MP3.com Close to Reaching Licensing Agreement With EMI

Online music seller MP3.com (MPPP Quote), once a loud opponent of the big record labels, is close to reaching a licensing agreement with a third major record label, British-based EMI Group, people close to the negotiations said Thursday.

An announcement of a deal could come as early as Friday, one person said, speaking on condition of anonymity.

The expected settlement of EMI's copyright infringement lawsuit would allow MP3.com to offer songs owned by EMI on its database. MP3.com's software enables computer users to gain access to music that they store on the company's database.

MP3.com, which has been embroiled in a legal battle with the recording industry, has already settled with Warner Music Group and Bertelsmann's BMG Entertainment in early June. It still has lawsuits pending with Seagram's, Universal Music Group and Sony Music Entertainment.

MP3.com is not close to settling with Sony, according to a person following those negotiations.

San Diego-based MP3.com and EMI declined to comment publicly. A representative of Universal was not immediately available for comment.

MP3.com's battles with the recording industry have been viewed as a test case for how copyright law is applied to the Internet and particularly for how music is distributed online. The San Diego-based company was sued by the recording industry after it made computerized copies of more than 40,000 compact disks without permission, and a federal court in San Diego found the company liable for copyright infringement in April.

When the lawsuits were filed, the recording industry was intent on putting MP3.com out of business. But the rise of Napster, which Wednesday was effectively ordered to shut down by a San Francisco judge presiding over a lawsuit filed by the recording industry, brought MP3.com and the record labels to the negotiating table, according to analysts. Napster is a computer program that allows near-instantaneous downloading of music free from the hard drives of members.

MP3.com finished Thursday regular trading down 1/8, or 1.2%, at 10 1/4.