MP3.com has reached settlement agreements over copyright-infringement suits filed by music industry giants Warner Brothers Music Group and BMG Entertainment.
The two agreements include monetary compensation as well as licence agreements. Time Warner is the parent company of the Warner Brothers Music Group, while BMG is the music unit of Bertelsmann AG and EMI Group PLC.
Warner and BMG did not disclose the terms of the agreements, but sources close to the deal say MP3.com will pay approximately £12.5 million to Warner and as much as £60 million in total in exchange for the right to use the songs owned by the music labels.
The deal reflects MP3.com's rise "from bad-boys throwing rocks through windows to a company maturely negotiating a settlement with the industry," said Eric Scheirer, a media and entertainment analyst from Forrester Research. "This is the day we say MP3.com grew up."
MP3.com has £220 million remaining from money raised in their initial public stock offering (IPO), said Scheirer. "The settlement looks like a lot, but it isn't." Signs point toward a settlement within the next week between MP3.com and the labels remaining in the RIAA suit, he said.
MP3.com was sued in January by the Recording Industry Association of America (RIAA), representing Warner Brothers Music Group, BMG, Sony Music Entertainment and Seagram’s Universal Music Group.
The copyright infringement lawsuit, filed in U.S. District Court in New York, sought to prevent MP3.com from marketing MP3.com services Beam-it and Instant Listening, which are marketed under the banner My.MP3.com.
Beam-it software matches music CDs that users insert into their PCs with CDs stored in MP3.com's own library. The software asks users if they own the CDs. If users verify they own the CDs in question, and the CDs match those in MP3.com's library, users then may log into their My.MP3.com account from any PC to listen to the CDs.
As part of the settlement, Warner has signed a North American licence agreement with MP3.com, allowing the Internet music company to use Warner recordings on the My.MP3.com. services, Warner and MP3.com said. MP3.com also signed a similar license agreement with BMG.
Though the RIAA filed the lawsuit against MP3.com on behalf of the music labels, each label must come to a separate licensing agreement with MP3.com.