MP3.com settles 2 copyright claims

Warner, BMG agree to let music service distribute songs

Entertainment industry

June 10, 2000|By BLOOMBERG NEWS

SAN DIEGO, Calif. - MP3.com Inc. settled copyright-infringement claims by two of the five largest recorded music companies yesterday and agreed to license their songs for its online service.

Terms of the agreement with Time Warner Inc.'s Warner Music Group and Bertelsmann AG's BMG Entertainment weren't disclosed, though people familiar with the settlements said MP3.com will pay about $20 million to each company. Seagram Co.'s Universal Music, EMI Group PLC and Sony Corp. are still negotiating with MP3.com.

Shares of San Diego-based MP3.com rose $1.94 to $19.19 on the Nasdaq Stock Market after climbing as high as $22.50. The shares had fallen 46 percent this year before yesterday's settlement.

The $40 billion-a-year music industry is battling services like MP3.com and Napster Inc. as more consumers use the Web to download music.

The industry alleged MP3.com infringed on its copyrights by giving users access to an online database of 80,000 CDs. Analysts said the agreements may help set a standard for future settlements and removes some uncertainty about MP3.com.

"The music industry has protected its franchise in the new media," said Wayne Matus, an intellectual property attorney at Salans Hertzfeld Heilbronn Christy & Viener in New York.

At the same time, MP3.com has gained a legitimate way to profit from distributing music and selling advertising and other content around it, he said.

Music companies are trying to stop piracy as it becomes increasingly clear they stand to lose billions in sales to the Internet.

Reuters reported earlier this week that MP3.com was close to an agreement to pay $75 million to $100 million to the Recording Industry Association of America, which represents all five major record companies.

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