A federal judge ordered MP3.com to pay $25,000 per compact disc to Seagram Co.’s Universal Music Group for copyright infringement yesterday in New York.
MP3 is expected to appeal. If the ruling were to stand, the music-sharing site could lose as much as $250 million. The number of CDs involved and total damages are expected to be decided November in court.
MP3 had told US District Judge Jed S. Rakoff a day earlier that a $500 per CD verdict might put the Web company out of business, according to several published reports.
The high-dollar ruling sends a strong message and also leaves question marks for Web firms basing their business on the free distribution of music or video content, said Jim Kendrick, entertainment lawyer at Brown Raysman Millstein Felder & Steiner LLP, New York.
“It definitely puts down a marker, there’s no question about it,” he said. “But resolving the issue of fair use got absolutely nowhere.”
MP3, San Diego, provoked all five major record companies to file lawsuits in January when it began the MyMP3.com listening service, which allows customers to hear CDs from anywhere once they prove they own them by inserting them into a computer.
A federal judge ruled in April that MP3 violated copyright law by creating a database of more than 80,000 albums that, when combined with its software, allows users to store music digitally and access it at any computer.
Since then, Time Warner’s Warner Music group, Sony’s Sony Music Entertainment, Bertelsmann’s BMG and EMI have reached licensing agreements with MP3 that allow their music to be made available at the site.
Financial terms of the agreements haven’t been announced. However, MP3 users now must verify first that they own compact discs of the music before adding digital titles to their storage. There was no such requirement prior to the deals.
Kendrick said those agreements couldn’t have been as financially lucrative compared to Universal’s estimated take from its victory over MP3.
“The companies that did settle probably aren’t as proud of themselves now,” he said.