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MP3 site settles for $10 million with RIAA

Record labels say the Spanish site offered music online for pennies, but it didn't have permission.

The Recording Industry Association of America has reached a $10 million legal settlement with a Spanish company that briefly offered MP3s online for just pennies a song.

The trade group on Monday said four people associated with Puretunes.com, which operated only briefly in mid-2003, collectively agreed to pay $500,000 in damages, while the holding company responsible for the Web site's operations will be responsible for $10 million.

The company initially said it had acquired the rights to the songs legally through overseas licensing authorities. The RIAA disagreed and sued the company not long afterward.

"Puretunes.com duped consumers by claiming it was a legitimate online music retailer when, in fact, it was no such thing," RIAA President Cary Sherman said in a statement. "It's essential for the integrity and security of the legitimate online music marketplace that imposters like Puretunes.com are held accountable."

The Puretunes case was one of several the recording industry has pursued in recent years against Web sites, trying unusual music distribution models. The online companies often cite loopholes in overseas content licensing rules that U.S. companies say aren't valid.

A similar case is now going to court in Australia, where a man is accused of allowing people to download 2 terabytes of music from his Web site.

Some of these sites are still operating, however. One widely used Russian site, AllOfMP3, offers users the ability to pay by the size of their download. Customers are offered 500 megabytes of music--about 100 songs--for $5, for example. Another Spanish company called WebListen.com, very similar to Puretunes, is online, despite having been sued.

Former Grokster President Wayne Rosso, who helped market the Puretunes service through his peer-to-peer application, is named in the RIAA settlement. He said he was never an owner and that the RIAA was unfair to target people who thought they were obeying the law.

"The owners thought everything was in order, and as soon as they found out everything wasn't in order, they pulled it," Rosso said. "They were trying to do the right thing every step of the way."