Time Warner May Sign Licensing Deal With MP3.com This Week

Time Warner is poised to sign an unprecedented, multimillion-dollar licensing deal this week with controversial MP3.com, sources said.

The two-year agreement, which could be announced as early as today, would require MP3.com to pay an estimated $6-million advance plus additional licensing fees for future use of Warner Music Group recordings appearing on the Internet company’s Web site, sources said.

The move follows a federal judge’s April 28 ruling that the San Diego-based Web site had infringed record industry copyrights by transmitting, for free, hundreds of thousands of songs to computer users who subscribe to its “My.MP3.com” service.

MP3.com was sued in January by Time Warner, Seagram Co., Sony Corp., EMI Group and Bertelsmann for copyright infringement relating to My.MP3.com. The record labels said MP3 violated copyright laws by creating a database of 80,000 unauthorized albums, which allows users to store music from their personal CD collections and then access it via any computer connected to the Internet. MP3.com cut off access to all major label music after the judge’s ruling.

MP3.com and the record companies have been struggling for weeks to come to terms on payments for past damages and future licensing fees that might allow use of major label music on the service in the future. Bertelsmann Music Group is close to signing a pact similar to Warner’s, but Seagram’s Universal Music Group, Sony and EMI Group have been unable so far to come up with a specific structure for future licensing fees, sources said.

All five record companies have worked out an agreement with MP3.com to resolve the issue of damages for copyright violations, sources said. In the lawsuit, the companies were seeking billions of dollars in damages.

Next week, however, MP3.com is expected to announce that it will pay more that $100 million to the five companies to settle that aspect of the case. According to sources, at least two of those companies do not plan to pass along any of that money to artists whose music was played on the service.