And Then There Was One: MP3.com Signs Up Sony, Leaving Universal as Holdout By Bruce Haring
Sony Music Entertainment and MP3.com agreed Monday to terms that will allow the Sony catalog to be included in the My.MP3.com online streaming service.
The deal, which followed legal action brought eight months ago by the major record groups against the e-music company, calls for a payment by MP3.com to Sony for past copyright infringement, believed to be in the $20 million range. The agreement also grants the San Diego-based company a non-exclusive North American license with Sony Music for use of its recordings within the My.MP3.com system, including the Beam-It and Instant Listening services.
MP3.com must still reach agreement with myriad music publishers on copyright issues before the My.MP3.com service can again provide content from the major labels.Sony is the fourth major distributor to settle with MP3.com, following earlier deals with Warner Music Group, EMI Music and BMG. The world's largest record company, Universal Music Group, is the only holdout. Universal and BMG have struck deals with, and taken ownership stakes in, streaming-media startup Musicbank, a competitor to My.MP3.com.
Although both companies declined to discuss the agreement pending a joint announcement on Tuesday, Inside.com has learned that all Sony-affiliated artists are included in the deal. Some major artists at other distributors have clauses in their contracts that permit them to opt out of services like MP3.com.
It is believed that settling outstanding issues with the major record distributors and publishers will cost MP3.com well over $100 million, or about half of its available cash reserves. Licensing terms are said to call for MP3.com to pay a royalty for tracks both stored and streamed by users. Some reports have questioned whether the settlement terms will ever allow MP3.com to make a profit on the service.
The company's most recent financials, for the six months ended June 30, showed a net lost of $195.2 million, thanks to a $150 million charge taken to settle copyright violations and pay advances against future licenses.
Shares of MP3.com rose this morning more than 30 percent on news of the settlement, to $10.25. That's considerably higher than the company's 52-week low of $6.50, achieved just after the court decision that charged the company with massive copyright infringement, but is still far off its 52-week high of more than $64, which occurred shortly after the company's successful IPO.
MP3.com must still reach agreement with myriad music publishers on copyright issues before the My.MP3.com service can again provide content from the major labels.