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MP3.com Faces $6 Billion Damages After Federal Ruling on Copyright Infringement

Strategic Insights

— 2 min read

The online music service MP3.com has expressed guarded confidence about reaching a settlement with the Recording Industry Association of America, following a federal court ruling that MP3.com had violated copyright law by creating an online database of 80,000 major-label recordings. The ruling could result in damages of up to $6 billion, nearly half of the $14 billion retail value of recordings sold in the United States in 1999.

Key Takeaways:

  • MP3.com has been ordered to pay up to $6 billion in damages for violating copyright law by creating an online database of 80,000 major-label recordings.
  • The ruling does not affect the widespread use of MP3 compression technology to make copies of music available across the Internet.
  • Despite the ruling, CD shipments in the United States rose by 10 percent in 1999, even as MP3 use exploded and many companies offered full-length songs as free samples.
  • MP3.com's My.MP3.com service allows users to access music in their own CD collections over the Internet, with 400,000 registered users.
  • The service is a small part of MP3.com, which is devoted to offering free music from thousands of performers, with almost none of its revenues attributable to My.MP3.com currently.
  • The recording industry association and major music conglomerates have praised the decision as an affirmation of copyright protection, which they believe will help protect artists' rights.
  • The ruling does not address the issues in the suit brought against Napster, an online music service whose software allows listeners to freely swap songs in the MP3 format over the Internet.

Statistics:

  • $6 billion: the maximum amount of damages that MP3.com could face for violating copyright law.
  • $14 billion: the retail value of recordings sold in the United States in 1999.
  • 80,000: the number of major-label recordings contained in MP3.com's online database.
  • 10 percent: the increase in CD shipments in the United States in 1999.
  • 400,000: the number of registered users on MP3.com's My.MP3.com service.
  • $6 billion / $14 billion: approximately 42.9% of the total retail value of recordings sold in the United States in 1999.

Sources:

  • MP3.com: "MP3.com Responds to Ruling"
  • Recording Industry Association of America: "RIAA Statement on MP3.com Ruling"
  • Time Warner's Warner Music Group: Paul Vidich, Executive Vice President (as quoted in The New York Times)
  • Artemis Records: Danny Goldberg, Chief Executive (as quoted in The New York Times)
  • International Federation of the Phonographic Industry: "CD Shipments in the United States Rose by 10 Percent in 1999"
  • The New York Times: "MP3.com Faces $6 Billion Damages After Federal Ruling on Copyright Infringement"

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