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. Last Updated: 07/27/2016

Online Music Firm Halts Service While Settling Suit

NEW YORK -- Online music company on Wednesday halted access to major-label songs on its controversial database while the company continues talks to settle a copyright-infringement lawsuit filed by record companies.

A U.S. District Court ruled April 28 that the San Diego company infringed on copyrights held by the world's largest record labels by creating a database of more than 80,000 albums. The database, part of a service called, allows users to store music digitally and then access it via any computer. features software that allows computer users with an original copy of one of the recordings in the database to register that compact disc. It then allows the user to listen to that album over the Internet from any computer without having to insert the original disc.

Warner Brothers music group, Sony Music Entertainment, Universal Music Group, BMG and EMI filed the suit in January originally seeking to shut down the service and collect damages.

U.S. District Judge Jed Rakoff said in an opinion released last week he disagreed with's argument that its music service is the "functional equivalent" of storing CDs that had already been purchased.

"In actuality, the defendant is replaying for the subscribers converted versions of the recordings it copied, without authorization, from plaintiffs' copyrighted CDs," Rakoff wrote. has been in talks with the record companies since the suit was filed to license the copyrighted work from the labels.

The company's chief executive, Michael Robertson, said at the time the court's decision was announced that would continue to be a successful feature of the web site, even without the music from the major labels.

" features music from over 4,000 labels, many of them have allowed us to make their music available this way," he said.

The company generates no revenue from the service: About 80 percent of its revenue comes from advertising.

But analysts noted that access to music from major labels was one of the most attractive aspects of the site and was the feature that lured the most eyes.