Two of the major music labels are reportedly close to striking a groundbreaking deal with MP3.com that would enable people to access their favorite music from any Internet connection.
The supposed deal with Warner Music Group and BMG would be the first time a major label made their vast archives of music available to consumers over the Internet.
According to a report on music news service HITS, the deal would see MP3.com pay between $75 million and $100 million to the labels and would settle the companies’ copyright infringement claims as part of the RIAA suit.
The talks were prompted by a federal judge finding MP3.com liable for copyright infringement for streaming music through its my.mp3.com service from a database of music copied from CDs.
My.MP3.com enables registered users to access music from the database, which translates the songs into a library of MP3s. Before users can have the music streamed to them, they have to load a physical CD that contains the album into their computer.
In May, MP3.com halted access to major-label music while the company negotiated a settlement to the copyright infringement lawsuit filed by the RIAA.
Also included in the deal would be a licensing provision where the company would pay 1.5 cents per song people stored by people in their virtual lockers, and 1/3 of a cent each time a song is streamed, the report said.
Although MP3.com faced a difficult legal battle with the RIAA lawsuit, CEO Michael Robertson has said the only way his company could get the music industry to sit down and negotiate licensing fees was to launch the service without permission from RIAA.
“Unfortunately, there isn’t a good track record of any other way working,” Robertson said earlier this year in an interview.
“When I sat down with Hilary (Rosen, president of the Recording Industry Association of America), I said give me a list of all the people that have come to you and asked for a license that you have been able to provide a license to. There simply aren’t any licensees of interactive music distribution, which is what my.mp3.com is doing.”
If the labels do cut a deal, it would signal a radical change in their attitude toward digital music distribution.
“The thing that struck me about this possible deal — if you take this at face value — is that some of the majors are embracing MP3s, even if it’s just with streaming technology, and that is amazing,” said John Parres, an Internet specialist with Los Angeles-based Artists Management Group.
Parres also said that MP3.com still has to settle its legal dispute with songwriters and publishers.
“But this is a win for everyone in this space. Now, things are going to get really interesting with the music,” he said.
Before the digital music industry can move forward, MP3.com CEO Michael Robertson has to find a way to create a revenue model to pay for the label’s licensing fees. Sources familiar with MP3.com said that Robertson would possibly offset those costs with advertising revenues.
“This deal will be good for consumers because they will begin to enjoy ubiquitous access to content,” wrote Jim Griffin, the CEO of a digital media incubator Cherry Lane Digital.
“It will be good for labels because they can transition consumers to a service with a bundled price and unbundled choice, which gives consumers the freedom of use they crave with a flat fee approach that ultimately increases total global music sales.”
A change of heart by the labels would also benefit other digital music companies that want to license music from the labels. While MP3.com is wading through lawsuits and trying to ramp up its my.mp3.com service, other competitors might pursue similar licensing agreements.
“I think it will be some time between when the MP3.com/RIAA suit is settled and my.mp3.com can be back up to speed with as complete a service as it had before the shut down,” Dean Kay, co-chairman of the American Society of Composers, Authors and Publishers, new technologies committee, wrote in an email.
If the labels do begin licensing music to portals, the biggest winner might be Yahoo, which has been in talks to purchase myplay.com — a virtual storage company that offers a similar service to my.mp3.com.
