Ouch! Judge's Ruling Hits Sour Note for MP3

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We're about to find out just how deep MP3's pockets really are. Wednesday, a U.S. district judge ordered the Internet music company to pay Universal Music Group a whopping $25,000 for each CD posted on the site — for a total fine that could easily reach $250 million. The award was considerably less severe than it could have been; as the judge was happy to remind MP3 defendants, he weighed fining the company up to $150,000 per CD, but chose a lower number to reward MP3 for their responsible behavior, relative to other music sites. What would this guy have done to Napster?

For MP3, this ruling is a particularly harsh indictment; executives hoped the site's strict "usage guidelines" — the company claims participants are forced to prove they own a particular CD before listening to the songs, a bit of legally inspired window-dressing that seems both illogical and unlikely — would help protect the company from record companies' wrath. They were wrong. And now, as the music industry learns of Universal's hefty win, MP3 faces another round of jaw-dropping fines — while the site managed to cut deals with several record companies to stanch any legal action, only half of the music featured on MP3 is covered under those agreements.

Predictably, MP3 spokespeople expressed disappointment with the judge's decision, just as record executives everywhere burst into cheers. This is unlikely to be the last go-around over online music distribution; as the topic (and the practice) heats up, each wave of new users is almost guaranteed to be closely followed by a new wave of lawsuits.