Labels settle at-work song-share dispute

The recording industry collects $1 million from a tech company that dedicated a server to the posting and sharing of copyrighted music by its employees.

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In an unprecedented crackdown on an internal corporate network, the recording industry said Tuesday that it has settled with an Arizona company that allegedly let employees trade copyrighted MP3 files over a dedicated server.

The Recording Industry Association of America said technology consultancy Integrated Information Systems (IIS) agreed to settle for $1 million. IIS, whose products include software designed to secure digital material, allegedly allowed people to swap copyrighted songs by artists including the Police and Ricky Martin.

"This sends a clear message that there are consequences if companies allow their resources to further copyright infringement," Matt Oppenheim, RIAA's senior vice president of business and legal affairs, said in a statement.

The RIAA--which represents the major music companies such as AOL Time Warner's Warner Music Group, Bertelsmann's BMG Entertainment, Sony Music Entertainment, Vivendi Universal's Universal Music Group and EMI Group--said it learned of the network from an e-mail tip.

IIS did not immediately respond to requests for comment.

Companies and universities that allow file swapping are coming under increasing pressure from the entertainment industry, which alleges trading networks promote copyright infringement. The music industry already has gone after companies seeking to make money by providing such networks to the general public, including Napster and Scour.

Although some companies are pulling down their internal file-swapping networks for fear of legal action, many schools are allowing the sharing of MP3s to continue unabated. MP3 files are created through a specialized computer program that compresses standard audio tracks into smaller sizes without significantly compromising sound quality.

In a separate announcement, the RIAA said it had reached a $3.2 million settlement with CD manufacturing facility DOCdata USA, which also agreed to help the RIAA prevent piracy and investigate any further cases.