November 15, 2000 – U.S. District Judge Jed Rakoff yesterday awarded $53.4 million in statutory damages and attorneys fees to the Universal Music Group (UMG) in its copyright infringement suit against MP3.com, Inc. Last January, UMG and others filed the lawsuit challenging MP3.com's copying of thousands of copyrighted CDs onto its file servers to create its My.MP3.com "locker" service. MP3.com does not intend to appeal from the judgment.

"Universal Music pursued this case to send a strong message that copyrights will be protected and that copyright owners and artists need to be properly compensated for use of their work," said Zach Horowitz, President and Chief Operating Officer, UMG. "Although we believe our proof at trial would have led to a greater damage award, we are satisfied with the award. It was never our intent to put MP3.com out of business with a judgment so large that it would threaten their viability as a company. We support the development of legitimate music businesses on the Internet."

Michael Robertson, Chairman and Chief Executive Officer of MP3.com stated: "We are glad that this case is now behind us and that we will be able to include UMG's music as part of our My.MP3.com service. We look forward to returning our entire focus to capitalizing on the tremendous opportunity in the digital delivery of music and letting consumers listen to CDs which they own in the digital age. As we move ahead, this provides clear evidence that the needs of rights holders and music fans can be accommodated in the digital music space. The marketplace that has served artists and consumers for so long will continue to thrive in the era of the Internet."

Universal Music Group Grants MP3.com License for My.MP3.com Service

Concurrently, it was announced that UMG has granted MP3.com a non-exclusive, North American license for the use of UMG-controlled recordings on the My.MP3.com system, including the "Beam-it(TM)" and Instant Listening(TM)" software services.

MP3.com Issues Warrants to Universal Music Group

As part of the settlement, MP3.com announced today that it has sold to Universal Music Group (UMG Recording, Inc.) warrants to purchase up to 3,000,000 shares of MP3.com common stock. These warrants give UMG the right to purchase up to 3,000,0000 shares of MP3.com common stock at specified prices ranging from $3.75 to $5.00 per share and over terms of one to three years. If fully exercised, the shares issuable under the warrants will represent less than five percent of MP3.com's outstanding shares.

MP3.com Now Has Distribution Deals with All Five Major Label Groups for Its My.MP3.com Service

The five major label groups sued MP3.com in January over its My.MP3.com program, which allows users to listen to popular albums in streaming MP3 format provided they'd previously inserted a copy of the CD into their computer to prove they own it.

The new distribution agreement marks the end of the Recording Industry Association of America's lengthy battle with the pioneering music-download site.

"The RIAA is pleased that this matter has finally been resolved," RIAA President Hilary Rosen said in a statement. "This case was never about stifling the technology or putting this company out of business, but rather about protecting the copyright owners' and artists' rights to be compensated for their works. We believe through this judgment that message has been sent."

The five major label groups are BMG, EMI, UMG, Sony and Warner.