ZOMBA SUES MP3.COM

On the heels of the landmark MP3.com-Universal case, Zomba Recording Corp. and Zomba Music Publishing, members of the world's largest independent group of music companies, have each separately filed lawsuits in U.S. District Court in New York against MP3.com willful copyright infringement in relation to its My.MP3.com service.

Zomba said, "MP3.com has adopted a blatant strategy of attempting to unlawfully build a business by misappropriating us and our artists and writers goodwill, recordings and songs."

Zomba owns the Jive label, which is home to the Backstreet Boys, NSYNC, Britney Spears and R. Kelly.

Analysts have warned that the Zomba cases could be the first of many copycat claims brought by smaller labels and publishers against MP3.com. MP3.com was sued in January by Seagram, Sony, EMI, Bertelsmann and Warner Music Group for the same thing. While MP3.com scrambled to reach out-of-court settlements with four of the record companies, Universal Music Group, the world's largest record conglomerate, refused to settle. Last Wednesday, U.S. District Judge Jed S. Rakoff in New York ordered the San Diego-based company to pay $25,000 for every Universal CD illegally posted on its My.MP3.com service, or at least $118 million.

The unprecedented order delivered a potentially devastating blow to MP3.com, sending its Nasdaq-traded shares plummeting from $7.88 a share Wednesday to a 52-week low of $5.66 when the markets closed Friday.

MP3.com officials said last week that the company will appeal the ruling. They could not be reached for comment regarding the Zomba suits.