MP3tunes.com locker service files for bankruptcy (exclusive)
Legal costs piled up over four years as the music service defended itself against a copyright suit from EMI that proved to be too much, says founder Michael Robertson.
MP3tunes.com, the music locker service that rose from the ashes of pioneer sharing site MP3.com, has filed for bankruptcy, records show.
MP3tunes.com was sued out of existence by EMI, one of the four top record companies, according to founder Michael Robertson, a technology entrepreneur who started Linspire, MP3.com, and DAR.fm. In 2007, EMI accused MP3tunes.com of violating its copyright and so ensued more than four years of litigation, heaping loads of legal costs onto the startup music service.
"Four and a half years of legal costs and we're not even out of trial," Robertson told CNET. "MP3tunes has no choice but to file [for bankruptcy]...This is what they do. The labels engage in multiyear legal battles and put small companies through hell for years. "
Veoh, the video-sharing service, went bankrupt in much the same way after being sued by Universal Music Group, the largest of the major labels. More recently, all four of the top labels have filed copyright suits against Gainesville, Fla.-based Grooveshark.
A spokesman for EMI was not immediately available for comment.
The bankruptcy filing is the latest blow to Robertson's efforts to give music fans ubiquitous access to music without having to pay a toll to the labels. Robertson started one of the first music locker services more than 15 years ago. It was one of the features of file-sharing service MP3.com, which also succumbed to legal challenges. The domain and some of MP3.com's assets were eventually sold to CNET.
The bankruptcy documents (PDF), which were filed on April 27, were posted to the Web by Kevin Carmony, a former employee of Robertson's who has been critical of his former boss in recent years.
Records show that MP3tunes.com has liabilities of between $1 million and $10 million. Robertson would not comment about the financial details or about possible layoffs at the company. As for the case with EMI, Robertson said that typically in bankruptcy cases, unfinished litigation is stayed. That means we may not get a final ruling in EMI vs. MP3tunes.com.
Robertson said if EMI's goal was to use the lawsuit to drive MP3tunes out of business, then the label succeeded. If the plan was to prevent the rise of unlicensed music lockers, then the label failed.
As of now, Google and Amazon both operate digital music locker services that enable users to store their songs on the companies' servers and then access them via Web-connected devices. Neither service has a license to do this from the top record companies.
Robertson said that the labels were out to get MP3tunes.com any way they could. He accused them of using their influence in the music industry to blackball the service.
"EMI went to other companies and demanded that they not work with us," Robertson said. "They went to retailers, as one example, and forbid those guys to work with us."
Robertson suggested this may not have been legal. But will he file suit or a complaint with authorities?
Robertson said: "I don't know."