Universal Music Sues MySpace Claiming Copyright Infringement

Universal Music Sues MySpace
Claiming Copyright Infringement
By ETHAN SMITH and JULIA ANGWIN
November 18, 2006; Page A3


Universal Music Group, the world's largest recorded-music company, sued News Corp.'s MySpace for copyright infringement, alleging that the social-networking giant traffics in "user-stolen" content, including music, videos and other material.

At issue is the widespread presence of copyright music and video content on MySpace. In the suit, filed in U.S. District Court for California's Central District, Vivendi SA's Universal dismisses the frequently used label "user-generated content" -- alleging that much of the material on MySpace is stolen from copyright holders.

The move signals that content companies remain sensitive to how their intellectual property is deployed on the Internet. Universal Music particularly has been among the most-aggressive content creators in sabre-rattling against potential copyright violators.

MySpace and Universal have been negotiating toward a deal in which News Corp. would pay a licensing fee for Universal content. However, News Corp. balked at Universal's demand that News Corp. pay restitution for content that had previously appeared on MySpace, according to a person close to the situation.

The suit also comes less than three weeks after MySpace, owned by News Corp., announced it was testing a system from Gracenote Inc. of Emeryville, Calif., to filter Universal Music content from its site. People familiar with talks between the two companies characterized that test as the final step before a putative licensing deal.

A Universal spokeswoman declined to comment on the filtering system. But the music company's court filing cited recent widespread leaks on MySpace of superstar rapper Jay-Z's forthcoming "Kingdom Come" album as a factor.

Universal executives have been outraged by the leak. In a recent interview, Antonio Reid, chairman of Universal's Island Def Jam Music Group, said next week's debut of the Jay-Z album would likely be "devastated" by the leaks. "I'm sure it's cut into our sales, and not by a small amount," Mr. Reid said. "Even if it [sells] a million units it's not what it should have been."

So-called user-generated content sites have been an increasingly hot issue for music companies and other copyright holders. Universal and two other big music companies recently reached blanket licensing deals with YouTube Inc., shortly before it was acquired by Google Inc. Universal sued two smaller sites, Sony Corp.'s Grouper Networks Inc. and Bolt Inc., over copyright infringement.

In September, Universal Chairman Doug Morris made public statements that were widely interpreted as threats to sue MySpace and YouTube. Since then MySpace has been taking steps to take copyright material off its Web site. In addition to last month's test of the Gracenote software, on Friday, hours before the lawsuit was filed, MySpace announced it had set up a system to make it easier for copyright holders to report infringements.

Universal said in a statement that its content has "created hundreds of millions of dollars of value for the owners of MySpace," and added that it was seeking to "ensure that our rights and those of our artists are recognized."

A statement released by MySpace said in part that it had "no doubt we will prevail in court."