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Friday, 9 June, 2000, 18:44 GMT 19:44 UK
MP3.com settles suit

Online music provider MP3.com has settled industry copyright lawsuits with two of the largest record labels.

The settlements will allow MP3.com to store music from both record labels on its website.

The MP3.com website offers a service called my.mp3.com which allows users access to their own CD collection online for free.

The recording industry fears that the MP3 technology could wipe out its revenues and says that MP3.com 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.

The suits follow a court ruling in April that the company was violating record company copyright.

Under the terms of the suit, the two labels will receive a lump sum.

In addition, MP3.com will likely pay a fee for each time a user registers a label's CD or accesses one of the record label's songs.

More to come

Three other labels in the suit - Sony Music Entertainment, Seagram's Universal Music Group and EMI Group - have yet to reach settlements with the company.

The success of MP3.com, 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.

MP3.com's shares rose 22% to $21 on the news a settlement had been reached.

Analysts said the news lifted concerns about the settlement's impact on the company.

But said fears remain about its ability to turn a profit as the company has yet to generate revenues from its my.mp3.com service.

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See also:

10 May 00 | Business
EMI enters digital music arena
09 May 00 | Entertainment
The music industry's MP3 headache
30 Apr 00 | Business
MP3.com to fight court ruling
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