Recording industry groups settle digital-music case with manufacturer

Friday, September 10, 1999

Two leading music industry groups and the maker of a popular digital-music player have settled a year-old lawsuit, reinforcing an agreement struck last year to develop a new industry standard for developing online forms of music.

Under the settlement, the Recording Industry Association of America, the Alliance of Artists and Recording Companies and Diamond Multimedia agreed to dismiss all of the litigation surrounding Diamond's Rio MP300 player, a device that enables computer users to download and play digital-music files.

Officials from the two groups and the manufacturer reiterated their support for the Secure Digital Music Initiative, the effort to develop a secure online music format.

Cary Sherman, chief counsel for RIAA, said the announcement “makes clear that the future of the digital music marketplace will be created in the marketplace itself, enabled by initiatives like SDMI.”

The settlement, announced Aug. 4, comes nearly two months after a federal appeals court ruled that the Rio player doesn't violate federal anti-piracy laws. On June 15, a three-judge panel of the 9th U.S. Circuit Court of Appeals voted 3-0, saying the Rio MP300 player does not qualify as a “digital audio recording device” and is not subject to restrictions imposed by the 1992 Audio Home Recording Act.

The RIAA had argued that the players exploited an illegal market, allowing computer users to download free music without any compensation to the artists who created it.

Diamond and owners of MP3 Web sites defended the use of the music player, saying it gives listeners more freedom to listen to the songs they want. They said most MP3 sites offer legally obtained music.

Last week's settlement also closes Diamond's countersuit, filed in December, that said the RIAA engaged in anti-trust and illegal business practices “by conspiring to restrain trade and restrict competition.” The company had also sued the industry association for libel over allegations that Diamond was tied to pirated uses of the MP3 format.

Ron Moore, chief counsel for Diamond, praised the settlement and said the Rio player stands at the forefront of digital-music efforts. Moore said he hoped the player continued to be the premier digital-music player.

“We can't do that unless that legitimate, online music market develops,” he said in a joint statement with RIAA sent to the First Amendment Center. “We were among the first technology companies to join SDMI and we believe that this voluntary, cross-industry effort is quickly producing a technology solution that will protect creative rights while enabling new ways for consumers to access music.”