MP3.com's New Tools Break Rules

"It's Instamagic," says MP3.com CEO Michael Robertson, describing the two new products his company unleashed today. The major record labels and their lobbying group would undoubtedly use a different word to describe them.

The first of the new features, "Instant Listening," lets you buy a CD from one of MP3.com's three CD retail partners, in such a way that the CD's tracks instantly show up as MP3 files in your My MP3.com music collection. The other product, "Beam It," copies your existing CDs into your My MP3 collection as soon as you pop them into your disc drive, alleviating the need for additional CD-ripping software.

Once tracks from "Instant Listening" and "Beam It" are in your collection, you can access them from any computer by logging in with your password, a la Hotmail. Then you can stream individual tracks from your collection, or create play lists that stream like personalized radio stations. The user can't e-mail the tracks to others, or download them anywhere outside the MP3.com collection.

The new features are MP3.com's way of adding credibility to its new identity as a "music service provider" that allows you to access your music collection from nearly any device - from cell phones and wristwatches to - yes - earrings.

Earlier this month, the company partnered with the Santa Clara, Calif.-based Portal Player, which creates multimedia management systems for device manufacturers. The two companies want to build devices that can play and store digital audio. Until now, though, they lacked a way to get people the music they wanted.

"One of the complaints with MP3.com, and it's a warranted complaint, is that people say, 'You're doing all these great things with music, but it's not the music I like,'" says Robertson. "We need to have all the music, and how do you do that? The majors aren't giving it to anybody!"

So MP3.com has found a way around that problem by helping you copy what you already have.

Although the Recording Industry Association of America was unavailable for comment, the products are likely to inspire a backlash, including cries of copyright violation about the "Instant Listening" feature. David Pakman, the founder and senior VP of MyPlay.com, which provides a service similar to MP3.com's new "Beam It" product, says that in his company's experience, it's okay to copy CDs you own, but when it comes to "Instant Listening," the company gets into sticky legal issues.

"You're permitted under copyright law to make a personal backup of copy of a CD that you own, for personal noncommercial use," says Pakman. "If you go to an online CD retailer, and then MP3.com, as another company, makes a copy of that and gives you a copy, then that requires a license. Unless they've secretly struck a deal with all five major labels to copy and distribute their music, then I don't think this is legal."

Prior to today's launch, Michael Robertson had acknowledged that the new feature would cause an uproar, but said that MP3.com was ready to go to battle.

"Our position is you've already bought the CD, you can do with it what you want," said Robertson.

Such a position could be seen as an argument based on technicality. Sure, you have purchased the CD, but you don't actually have it yet. MP3.com is able to instantly beam the tracks into your collection because it's the one that owns the physical CD - that's where the "instamagic" comes in. MP3.com has digitized thousands of popular CDs, so that when consumers buy one, they can instantly put the already-digitized tracks in there. During this beta phase of "Instant Listening," if a customer picks a CD that MP3.com employees have not already digitized, the company will run out and buy it. That way, the next time a customer purchases this CD, the tracks will be ready to beam into their collection. The major labels did not return calls about this strategy.

When it comes to the virtual world of purchasing, other issues could take MP3.com's nifty "Instant Listening" down. For instance, what happens if a person buys a CD using a credit card, the tracks go into their MP3.com collection, and then the buyer cancels the sale, or disputes the claim?

A spokeswoman for MP3.com says precautions have been taken for this kind of situation. The retail partner - currently, Junglejeff.com, Dufflebag.com and Cheap-cds.com - would be required to immediately send information about the user and the CD that had been fraudulently purchased, whereupon MP3.com would deny access to those tracks as quickly as possible. How quickly, the spokeswoman says, she doesn't know.

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