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MusicMatch, Record Labels Set License Pact

Entertainment: Deal between radio service and recording industry is expected to end suits over royalty structure.

July 16, 2001|SUE ZEIDLER | REUTERS

MusicMatch Inc. said Sunday that it struck a licensing deal with the recording industry to broadcast musical performances on its Web radio service, paving the way for both parties to drop lawsuits against each other.

"Entering into this license made the lawsuits unnecessary," said Bob Ohlweiler, senior vice president of music development for MusicMatch.

MusicMatch was one of several Webcasters embroiled in an escalating legal battle over the royalty structure for Internet radio stations.

At issue is whether Webcasters that allow users to pick the style of music they want to hear or to skip songs selectively should be required to have separately negotiated licenses from record companies or are eligible for compulsory licensing as traditional radio stations are.

Ohlweiler said the company had been negotiating with the Recording Industry of America for quite some time. "The urgency of all this led us to pull it together, and this licensing announcement removes any kind of ambiguity or disagreements," he said.

He declined to disclose terms of the licensing deal.

The first salvo in the dispute came in late May, when the RIAA, which represents the record labels, filed suit against music portal Launch Media Inc. for allegedly failing to seek proper licenses for its personalized Web radio service, Launchcast.

Under the 1998 Digital Millennium Copyright Act, Webcasters that provide interactive features are required to seek special licenses with each record label, but the law does not precisely define those features.

If the Webcasters are deemed non-interactive, they are eligible for statutory licenses, or a blanket license, granted from the RIAA. Two days after filing the suit against Launch Media, the RIAA filed a motion with the U.S. Copyright Office, which is expected to oversee royalty arbitration proceedings this summer, to have MusicMatch and six other Webcasters declared ineligible for statutory licenses.

The Webcasters and a trade group that represents them, the Digital Media Assn., responded to the RIAA's motion by filing suit in a San Francisco federal court June 1, asking the court to define what kinds of features would qualify as "interactive" under the copyright law.

The RIAA shot back by suing MusicMatch and other Webcasters on June 8, asking a New York court to consider all of the relevant issues. The other Webcasters in the suit were MTVi Group and Xact Radio.

But the agreement announced Sunday indicates that the RIAA considers MusicMatch a radio service that is non-interactive and compliant with the Digital Millennium Copyright Act, a MusicMatch spokesman said.

"This is a voluntary statutory license and is the same type of statutory licensing agreement that the other Webcasters will also receive when they go through the arbitration proceedings later this summer," Ohlweiler said.

"We're satisfied with the license, and it allows us to continue to provide these radio products," he said.

Ohlweiler called the agreement a blanket license with the RIAA covering all of the labels it represents.

MusicMatch has been operating its radio service since November under the statutory Webcasting license provided by the Digital Millennium Copyright Act.

"This license agreement confirms that the needs of online music lovers do not have to come at the expense of artists and copyright holders," said Hilary Rosen, president and chief executive of the RIAA.

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