Major Music Labels Sue Launch Media, Aimster

The major record labels continued their legal assault against online music companies Thursday, filing lawsuits in federal court against a leading personalized radio station and a popular file-swapping service.

A lawsuit against Launch Media Inc. of Santa Monica accuses Launch of infringing the labels’ copyrights by failing to obtain licenses for its Web radio service. Launch suspended that service, which allows users to shape playlists to their preferences, and the two sides went into immediate negotiations.

Four of the five major label groups--Sony, Universal, BMG and EMI--and Zomba Recording Corp., a large independent label, joined as plaintiffs in the suit. Sony Music is one of Launch’s investors and strategic partners, along with America Online, Microsoft Corp. and Intel Corp. Warner Music Group, which has a licensing deal with Launch, did not join the suit.

Two other copyright infringement lawsuits, brought by all five of the major labels and several divisions of AOL Time Warner, targeted the Aimster file-swapping service. The lawsuits were expected, coming three weeks after Aimster filed a preemptive legal action seeking protection from the federal courts.

The timing was particularly bad for Launch, which was attempting to close a $5-million loan Thursday. The company hoped that the loan would carry it to the end of the third quarter, when it expects to make enough money to cover its operating expenses.

According to a quarterly statement filed with regulators earlier this month, Launch had only $3.5 million in cash as of March 31. In its most recent quarter, net losses came to $14 million.

“We’re very hopeful that it will get figured out very quickly,” said Launch Chief Executive Dave Goldberg.

Web radio stations qualify for a “compulsory” license from the record labels if they obey rules written into a 1998 federal law. In particular, the stations cannot be “interactive,” meaning they cannot let users pick the songs that get played online.