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Sunday, 30 April, 2000, 13:47 GMT 14:47 UK to fight court ruling

Internet music service is to fight a court ruling that found it is violating record company copyright.

The ruling can be seen as a victory for the world's largest music labels, who have long feared that the MP3 technology could wipe out their revenues.

The website offers a service called which allows users access to their own CD collection online for free.

The recording industry say that did not have record company permission to create the database that makes this service possible.

MP3 is a technology for compressing sound, either music or speech, into a small file, about one twelfth the size of the original. The sound quality is similar to the original.

Judge Jed Rakoff ruled on Friday that was "liable for copyright infringement".

He said a written opinion would be available in the next two weeks.

Record company joy

The lawsuit was brought by the Recording Industry Association of America, which has welcomed Judge Rakoff's decision.

The record companies involved in the court case include Time Warner's music group, Sony Music Entertainment, Seagram's Universal Music Group and Bertelsmann's BMG.
George Michael
Sony artists such as George Michael can be accessed via MP3

These companies are now expected to apply for an injunction, that will force to remove from the database the music whose copyrights are held by major labels.

Fighting talk has made it clear that it intends to appeal and that business will continue as usual.

"We lost round one," Robin Richards,'s president said. "We're in a heavyweight fight, and there are five heavyweights ( in the ring against us. We will take shots, but this is by no means the end of the fight," he added.

He pointed out that " features music from over 4,000 labels, many of whom have allowed us to make their music available in this way."

The success of, with an estimated 400,000 customers, has prompted the recording industry to launch an aggressive anti-piracy crusade.

The website had initially focused on creating a platform for unknown artists.

What prompted the RIAA to start this lawsuit was's launch of two new services.

Instant Listening Service allows customers to listen to a CD after they have purchased it, while Beam-IT allows users to add their own CDs to their personal playlist online.

While individuals can listen to their CD collections online anyway, MP3 was making it easier for them by offering them access to its database.

The major record companies objected to the unauthorised creation of the database, even though the system cannot work unless the user has an original copy of the copyrighted work.

Investor fears

The news sent shares plummeting on Friday, with shares closing 40% lower at $7.

When it was first issued in July last year, the share had traded as high as $105.

Chairman and chief executive Michael Robertson has since sought to reassure worried investors.

"This ruling will have no impact on the future revenues of the company," he said.

The site does not generate any revenue for, he said.

About 80% of the company's revenues come from advertising in other parts of the site, he added.

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See also:

25 Aug 99 | The Company File
Don't write off the CD - yet
21 Jul 99 | The Company File
Music site is a market hit
28 Sep 99 | Sci/Tech
It's only MP3 but I like it
16 Aug 99 | The Company File
Sony launches Internet music sales
22 Apr 99 | Entertainment
Taming music on the Web
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