MP3 chief: Company will prevail despite legal storm

CEO Michael Robertson insists his online music company will prevail in its legal battles and will appeal a court decision against it.

3 min read
Despite his company's mounting legal troubles, the embattled chief executive of MP3.com today vowed to fight on.

MP3.com CEO Michael Robertson, in a statement issued today, insists his company will prevail in its legal battles and will appeal a court decision against it.

The decision by a federal judge last week found that MP3.com willfully infringed the copyrights of Seagram's Universal Music Group, opening the company to enormous potential damages in one of the first trials to address the legal boundaries of Internet music distribution.

And legal troubles continue to mount. Just yesterday, independent music companies Zomba Recording and Zomba Music Publishing each sued MP3.com for willful copyright infringement in relation to its My.MP3.com service, which the company introduced in January.

My.MP3.com lets consumers listen to their CDs through any computer with Web access. 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 the CD by placing the disc in their computer.

Universal and MP3.com are still in negotiations to end their legal scuffle over whether MP3.com has been a vehicle for pirated music, Robertson said in the statement.

He added that his company will come out on top in that battle.

"We are now starting a third phase of the trial to determine the number of copyrights for which Universal will actually be entitled to receive statutory damages," he said in the statement. "We expect this phase of the case to end sometime in mid-November. Once final judgment is entered in the case, we will be able to pursue an appeal of all the appropriate issues."

The company has already settled with major record labels Sony Music Group, BMG Entertainment, EMI Recorded Music and Warner Music Group and is working to let My.MP3.com users resume access to content from that group of labels.

Robertson is trying to reverse the company's sinking stock. The day of the Universal ruling, MP3.com shares fell $1.69, or 21 percent, to $6.19 a share. Since last week it has continued to plummet; shares today hit a new 52-week low.

Despite the court battles, Robertson said the My.MP3.com service will be reactivated in the next few weeks, giving members access to music stored on the company's computers in San Diego.

MP3.com's top executive said his company will continue to pursue other avenues to raise the awareness of consumers' rights to listen to music on the Internet.

"We are working see news analysis: MP3.com's practices stir debatewith several legislators in Washington, D.C., to review current copyright laws and possibly revise those laws to clarify a consumer's right to listen to the music they purchase, with or without the assistance of technology companies like MP3.com," Robertson said. "There continues to be confusion about what a consumer can and cannot do with a CD once purchased. We feel that clarification of this aspect of the various copyright provisions should be addressed at the legislative level."

In the Universal case, U.S. District Judge Jed Rakoff ruled that the online music company must pay $25,000 per violation stemming from its My.MP3.com "music locker" service.

MP3.com estimated during the trial that 4,700 CDs covered by Universal's copyrights were stored on its database, possibly exposing the company to damages of $118 million. However, the actual number of CDs that were copied--and therefore the amount of damages--has not been determined.

Meanwhile, the Zomba companies accuse MP3.com of allegedly "adopting a blatant strategy of attempting to unlawfully build a business by misappropriating us and our artists' and writers' goodwill, recordings and songs," according to a court filing.

Phil Leigh, an analyst at investment firm Raymond James, said he expects more small companies such as Zomba to file suits against MP3.com because of the judge's ruling in the Universal case.

"Between now and the end of the final Universal case decision, I think we'll see more lawsuits from independent companies," Leigh said. "But I wouldn't tell investors in the company (to give up). MP3.com could win in the appeals process."