MP3.COM: TAKING STOCK OF THE SITUATION

MP3.com stock rebounded on Monday, as major record companies said they were stepping up efforts to settle their dispute with the online music company after a federal judge's ruling on Friday that MP3.com violated copyright law.

The shares were up 18 percent, or 1 ^1/4, at 8 ^1/4, amid heavy trading. They reached as high as 9 ^1/4, after plummeting 40 percent on Friday. On the day of the stock's debut in July, it traded as high as 105. But on the day of the precedent-setting summary judgment Friday that favored the Recording Industry Association of America, the stock fell to a low of 6 .

The stocktumbled on Friday after Judge Jed Rakoff of the U.S. District Court of the Southern District of New York ruled that San Diego-based MP3.com infringed on copyrights held by the record labels with the creation of a database of more than 80,000 albums that allows users to store music digitally and then access it via any computer connected to the Internet.

Rakoff convened a meeting late Friday between lawyers for MP3.com and the Recording Industry Association of America, the trade group representing the five major record labels, to work out a schedule to resolve the dispute.

"We've been talking to the record labels almost on a daily basis for a long time now," said MP3.com Chief Executive Michael Robertson. "We're making great progress. And we hope to negotiate a way to offer the service" with content from major labels, he added.

"We absolutely do not want to see MP3.com shut down," a source with one of the labels said. "Settlement talks were going on before the case went into the court and they are continuing. We would be happy to see this thing settled."

The database is part of the MyMP3.com service, which features software that lets computer users with an original copy of one of the recordings in the database to register that CD. The user may then listen to its contents over the Internet from any computer without having to insert the original disc.

MP3.com's Robertson said talks were focusing on working out a way for MP3.com to license the music for the database from the labels rather than removing the copyrighted music altogether.

"The judge sat down with the counsel from both sides Friday night to work out a schedule for the next steps [in the dispute],'' an RIAA spokesman told Reuters on Monday.

"The steps include working out damages, discussions on whether or not MP3.com can continue to operate the MyMP3.com service and whether or not the content for which the labels hold the copyright has to be removed,'' he added.