A court-stipulated sum of $53.4 million ends a bitter dispute over the online music site’s use of UMG recordings in the construction of the database for its streaming My.MP3.com service.


Giant Damages Award Ends Litigation; Label Group Says Half Of Sum Will Go To Artists
The MP3.com-Universal trial has concluded and an award determined—but not as a settlement.

A court-stipulated sum of $53.4 million ends a bitter dispute over the online music site's use of UMG recordings in the construction of the database for its streaming My.MP3.com service. The music group has also purchased the right to buy up to 5% of shares in MP3.com at a later date for a price above the close of trading on Monday (11/13).

A one-day postponement yesterday raised expectations of a settlement, but after talks fell apart, the court stepped in.

The stipulated amount, reportedly the largest single statutory award for copyright infringement ever, cleared the way for the licensing of Universal Music tracks to the streaming service. The amount awarded to UMG is more than twice that granted to any of the label groups that settled previously.

The terms for licensing—which is non-exclusive—are similar to those devised with the other majors.

"Universal Music pursued this case to send a strong message that copyrights will be protected and that copyright owners and artists need to be properly compensated for use of their work," stated President/COO Zach Horowitz. "Although we believe our proof at trial would have led to a greater damage award, we are satisfied with the award. It was never our intent to put MP3.com out of business with a judgment so large that it would threaten their viability as a company. We support the development of legitimate music businesses on the Internet."

Horowitz told hitsdailydouble.com that 50% of the award money would go to UMG artists, regardless of their contracts.

UMG was the sole holdout in the lawsuit initiated by all the major-label groups as represented by the RIAA. The other groups settled with MP3.com and dropped out of the suit one at a time.

Universal's attempt to submit its copyrights in the case as works-for-hire created complications for the music group, as the netco argued the submitted copyrights were invalid, according to the Copyright Act. On 11/3, Judge Jed Rakoff denied UMG's motion for a summary judgment. At that time, the music company was pressing for damages approaching $170 million.

"We are glad that this case is now behind us and that we will be able to include UMG's music as part of our My.MP3.com.service," commented MP3.com's Michael Robertson. "We look forward to returning our entire focus to capitalizing on the tremendous opportunity in the digital delivery of music and letting consumers listen to CDs which they own in the digital age."

Robertson added to hitsdailydouble.com, "UMG is now a partner rather than a legal adversary. And as with all of our partners, we're committed to making them successful. We'll now turn our focus to powering on the My.MP3.com system."

RIAA ruler Hilary Rosen weighed in, too, of course.

"The RIAA is pleased that this matter has finally been resolved," reads Rosen's statement. "This case was never about stifling the technology or putting this company out of business but rather about protecting the copyright owners' and artists' rights to be compensated for their works. We believe through this judgment that message has been sent.

"The resolution of the litigation and the license granted by Universal also drive home the point that the marketplace for legitimate music on the Internet really works," concludes Rosen's release. "Record companies are not only willing, but eager to enter into marketplace deals."

MP3.com stock closed up 62 cents at $4 today.

Stay tuned for further details on this major development.