UMG Recordings, Inc. v. MP3.com, Inc., 92 F. Supp. 2d 349 (S.D.N.Y. 2000) was a landmark case of the U.S. District Court for the Southern District of New York concerning the unauthorized copying of copyrighted materials on the Internet. The case concerned unauthorized duplication by the company MP3.com of songs from a wide selection of compact discs for the purposes of launching a service that allowed users to access their private music collections online from anywhere in the world. This business model was ruled to be a violation of American copyright law.
Background
Upon the rise of music file sharing by consumers on the Internet, MP3.com conceived a new service in early 2000 called My.MP3.com that allowed users to rip songs from compact discs that they had already purchased legitimately, then upload the resulting MP3 files to an account managed by MP3.com. The users would then be able to log into their accounts from any Internet-connected device anywhere in the world, and listen to the music that they had previously uploaded. Users quickly compiled a library of over 80,000 albums, with the songs stored on servers at MP3.com. The company also attempted to expand the library by buying tens of thousands of albums on compact disc itself, and adding those to the library to be accessed by its users.
MP3.com also argued that a copied MP3 file suffered from lesser audio fidelity and lower quality than the equivalent song on a compact disc, so the files in its My.MP3.com library constituted transformative use under copyright law. MP3.com also accused the record companies of copyright misuse by filing a lawsuit for purposes of revenge, while its subscribers were simply engaged in space shifting – consuming their purchased media in different environments – which had been upheld by several Supreme Court precedents. However, some scholars argued that the ruling only addressed the specific business model practiced by My.MP3.com, and left larger file sharing trends on the Internet unaddressed, particularly those practices not covered by a legitimate (if unsuccessful) business plan. The ruling also neglected to address any responsibilities that the legacy record companies may or may not have had in the management of their own copyrighted products and preventing them from being illegally traded.
This ruling resulted in several additional legal claims against MP3.com, with the company ultimately owing more than $150 million to legacy record companies. The judgments pushed MP3.com into severe financial difficulties which were averted by a merger with Vivendi Universal.