MP3.com Settlement May Be Near
“I would say that we have two very motivated parties. We’ve been in heavy negotiations for weeks. We’re relatively close in my opinion,” Michael Robertson, MP3.com’s chief executive officer, said in a telephone interview from the headquarters of the San Diego-based company.
The comments came after U.S. District Judge Jed Rakoff ruled Friday that MP3.com is liable for offering music online without permission.
MP3.com lets users listen to music on its Web site from compact discs they already own. The record companies challenged the practice, saying MP3.com violated copyrights by loading CDs onto computer servers and letting customers download them.
On Monday, Rakoff set an Aug. 28 trial date to resolve any remaining issues in the case, including damages. But he gave the parties until May 25 to continue settlement discussions. Katherine Forrest, a lawyer for plaintiff Warner Brothers Records Inc., referred calls to the Recording Industry Association of America, a trade association for the major music labels representing 90 percent of signed artists.
Jason Maloni, a spokesman for the organization, declined to comment.
A source familiar with the talks who spoke on condition of anonymity said there was nothing to indicate the record companies were close to a settlement.
Robertson said it was in the interests of both sides to come to what he said would be a precedent- setting business resolution.
“No one in the world has ever gotten a worldwide licensing agreement for the entire record catalogue,” he said. “It would be a monumental licensing deal if we are able to bring it to fruition.”
He said negotiations were focusing on payments to record companies that would still allow his company to succeed.
“I think both parties are really motivated to make it a realistic number,” he said. “The content we’re talking about is only the CDs that you’ve already bought. It doesn’t make sense to … say, ‘You have to pay again.'”
Robertson likened his company’s court battle to those faced by companies during the introduction of other technologies such as cable television, cassette tape recorders and the video cassette recorder.
Adam Sandler, a spokesman for The National Academy of Recording Arts & Sciences, said the trade organization for songwriters and producers would be pleased with a deal that forces MP3.com to pay for its music.
“You can’t close the door to the barn so you might as well make it feasible for these people to pay for the use,” he said.
If settlement talks break down, Robertson said his company would not be doomed. MP3.com still seems on track to meet analysts’ predictions that it will become profitable in the first quarter of 2001.
“None of our revenues are tied to the technology in legal question,” he said, noting that the service accounts for only 4 percent of the company’s business. Most of the company’s revenue comes from advertising on the site and sales of CDs, which it mails to customers.
Shares of MP3.com were up 20 percent, or $1.40 5/8 , at $8.40 5/8 at 4 p.m. Monday on the Nasdaq Stock Market.