The settlements include licensing agreements that will allow to store music from both record companies on its service. It also calls for undisclosed cash payments to the record companies, which they will reportedly share with their artists.

Time-Warner and Bertelsmann AG, parents of Warner Music Group and BMG Entertainment, along with Sony Corp., Seagram Co., and EMI Group were among the group of corporations that sued in January.

U.S District Judge Jed S. Rakoff in May ruled that infringed on copyrights when it purchased tens of thousands of recordings and then copied them onto its computer servers in order to replay them for subscribers. disabled that service, called MyMP3, to prevent anyone from storing music produced by the litigating companies after the ruling was handed down.

The licensing agreements will allow consumers to access copies of Warner or BMG compact discs they already own from the Internet with

The news was well-received by investors: shares of San Diego-based MP3.closed up $2.33, or 11.9 percent, at $19.58 in Nasdaq trading the day of the announcement.

It comes as a relief to the parties in the lawsuit as well.

“This is a giant step forward for, the digital music space, artists and consumers,” said Robin Richards, president and chief negotiator for, in a statement accompanying the settlement announcement.

“This is an important moment for recording artists and copyright owners. This settlement ends an unfortunate period in our history with,” said Paul Vidich, an executive vice president with Warner Music Group.

“BMG vigorously enforces its copyrights. At the same time, we believe the best enforcement is the creation of legitimate alternatives for consumers,” said Kevin Conroy, BMG’s chief marketing office and president of its New Technology division.

Micheal Robertson, chairman and CEO, said all sides in the negotiations worked to benefit consumers, artists and copyright owners.

The licensing agreements represent a large store of potential material for to make available for download.

Warner Music Group has a roster of more than 1,000 artists and includes the Warner Bros., Atlantic, Elektra and Rhino labels. BMG Entertainment owns more than 200 record labels in 54 countries, including Arista, RCA, Ariola and Windham Hill.