Klarinet Archive - Posting 000483.txt from 2000/05

From: David Blumberg <reedman@-----.com>
Subj: [kl] MP3.com and Sony, BMG, Warner, etc.
Date: Mon, 8 May 2000 14:19:50 -0400

Downloadable and streaming music site MP3.com is discussing the terms of
catalog-wide licenses with the five major label groups, which won a
summary judgment in their copyright infringement suit against the company
last week. Should licensing agreements be signed, MP3.com could emerge
from its legal woes as a forward-looking music provider with back-end
systems that other Internet music companies pay to use.
MP3.com has been in negotiations with Sony Music Entertainment, BMG
Entertainment, Universal Music, Warner Music, EMI Recorded Music and the
Recording Industry Association of America (RIAA) for three to four weeks,
according to MP3.com President and COO Robin Richards, who described the
"demeanor of the negotiations as very, very productive."
The parties are discussing "ongoing, catalog-wide licenses," Richards said,
with specific terms regarding the My.MP3.com streaming service.
The working terms include provisions that required My.MP3.com to be
password- protected and force users to prove they own the CDs they want to
stream, Richards said.
"That [requirement] puts a tremendous respect and value on the CD itself,
which a lot of these technologies don't do," Richards said. "I think that
was important to the record companies, and frankly, that's why we built it
that way."
The reliance on the CD indicates that the major labels are still concerned
that digital music could diminish that market. New streaming services and
downloadable music are expected to grow quickly in the next five years, but
some observers believe they will complement the CD market, not supplant it.
Richards would not comment on how much the licenses might cost. The RIAA
has negotiated at least ten licenses with non-interactive webcasters, who
pay between 15-22% of their gross revenues to the trade group. My.MP3.com
would qualify as an interactive webcast service, and MP3.com would likely
have to pay higher license fees.
BMG Entertainment confirmed it wanted to "reach a fair and reasonable
business arrangement that compensates BMG Entertainment for the
infringements," but did not comment on the matter of licensing. Sony Music
Entertainment would not comment on the negotiations, and representatives
from the other labels could not be reached by press time.
If MP3.com succeeds in obtaining licenses and keeping major label content
on My.MP3.com, the streaming service would be legitimized. In effect, the
United States District Court's ruling that MP3.com violated copyrights has
forced the current negotiations, and as a result of those talks, the major
labels could see new revenue from MP3.com.
Richards said that positive negotiations would send a signal to the market
that the record companies "appreciate technology" and MP3.com "values
copyright."
MP3.com is also in a position to license its streaming system to other
companies that want to offer similar services, but offer an original
interface that relies on the MP3.com database of over 45,000 CDs.
Sony Music and Universal Music announced earlier this week that they would
establish a joint subscription service that would offer streamed and
downloadable music to listeners using PCs, wireless devices and set-top boxes.
When the two companies made the announcement, they did not indicate that
they had made any real progress toward building the computer systems that
would run the service. MP3.com's Richards said that his company's system
could serve as the back-end for the Sony/Universal venture, but that
the idea had not been discussed in the current negotiations.

David Blumberg
music@-----.com
http://www.mp3.com/mytempo
http://www.mytempo.com
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