MTVi in Net radio licensing dispute
In advance of a proposed IPO, MTV's Interactive Group discloses that it is in a licensing dispute with two major record companies over its Net radio business, according to a recent SEC filing.
MTVi Group, a unit of Viacom that operates several Web sites including MTV.com, VH1.com and SonicNet.com, said it has received letters from two major record companies that disagree over its Internet radio business, according to the filing. The record companies are Sony and EMI, according to The Wall Street Journal, which cited people familiar with the matter.
MTVi, which did not identify the record companies in the filing for its initial public offering, said the companies are "demanding that we cease our use of their music in this manner and pay for our past use." The Internet radio service allows users to "tune in" to a preferred genre, the same way one would be able to with traditional radio.
EMI could not immediately be reached for comment. Sony declined to comment.
The licensing dispute between the companies comes at a time when license fees for digital services, such as Internet radio services or other Net music services, are still being debated.
MTVi said in the filing that it has not paid license fees to the record companies because it believes the features it offers in its Internet radio service are within the "scope" of the compulsory license. The fees for such a license are determined by the Librarian of Congress or by negotiation with individual companies.
MTVi belongs to 
the Digital Media Association (DiMA), a trade group for Webcasters, which is locked in arbitration with the Recording Industry Association of America over the exact terms of a Webcasting licensing fee mandated by a 1998 overhaul of the Digital Millennium Copyright Act.
Webcasters must pay record companies for the performance of a sound recording. The fee for the performance of a sound recording is in addition to what Webcasters and offline radio stations pay to license groups such as ASCAP and BMI, which represent composers, publishers and authors.
MTVi is part of Viacom's major Internet push launched last year. On Friday, Viacom announced plans to take the unit public. Morgan Stanley Dean Witter, Credit Suisse First Boston and Bear Stearns are the underwriters for the offering.
News.com's Courtney Macavinta contributed to this report.