The My.MP3.com service was launched in January 2000. The company built up a library of popular CDs, copied them onto a server accessible from its web site and invited subscribers to customise and download the music files from any location. In an attempt to avoid copyright infringement, subscribers were required to either demonstrate that they already owned any of the CDs from which they wanted to download MP3 format tracks or purchase the CDs from an on-line retailer co-operating with MP3.com.
However, the precautions were insufficient. When the company was sued for copyright infringement by the Recording Industry Association of America (RIAA), Judge Jed S. Rakoff said MP3.com was simply replaying for the subscribers converted versions of the recordings it copied, without authorisation, from copyrighted CDs.
In yesterday’s settlment, in addition to a $20 million payment by MP3.com for past violations, the companies announced that MP3.com has entered into a non-exclusive, North American license with Sony for use of Sony’s music in the My.MP3.com service.
"Sony Music Entertainment strongly enforces its copyrights. This settlement affirms and upholds the right of copyright owners to be paid for the use of their works on the Internet," said Al Smith, Senior Vice President, Sony Music Entertainment. "Sony Music has always understood that changes in technology create new ways for consumers to experience entertainment. This licensing agreement with MP3.com is one of a number of initiatives that we have underway to enhance music fans' experience in an environment that protects intellectual property rights."
"This settlement and licensing agreement is a business resolution that we believe will positively impact the future of online digital music," added Robin Richards, president of MP3.com and who has served as chief negotiator during settlement talks. "The leveraging of MP3.com's technology infrastructure with Sony Music Entertainment's tremendous content means that consumers are closer to getting what they've been asking for - a powerful, easy-to-use on-line listening experience."
MP3.com is due back in court from 28th August to determine whether it wilfully infringed on copyrights of major record companies by letting people store copied songs on its computers, notwithstanding the out of court settlement with Sony and others. The company is still trying to reach a settlement with Universal Music Group.