MP3.com agrees Sony damages

The deal covers Bruce Springsteen and other Sony artists

Online music service MP3.com has reached a $20m (£13m) damages settlement with Sony Music Entertainment, home to artists such as Jamiroquai, Bruce Springsteen and Mariah Carey.

The deal will allow the company to use the record label's music under licence as part of its internet-based service.

This settlement affirms and upholds the right of copyright owners

Al Smith, vice-president Sony

However, the payment only represents damages during past violations of copyright.

In future, MP3.com will make 'royalty' payments every time a user registers a Sony CD, or downloads one of its songs.

The deal is believed to be similar to earlier agreements reached between MP3.com and the Time-Warner, EMI, and Bertelsmann (BMG) music giants.

"This settlement affirms and upholds the right of copyright owners to be paid for the use of their works on the internet," said Al Smith, senior vice-president at Sony Entertainment.

Copyright infringement

Although the settlement has been reached out of court, a judge has ruled that a trial is still necessary to resolve other cases of copyright infringement by the San Diego based company.

The case is expected to resume on 28 August. Earlier this year, MP3.com said it had set aside a fund of $150m to meet legal settlements with music companies and publishers.

MP3s are highly compressed digital audio files.

Compressing large amounts of data - in this case music - makes MP3s the most popular way of storing and exchanging music on the internet because of the relatively short download time involved.

Part of MP3.com's site also allows users with original copies of CD's to upload them onto the site. Users can then listen to these from any computer without having to insert the original disc.

However in April, a court ruled that MP3.com's huge database broke copyright laws and ordered the company to make settlements with the music companies or face billion dollar damages claims.

The Seagram company's Universal Music Group is the only major music company still to reach a settlement with MP3.com, although there are still several music publishers with outstanding claims.