The announcement followed a statement from digital music site MP3.com that it had received a missive from Sightsound, which indicated the patents "control, among other things, the sale of audio or video recordings in download fashion over the Internet."
The missive was sent to three other music companies, Sightsound said in a statement, naming Platinum Entertainment, Amplified.com, and GoodNoise Corp. All were invited to join Sightsound's Limited Patent Licensing Program.
The cost: 1 percent of the price per transaction as charged to the customer.
That's extremely low, said Gene Hoffman, president and CEO of GoodNoise. "This has no material affect at all (on our business)," he said, indicating that the fee, at least, would not be a problem. In fact, setting the charge so low is a good business decision, he added, as it makes it more likely that the companies would comply. "But it's bad for artists." Hoffman had not seen the letter, and did not know how his company would respond.
Bill Paige, a spokesman for Platinum Entertainment, said that to his knowledge, Platinum had also not received the letter. Officials at Amplified.com could not be reached for comment.
Sightsound stated that two patents -- U.S. Patent 5,191,573 filed in 1990 and granted in 1993 and U.S. Patent 5,675,734 filed in 1996 and granted in 1997 -- cover the digital distribution of audio and video recordings. The company has licensed the technology to AT&T's a2b Music as part of a broader business deal. "We licensed out technology to them, and as part of that deal we protected ourselves against patent claims," said Howie Singer, chief technology officer for a2b Music.
Singer stressed that a2b Music's deal does not validate Sightsound's patents. "This whole area of patenting Internet business models is becoming scrutinised," he said. "I have trouble seeing how an auction on the Internet could get a patent." It is yet uncertain whether Sightsound's patents will stand up in a court of law. Currently, the company is suing music site N2K Inc. for alleged violations. "The validity of the patents are certain to be challenged," said Lydia Pelliccia, spokeswoman for the Recording Industry Association of America, which numbers the largest music companies in the industry -- as well as N2K -- as its members.
In its statement, Sightsound pushed the patent enforcement as its way of supporting the Secure Digital Music Initiative - a forum created by the Big 5 music companies to develop technology to protect copyrighted content on the Internet. "Our ability to offer the protection of two U.S. patents will make Sightsound.com a vital ally of SDMI and will be beneficial to artists, labels and, ultimately, the consumers who prefer to purchase directly over the Internet," said Scott Sander, president and CEO of Sightsound.
That's the sweet nothings; the company is also talking tough. According to an MP3.com posting of the text of Sightsound's missive: "If (MP3.com does) not become an authorised licensee, (it) MUST immediately cease and desist from selling music, or other audio recordings, over the Internet in download fashion."
Take me to the MP3 Special