MP3.com, music publishers sound out licensing deal

Web music service MP3.com on Wednesday agreed to a preliminary three-year, $30 million licensing agreement with the National Music Publishers' Association's subsidiary, The Harry Fox Agency.

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If approved by publishers, the license would give MP3.com the use of more than 1 million musical works for its My.MP3.com music storage service. The agreement also would settle a lawsuit filed by the association in March against MP3.com, alleging copyright infringement of their works.

"The agreement that we've reached will have cessation of lawsuit and a stay of the court proceedings," said Ed Murphy, the association's chief executive.

The association and its Harry Fox licensing subsidiary are trade groups for music publishers and are the parties spearheading the lawsuit.

This is the latest deal struck between the music industry and embattled MP3.com. The issue centers on My.MP3.com, an online service developed by MP3.com that allows consumers to play back over the Internet music from CDs they have recently purchased.

To provide the service, MP3.com bought tens of thousands of CDs, created a database of MP3-encoded downloads, and offered access to people who proved they had bought a given CD by placing the disc in their computer. The company's move caught the attention of the recording industry, which took swift legal action against it. As a result, MP3.com has agreed to pay more than $100 million in licensing and settlement fees to keep its service running.

That settlement figure is likely to grow. A federal judge in April ruled that My.MP3.com violated copyrights. MP3.com has since settled with all of the Big Five record companies except Seagram's Universal Music Group.

In September, the same federal judge ruled that MP3.com could pay about $118 million in damages to Universal. The final amount will depend on how many works the judge deems were infringed.

The Harry Fox unit will split the licensing revenues into two funds. One fund will pay the agency's publisher-principals for uses of their music on My.MP3.com, and the other will provide advanced payments toward royalties under the license.

The terms of the proposed license were based on a fee of one-quarter cent for each song streamed on My.MP3.com, as well as a onetime fee every time a track is added to the service.