SAN FRANCISCO - Two major record labels settled copyright infringement disputes Friday with MP3.com, opening the way for users of the popular Web site to continue storing music online.
Details of the settlements were not disclosed, but MP3.com will pay more than $20 million to Warner Music Group and to BMG, music industry sources said. The deal includes a new licensing agreement that will allow MP3.com to eventually resume storing music from both companies on its service.
''This is an important moment for recording artists and copyright owners. This settlement ends an unfortunate period in our history with MP3.com,'' said Paul Vidich, vice president of planning and development at Warner Music.
Warner and BMG had claimed San Diego-based MP3.com violated copyright law with its ''Instant Listening Service'' and ''Beam-it'' technologies, which allow users to listen to music stored on MP3.com computer servers.
To gain access to the music, the user must have either purchased the song or album from MP3.com and be waiting for it to be physically delivered, or must briefly insert a compact disc version of the recording into a home computer. It does not allow users to save music from the company's servers to their home computers.
MP3.com, which purchased 45,000 CDs and copied them onto its servers, had argued in U.S. District Court in New York it was within the law because it required proof of ownership.
But U.S. District Judge Jed S. Rakoff rejected that argument in May, ruling that MP3.com infringed on copyrights by copying all the compact discs onto its computers. After the ruling, MP3.com disabled the service to prevent anyone from storing music produced by the major recording companies.
Still pending against MP3.com are copyright infringement claims by Universal Music Group, EMI and Sony Music Entertainment, also defendants in the lawsuit.
Michael Robertson, chairman and chief executive of MP3.com, said all parties to Friday's settlement worked to benefit consumers, artists and copyright owners.
''The digital music space is still in its infancy,'' Robertson said in a statement. He also expressed gratitude to Warner Music and BMG for placing trust in his year-old company.
Friday's settlement could be a huge boon for the Internet upstart, which generates revenue from online advertising and electronic commerce.
Analysts called the settlement a move forward in the embattled transition to digital storage of music, often mired in controversy because of a lack of copyright protections for artists.
''For the record labels, this is the first time they've stopped their ceaseless whining about control and security of their music,'' said Eric Scheirer, a media and entertainment analyst for Forrester Research. ''Consumers are the biggest winners of all in a deal like this.''
The settlement does not, however, begin to address the enormous potential for music copyright violation presented by digital music and the Internet.
The MP3 audio compression format currently contains no mechanisms to prevent limitless copies and trading, facilitated over the Internet by software programs including Napster and Gnutella. MP3.com uses ''streaming audio,'' which cannot be downloaded, saved and duplicated, for major record label music.
A Pew Internet Project study released Friday showed that 13 million Americans have downloaded music over the Internet but fewer that 2 million people paid for the songs.
On the Net:
MP3.com: http://www.mp3.com
Warner Bros. Records: http://www.wbr.com
BMG Entertainment: http://www.bmg.com
Recording Industry Association of America: http://www.riaa.org
