal were not released.

And in May, both Sony Music Entertainment and Seagram's Universal Music Group announced they would offer subscription plans for digital music services later this year.

"Today, a signal was sent to consumers that the music they already own will be made available to them through the My.MP3.com service. A business model where artists, copyright holders and record companies can potentially monetize their music digitally and in an accretive manner is finally emerging," MP3 chief executive Michael Robertson said in a release.

The settlement should also be good news for MP3.com. The lawsuits have overshadowed good financial news from the company, which reported better-than-expected second quarter results earlier this month.

MP3.com reported a second quarter operating loss of $5.2m, or eight cents a share, excluding the $150m charge it will take related to the previous settlements. The results topped Wall Street estimates by five cents a share. The results compare to a loss of $6.3m, or 22 cents, a year ago.

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