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Wednesday, 15 November, 2000, 13:07 GMT strikes Universal deal upset the big record companies
Controversial online music service has ended its legal dispute with record company Universal, after agreeing to pay it $53.4m (37.1m). has now secured a licensing agreement which allows it to use songs owned by Universal, which is the world's largest record company.

In return, Universal also has the right to buy a stake in, and on Wednesday the label bought warrants to purchase nearly 5% of the company.

Universal acts include Eminem, U2 and Jimi Hendrix. chief executive Michael Robinson said: "Our shareholders should be excited. It gets us out of the courtroom and into the business of delivering digital music."

Eminem is a Universal artist
The company has already reached settlements with four other major companies - Warner Music Group, Bertelsmann, EMI and Sony Music Entertainment - and has arranged licensing deals with each of them.

In a joint statement issued by Universal and, Universal president Zach Horowitz said his company had "pursued this case to send a strong message that copyrights will be protected and that copyright owners and artists need to be properly compensated for their work".

He added: "It was never our intention to put out of business with a judgement so large it would threaten their viability as a company.

"We support the development of legitimate music businesses on the internet."

Members only

At stake was, which allows computer users to listen to CDs over the Internet.

Members must first prove they paid for the recording by inserting the original CD into a computer's CD-Rom drive.

A judge ruled in September that had intentionally violated the copyrights of the music companies, and awarded Universal $25,000 (17,400) per CD - which could have resulted in a bill of up to $250m.

Digital dispute
Jan 2000: Record giants sue
April 2000: found liable
June 2000: Warner and BMG settle
July 2000: EMI settles
August 2000: Sony agreement
Sept 2000: ordered to pay up to $250m to Universal
Nov 2000: Universal settlement
Hilary Rosen, president of the US music industry body, the Recording Industry Association of America, welcomed the deal.

She said: "It will drive home the point that the marketplace for legitimate music on the internet really works."

Some disputes between smaller record companies and remain to be resolved, but these are not expected to pose a threat to the internet outfit.

Last month, Bertelsmann announced it was teaming up with another internet music service, Napster, in developing a membership-based system which would guarantee royalties to artists.

Napster simply acts as a clearing-house for users to find music on each other's hard-drives, while stores the music on its own servers.

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