American Green Inc (ERBB)

[neilbolton]

Sony BMG reaches licensing deal with iMesh

Published: July 9, 2005, 5:24 PM PDT

Music giant Sony BMG has reached a licensing agreement with file-swapping service iMesh, one of the first such tie-ups since a U.S. Supreme Court decision clamping down on online copyright infringement.

The deal, confirmed on Friday by an iMesh representative, followed a high court ruling that unauthorized networks such as Grokster could be held liable for the copyright infringement of their users. Analysts said that decision added momentum to the move toward networks sanctioned by media companies.

Once one of the most popular of post-Napster song-swapping networks, iMesh, formed in 1999, was sued by the record labels in 2003 for copyright infringement and settled for $4.1 million.

The New York-based service said just after the June 27 Supreme Court ruling in favor of entertainment companies and against rival file-swapping network Grokster that it would roll out a music industry-"sanctioned" song-swapping service.

The privately held company also hired former Sony Music President Robert Summer as executive chairman to handle negotiations with the music industry.

Sony BMG, one of the big four music labels, is a joint venture between Sony and Bertelsmann.

Music trade publication Billboard reported on Friday that iMesh was also close to signing a deal with Universal Music Group in the next week to 10 days. A representative for iMesh had no immediate comment on the report.

Other peer-to-peer services have been formed to satisfy the entertainment industry's demand to be compensated for songs like Mashboxx, headed by former Grokster President Wayne Rosso, which has also reached a licensing deal with Sony BMG.

Rosso said he was near deals with the other major labels and that the ruling had unleashed intense interest from investors. "Everybody wants a piece of me," said Rosso.

Mashboxx works with Snocap, a venture headed by Napster founder Shawn Fanning, which identifies songs by their digital "fingerprint" and determines if they are copyrighted.

The iMesh service also uses a centrally managed rights clearinghouse so music companies and publishers can claim compensation for songs being traded.

Record labels in 2001 managed to close down Napster, the first song-swapping service, and then went on to challenge its successors like Grokster and Streamcast Networks in the courts.

Napster has since changed owners and transformed itself into a commercial online music service.

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