EMusic, Independent Labels File Suit Against MP3.com

Online music company EMusic.com Inc. and five independent record labels filed a copyright infringement lawsuit Tuesday against financially struggling MP3.com Inc., which had just settled nearly identical complaints from the five major record labels last month.

The suit, filed in U.S. District Court in New York, alleges that MP3.com infringed the digital rights of an unknown number of EMusic’s library of 13,000 albums with its My.MP3.com service.

Other plaintiffs include several EMusic partners: Fearless Records, Fuel 2000 Records, Gig Records, Invisible Records and Spinart Inc. EMusic officials said they anticipate that additional independent labels and artists will join the suit.

San Diego-based MP3.com relaunched its online music locker service this month, after losing a painful legal battle over the My.MP3.com service because it had not obtained licenses from the record labels or music publishers. The new version is licensed by the five major labels and music publishers, which will collect small sums from MP3.com each time a song is played from the lockers or a new CD is added.

“Although MP3.com has entered into settlement agreements with the five major record labels, they have chosen to ignore their infringing actions with respect to independent record labels,” EMusic Chief Executive Gene Hoffman said in a statement.

EMusic, based in Redwood City, Calif., is one of the industry’s leading online outlets of independent-label music. Among other things, the company offers a subscription service that lets consumers download an unlimited number of its MP3s for as little as $10 per month.

The service is limited to EMusic’s roster of independent-label artists, and the audience remains relatively small. Sources peg the number of paying subscribers in the thousands.

MP3.com officials declined to comment Tuesday, saying they had not been served a copy of the suit.

Analysts said the suit was expected and it’s likely the first that EMusic will file--and the first copy-cat suit MP3.com will face.

“These are the kinds of issues that are going to pop up again and again with digital distribution,” said P.J. McNealy, an industry analyst with the research firm Gartner. “Everyone’s trying to carve out their territory in the digital world, and EMusic is just putting down their tent stakes.”

Indeed, EMusic recently took on controversial rival Napster Inc., and launched a software program that searches through consumers’ computers and flags digital-music files that it believes are pirated.

EMusic’s stock rose 3 cents Tuesday to 38 cents a share, while MP3.com’s stock fell 56 cents to close at $3.47, both on Nasdaq.

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Times coverage of music sharing, Napster and related issues is at https://www.latimes.com/musicweb.