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Suit, countersuit. When it comes to digital music licensing, the major record labels prefer to let the legal briefs do the talking. Last month, four of the five major labels — Sony, Universal, BMG and EMI — filed suit against digital music service Launch Media for failing to get proper licenses for its personalized LaunchCast service, which allows listeners to rate songs so that they hear some songs more frequently and some not at all. On Friday, Launch slapped back, filing suit against the labels in U.S. District Court in San Francisco. Launch and other plaintiffs named in the complaint — MTVi, MusicMatch, Inc, XACT Radio and Listen.com — are asking a judge to confirm that the customized music services they operate are legal under the Digital Millennium Copyright Act of 1998. The digital music companies believe that they should be able to operate their services with the digital equivalent of a “statutory license,” roughly the same type of license that broadcast radio stations use. The labels, represented by the Recording Industry Association of America, argue that any service that offers personalized broadcasts should have to negotiate separate licenses with each record label. The plaintiffs in Friday’s suit are members of the Digital Media Association, a trade group working to help Internet broadcasters build legitimate businesses on the Web. They are not asking for damages; instead, they want another interpretation of the DMCA to clarify what level of interactivity will be permitted when it comes to the distribution of digital music. Currently, Internet broadcasters are involved in an arbitration process with the labels and the Copyright Office to determine a new process for paying royalties for songs played on the Internet. The recording industry is seeking to exclude Launch and others offering interactive features from the process. Warner Music Group, the fifth major label, is not part of either suit because Launch signed a licensing deal with Warner last year. The suit comes at an inopportune time for the Santa Monica, Calif.-based Launch, which secured a $2 million financing round last week. Launch is running short of cash, but CEO Dave Goldberg said the company will turn cash-positive this fall. Shares in Launch Media have been on the upswing of late, on rumors that the company could be the next acquisition target of a major label. Last month, EMusic and MP3.com were acquired by Vivendi Universal, and Myplay was acquired by Bertelsmann. Launch shares were up 20 cents Friday to 78 cents. Sony Music Entertainment owns 5 percent of Launch; EMI and Warner retain options to buy Launch shares. Related Articles from The Industry Standard: MediaBay Hits Napster With, Well, You Know Napster Gets It in Spanish, Too RIAA Throws Aimster on the Barbie Copyright � 2001 The Industry Standard

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