MP3.com

The Web site http://MP3.com played a principal role in popularizing the MP3 music file format among both music fans and musicians who wanted to use the format to distribute their music. The site's outspoken founder, Michael Robertson, also helped to galvanize many in the online music community to rally against the standard practices of the major record companies. http://MP3.com eventually cooperated with the music industry to create a service allowing users to listen to their CD collections from any computer with an Internet connection.

Robertson launched http://MP3.com in November 1997, after noticing the growing frequency with which users of his Filez search engine were including “MP3” in their searches. With http://MP3.com, he created a site that served as a central hub where users could obtain MP3 software, news, and music. Artists were invited to post MP3s of their music on the site free of charge. By early 2001, nearly 145,000 artists offered almost one million songs for free download. While it initially made money through advertising, http://MP3.com later sold online CDs by its member artists, and broke sharply with music industry standards by splitting profits 50-50 with the artist. The company also sold music programs for retail outlets to play as background music in stores.

Within a year of its launch, both its popularity among Internet users and Robertson's evangelism established http://MP3.com as a key player in the quickly developing online music world. The major music labels, however, regarded Robertson as an adversary. Because there is no copy-protection mechanism in [Page 325]MP3 technology, a song from a CD could be converted into an MP3 and sent endlessly, for free, across the Internet without the permission of the copyright owner—which is typically a music label. By contrast, secure formats such as Liquid Audio contained technology to prevent files from being copied. Most music companies, therefore, viewed the MP3 format in general as a vehicle that promoted piracy and robbed them of royalties. For example, when singer-songwriter Tom Petty posted his song “Free Girl Now” on http://MP3.com in March 1999, Warner Bros. Records demanded that it be taken down two days later. The song was downloaded 157,000 times before it was pulled, which supporters cited as evidence that MP3 files could serve as useful promotional tools.

http://MP3.com's battle with the music industry came to a head with the January 2000 launch of the http://My.MP3.com service, which allows a user to insert a CD into a computer and have an MP3 version of the disc transferred immediately from a database to an online account with http://MP3.com. The user can then listen to the music from any computer connected to the Internet. Songs are streamed, which means that they cannot be downloaded and saved. The database contained music from tens of thousands of CDs. Because http://MP3.com did not obtain a license from copyright holders (music companies and publishers) to create that database, the major music companies—Sony, BMG, EMI, Time Warner, and Universal Music Group—sued http://MP3.com.

After a U.S. District Court sided with the recording industry, http://MP3.com settled, agreeing to pay undisclosed damages and licensing fees. In November 2000, Universal Music Group carried its suit to the final phase, and was awarded $53.4 million in damages and attorney fees. Although the service tried to re-launch with licensed content from all the major music companies, Universal acquired http://MP3.com in May 2001 and Robertson stepped down as chief operating officer. While http://MP3.com continues to operate as an independent website, Universal has used its technology to develop a music subscription service.

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