Mp3.com Reaches Preliminary Settlement With Publishers

MP3.com is poised to put another legal hurdle behind it with the announcement early this morning (Oct. 18) that it has struck a preliminary settlement and licensing agreement with music publishers over its My.MP3.com streaming-audio operation. The deal was announced in conjunction with the National Music Publishers Association (NMPA) and its licensing subsidiary, the Harry Fox Agency.



The San Diego-based MP3.com, which has spent much of the last year engaged in litigation over the service, has agreed to pay the publishers up to $30 million as part of a proposed three-year licensing deal to use more than 1 million songs in My.MP3.com. That service allows consumers to access music online that they can prove they have already purchased in physical form.

Concurrently, music publishers MPL Communications and Peer International Corp. said today that they have reached agreement with MP3.com over terms of a settlement of their copyright-infringement suit filed March 14 in U.S. District Court for the Southern District of New York. Terms were not disclosed.

That is the same court that issued a preliminary summary judgment in April that MP3.com had infringed major-label copyrights in copying CDs to create its My.MP3.com database. MP3.com settled with four of the five majors before trial for about $20 million each, according to sources; those settlements included separate agreements to license their catalogs for use by My.MP3.com.

Only Universal Music Group, which was awarded $25,000 per infringed CD by U.S. District Judge Jed Rakoff last month (or $118 million-$250 million, depending on how many CDs are ultimately ruled eligible for damages), remains a licensing holdout. MP3.com chairman/CEO Michael Robertson said recently that he planned to relaunch the service -- which was taken down after the majors filed suit -- with only the other four major labels' product, pending settlement of the publishers' suit.

The licensing pact between MP3.com and the NMPA and the Harry Fox Agency, calls for the monies will be paid into two equal funds: one to pay HFA publishers for past uses of music on the MyMp3.com service and the other to provide advance payments toward royalties under the license.

Under terms of that license, MP3.com would pay one-fourth of a cent each time a song is streamed on demand to a customer from his locker, as well as a one-time fee per track added to a customer's locker. Terms of the licenses with the major labels were not revealed but are said by sources to be similar.

The tentative agreements still require the ratification of the member publishing companies and approval by the court.

"The Internet has certainly posed many difficult music publishing issues and this agreement with the NMPA and Harry Fox is a giant step for all consumers who want to simply be able to listen to music they already own," said Robin Richards, president and chief negotiator for MP3.com, in a statement.

"We believe that our negotiations with MP3.com have yielded a landmark proposal that NMPA can refer to the music publishing and songwriting community with confidence and enthusiasm," said Ed Murphy, NMPA's president/CEO. "This is a triple win -- for music creators, Internet music service providers, and consumers."

In addition to the still-active Universal Music Group case, MP3.com still faces a suit brought by independent label TVT Records, as well as several shareholder suits filed after the judge's ruling against the company last month.