EMI is to issue a non-exclusive, North American licence to MP3.com to use EMI recordings on MP3.com’s Beam-It and Instant Listening software services.
Beam-It software lets users "store" music CDs in MP3.com's online library. If users register ownership of CDs with Beam-It, and the CDs match those in MP3.com's library, they can then log into their My.MP3.com account to listen to the music.
Legal blow A New York court ruled against MP3.com in April for violating copyright law with the service. MP3.com faced billions of dollars damages from the suit filed by the Recording Industry Artists Association (RIAA), which represents the five major music labels.
The terms of the settlement weren't announced, but are probably in line with agreements MP3.com signed in June with Warners and BMG, said Eric Scheirer, a media and entertainment analyst from Forrester Research.
Scheirer said: "This particular signing won't be as important as the two others left - Sony and Universal. Warner is about to own EMI. Universal is the biggest, so I figure that's why they're holding out until the end."
Costs mounting Sources close to the Warner and BMG deals said MP3.com paid about $20 million to Warner, and as much as $100 million in total for the right to use the songs owned by the music labels. MP3.com announced Monday that it had taken a $150 million charge against earnings for legal costs.
Scheirer discounted a direct connection between the MP3.com deal and the RIAA courtroom win against the music distribution network Napster. The RIAA won an injunction Wednesday against Napster, which provides a database of MP3 music file locations on computers linked in its network: He said: "These are long-term negotiations. I don't see this settlement as in response to it. In order to get to this point, they would have had to be negotiating for a while. This is the end of a long road."
The music industry faces the possibility of 20 million former Napster users migrating to other more distributed and less controllable means of downloading music files, like the Gnutella peer-to-peer network, which requires no central database. With the possible end of Napster, music labels may need to move fast to provide an alternative, and a deal with MP3.com may be an answer, Scheirer said.