settles 2 copyright claims

Warner, BMG agree to let music service distribute songs

Entertainment industry

June 10, 2000|By BLOOMBERG NEWS

SAN DIEGO, Calif. - 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 will pay about $20 million to each company. Seagram Co.'s Universal Music, EMI Group PLC and Sony Corp. are still negotiating with

Shares of San Diego-based 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 and Napster Inc. as more consumers use the Web to download music.

The industry alleged 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

"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, 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 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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