Universal Inks Digital Licensing Pact

Universal Music Group (UMG) has entered into a non-exclusive licensing agreement with Loudeye Technologies to digitally store and encode its entire U.S. catalog of audio and music titles.

Loudeye said that it will initially begin streaming 30- and 60-second audio and video sample clips from selected Universal properties. The company eventually plans to host versions of some 14,000 Universal audio tracks and 30,000 music videos, which will be offered to companies developing electronic music delivery downloads, Internet radio, and similar applications to redistribute in streaming and downloading formats.

The agreement also paves the way for Universal tracks to be sold online.

Seizing Digital Delivery Capabilities

Although the music industry has been slow to recognize the vast potential of digital delivery, Universal’s deal amounts to a significant endorsement of Internet distribution methods. “Having Loudeye host and stream UMG’s audio and video clips enables UMG to further market, promote and drive sales of our artists’ music over the Internet,” said Larry Kenswil, president of Universal Music Group’s eLabs.

Loudeye, which went public in March, also has deals to convert content for several media and entertainment companies, including AtomFilms, BMG Entertainment, Disney, EMusic.com, EMI-Capitol Music Group, Energy Films, Sony Corporation, Warner Bros. Online, and Universal New Media.

Universal Plays Hardball

As the only plaintiff to go to trial against MP3.com, Universal Music has been one of the most aggressive proponents of online copyright protection of its catalog.

Earlier this year, MP3.com settled lawsuits with four other major labels — Sony, BMG, EMI and Warner — but UMG decided to play hardball and won a multi-million dollar (US$) ruling for its efforts. The Universal/MP3.com case is being closely followed in the online, music and legal communities as an indicator of how aggressive courts will be in enforcing intellectual property law in the digital age.

U.S. District Judge Jed Rakoff found earlier this month that the San Diego, California-based MP3.com was liable for damages of at least $118 million for willfully infringing on Universal-owned recordings.

Rakoff awarded the music company $25,000 in statutory damages for each compact disc that MP3.com copied from Universal’s catalog. The actual number of CDs copied remains in dispute, with UMG saying that between 5,000 and 10,000 CDs are involved and MP3.com claiming the total is only 4,700 CDs.

The next phase of the trial, slated to begin in November, will determine final damages.

Following Rakoff’s decision, MP3.com chairman and CEO Michael Robertson vowed to appeal the case. “It continues to be our belief that consumers should have the right to listen to music they have purchased — anytime and anywhere, including the Internet,” Robertson said.