Warner Music Pulls Suit Against Web Site

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By ALEX VEIGA
The Associated Press
Thursday, July 12, 2007; 10:19 PM

LOS ANGELES -- Warner Music Group Corp. said Thursday it dropped a copyright infringement lawsuit against the social networking Web site imeem and agreed to license its music and video content to the site for a slice of its ad revenue.

Financial details of the deal were not disclosed.

Under the agreement, imeem Inc. can carry music and videos from all of the record company's artists, who include Madonna, Linkin Park and Red Hot Chili Peppers.

San Francisco-based imeem launched in 2004, offering instant messaging and file-sharing software. It has since morphed into a social networking Web site that also streams free audio and video next to advertisements.

Like YouTube and similar sites, imeem allows computer users to post their own videos. The imeem site, which has been offering video content for about 18 months, claims to have some 16 million active users.

New York-based Warner is the first major record label to sign a licensing deal with imeem. The site also has content deals with some smaller labels and independent film studios, imeem spokesman Mike Barash said.

Warner filed a federal lawsuit against imeem in May, claiming the Web site was enabling millions of computer users to share the music and video of Warner artists without permission.

In the complaint, the record company also asserted that imeem deliberately refrained from using technology to prevent users from sharing unauthorized content.

Imeem has since started using audio filtering software from copyright management provider Snocap and is working on adding similar technology to filter online video, Barash said.

Barash said the company is in licensing talks with other major labels. Music videos by artists signed to other major labels were available for viewing on the site Thursday.

Imeem is the latest Web site to have been the target of litigation by a record company and then emerge as a publicly vaunted business partner.

Last fall, Vivendi SA's Universal Music Group filed a complaint against Bolt Inc., an online video Web site, claiming the company was letting users share music videos without permission.

New York-based Bolt agreed to a multimillion-dollar settlement and to introduce video filtering technology. The settlement, which hasn't closed yet, also included a licensing deal for Universal content, Bolt CEO Aaron Cohen said.

Universal also has threatened to sue YouTube for copyright infringement but then struck a deal with the company along with other major labels.

The deals involving imeem, YouTube and others showcase the shift the record industry has undergone since the early part of this decade, when music companies sought to shut down Napster and other online file-sharing sites through lawsuits.

In contrast, Barash said Warner and imeem were engaged in negotiations before Warner filed its lawsuit.

"I don't know if the litigation was a tactic or not," Barash said.

Alex Zubillaga, Warner's executive vice president of digital strategy and business development, noted that Warner sought a deal with YouTube at a time when other companies were opting for litigation.

"Our approach has been one of an enabler," Zubillaga told The Associated Press during a conference of media executives in Sun Valley, Idaho.

Imeem, Zubillaga said, has taken "significant steps" in stepping up copyright protections.

"It's a good outlet for our content," he said. "As far as we are concerned, they are a legitimate business."

Warner shares fell 12 cents to $14.10 Thursday.

___

AP Business Writer Seth Sutel in Sun Valley, Idaho, contributed to this report.


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© 2007 The Associated Press

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