Update: MP3.com Soars After Settlement With Sony

Updated from 11:29 a.m. EDT

Online music seller MP3.com (MPPP Quote) settled a copyright infringement lawsuit brought by Sony's (SNE Quote) Sony Music Entertainment, giving the company deals with four of the five major record labels.

Shares in the company soared on the news, finishing up 1 19/32, or 21%, at 9 11/32. But the company's stock price is well off its 52-week high of 64 5/8.

Under the terms of the deal, MP3.com will pay Sony an undisclosed amount for past copyright violations. It also signed a licensing deal that will allow MP3.com to offer Sony recordings on its My.MP3.com system, which allows users to assemble a so-called digital locker that can be accessed over the Internet. Songs are streamed from the locker and users must first verify that they own the compact disc.

"It is clear that Sony Music Entertainment understands and embraces the Internet and values responsible technologies that excite consumers and reward content owners," said Michael Robertson, chairman and chief executive of MP3.com, in a statement.

The major record labels' content was pulled from MP3.com in May pending resolution of the suits. In April, a judge found that the company violated copyright law. The service will not resume until MP3.com secures agreements will all five major record labels.

The company recently settled with EMI, and had previous settlements with Time Warner's (TWX Quote) Warner Music Group and Bertelsmann's BMG Entertainment. The company has yet to settle with Seagram's (VO Quote) Universal Music Group.