Earlier this week, U.S. District Judge Jed Rakoff ruled that MP3.com willfully violated Universal’s copyrights by posting thousands of CDs on its controversial My.MP3.com service and said the San Diego-based digital music company would have to pay $25,000 for each online CD which violated Universal’s copyright. With the potential for damages as high as $250 million, the case could be the most expensive example of copyright infringement ever.
MP3.com was originally found guilty on Apr. 28 of having violated the copyrights of the Big Five record labels in compiling a database for My.MP3.com. During the past few months, MP3.com had reached settlements with four of the five companies, paying approximately $20 million per record label. Universal, a unit of Seagram’s Co., was the lone holdout.
On Friday, Robertson spoke to Newsweek¹s Jamie Reno about the ruling and what it means both for his company and for the future of music on the Internet.
NEWSWEEK: Were you surprised by the judge’s ruling? ROBERTSON: Yes, I was very surprised and hugely disappointed. I was saddened by the fact that he found us ‘willful.’ He suggested that we knew what we were doing was against the law but that we went ahead and did it anyway. That just isn’t the case. We have a great respect for copyright laws. In fact, in 1998 I wrote a handbook telling people how to locate and shut down pirate sites. Why would I do that if I didn’t care about copyright? I was also surprised because the four other major record labels have settled with us, and we are going to be rolling out our new service soon with the four other majors. I don’t know why Universal is the only one of the five majors that hasn’t publicly recognized that our technology is good technology.
Could this ruling put your company out of business? No, that is a misconception. It’s a matter of public record that MP3.com has $300 million in cash. So we can afford this judgment, if it stands. This will not shut us down. But people need to remember that we raised this money before the My.MP3.com. It’s just a shame that this money came into the legal process. Clearly the judge was aware of how much money we have when he made this decision.
Will you appeal? Of course, we do plan to appeal, and we think we will be successful, but there are also legislative options. We believe Congress will be receptive to making some changes in the laws. This decision just doesn’t sit well with consumers, and the consumers are the voters.
What about the specifics of the judgment? Don’t you feel any responsibility to the artists whom the plaintiffs and the judge say were damaged? One of the more interesting aspects of this case is that they [Universal] did not prove that there was one dollar, not one penny, of damages. The judge even admitted this. It’s also troubling that at the same time that Universal is pursing this case against the My.MP3.com service, they are trying to replicate the very same technology. A company called Musicbank.com, which is financed by Universal and BMG, is attempting to do exactly the same thing as we are already doing. It’s the very same thing.
Do you think the judge was unfair? It’s pretty obvious that he was making an example out of us, that he was using this case to lash out against the Internet in general. He was sending a message. I’ll leave it to you, I’ll leave it to the reporters of this story, to make up your own minds, but I have to wonder if the judge wasn’t thinking about bigger issues than just My.MP3.com. He kept saying the Internet is not above the law. The thing is, I agree with that and my company agrees with that. It’s also troubling to me that when this case began, the judge didn’t know what “streaming” meant, he didn’t know what “burning” a CD meant, and he didn’t know what “ripping” meant. When I stop and really ponder this decision, I think it would have been nice if the judge had been more familiar with some of these terms.
Beyond its impact on your company, what implications do you think this decision will have on the future of digital music? This decision, if it stands, will have a huge impact. Huge. It really comes down to this: In the future, will consumers be able to listen to their own CD collections online, or will they have to keep paying over and over? To enter the digital age, will consumers have to throw away their entire collection of CDs and start over? Will they have to re-buy each CD with each new technology? If we don’t ultimately prevail, that is what is going to happen. I don’t think that’s what consumers want.
