Launch Media, Webcasters Sue Recording Industry

By | June 3, 2001 at 12:00 AM

Several major Webcasters including Launch Media Inc., MTVi Group, MusicMatch Inc., and Listen.com Friday struck back at the recording industry by filing a countersuit in a music licensing dispute they say threatens their livelihoods.

The suit was filed in federal court in San Francisco in response to a lawsuit filed by the recording industry last week against music portal Launch Media for allegedly failing to seek proper licenses for its personalized Web radio service, the companies said.

At issue is whether Webcasters that allow users to personalize their Internet radio services should be allowed to join the rest of the industry in a coming arbitration process that will set licensing fees for commercial music.

The Recording Industry Association of America (RIAA) recently asked the U.S. Copyright Office to disqualify certain Webcasters that offer certain personalized Internet radio services from the royalty arbitration, said Jonathan Potter, executive director, Digital Media Association (DiMA), a trade group for Webcasters that joined Friday’s suit. The sixth plaintiff was privately held Xact Radio LLC.

“This was a defensive reaction to a well-financed industry collectively using a litigation sledgehammer,” Potter told reporters on a conference call.

The arbitration is scheduled for summer, according to RIAA officials, who said the Webcasters are trying to improperly shoehorn personalized radio services into the proceeding, which was intended to focus on rates for plain vanilla Web radio.

Tensions regarding royalty rates owed by the fledgling online radio companies – or Webcasters – have been simmering behind the scenes for months.

RECORD LABELS CALL WEBCASTERS UNFAIR

“Despite their claims of generosity, these companies are trying to impose a royalty scheme that would force all artists to share less than one dollar per year total for the personalized music these services deliver to an average listener,” said Steven Marks, senior vice president of business affairs for the RIAA.

“This case is about a handful of Internet music companies who are attempting to gain a market advantage over their competitors. This is unfair to the music services that are abiding by the rules laid down by Congress. It’s also unfair to the creators of the music, which is the backbone of the Webcasters’ business,” he said.

Potter said the Copyright Office has failed to clearly define what types of Webcaster services are eligible for statutory licenses.

“Our only remaining option is to ask a court to interpret the Digital Millennium Copyright Act so that media companies, technology developers, and investors can gain needed clarification of the statute,” Potter said.

The recording industry in their suit against Launch last week alleged that Launch’s licenses with some of the world’s biggest record labels – including Vivendi Universal’s Universal Music, Sony Music, EMI Group Plc and Bertelsmann AG’s BMG – did not allow for the level of interactivity and customization offered by its LaunchCast service.

The LaunchCast service allows users to customize Web radio stations based on their preferences. Last week, Santa Monica, California-based Launch removed LaunchCast from its Web site in response to the suit and has entered into negotiations to resolve the dispute.

“If any companies cease any of these kind of Webcasting operations, they have done it because of legal and industry pressures, not because they felt they were being unlawful in any way,” Potter said.

Launch was one of several targeted music companies that have been sued by the RIAA, which won a court-ordered injunction against Napster and also filed a landmark copyright infringement case against MP3.com. It also sued file-sharing company Aimster last week.

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