Emusic Suit Sends MP3.com Lower

MP3.com, Inc. (Nasdaq: MPPP) was down 1/32at 4 early Tuesday after EMusic.com, Inc. (Nasdaq: EMUS) said it sued theonline music company for copyright infringement.

Emusic filed a complaint in a federal court in New York, alleging that MP3 is usingtheir music without authorization. Fearless Records, Fuel 2000 Records, Gig Records, Invisible Records, SpinART Records and Victory Records joined Emusic in its complaint.

Emusic said it expects more independent labels to join the suit as it progresses.

“Although MP3.com has entered into settlement agreements with the five majorrecord labels, they have chosen to ignore their infringing actions withrespect to independent record labels,” said Emusic president and chiefexecutive officer Gene Hoffman.

Emusic said it has the exclusive digital copyrights to approximately 13,000albums from more than 600 record labels. The company said it is “unable todetermine” how many albums have been allegedly infringed by the MP3.comservice.

Last month, MP3.com settled a copyright infringement suit brought by Universal Music Group. The company had previously settled suits with otherrecording giants, and said the Universal deal gave it licensing agreementswith all the major record companies. In addition to a licensing pact, thesettlement gave Universal the right to buy equity in MP3.com.

The Emusic suit is not the only one hanging over MP3.com. The company has also been suedby a group including Unity Entertainment for copyright infringement.

Emusic, through its Web site, lets users buy individual tracks for 99 centseach, or download entire albums for US$8.99 apiece. The site also offers adigital music subscription service.

Emusic shares were down 1/16 at 9/32 early Tuesday.

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