After the My.MP3.com service set off a rash of copyright-violation lawsuits, the company struck licensing deals that allowed music from the major recording companies to be offered on the site. Yet challenges remain.
It's battling insurers that are refusing to pay litigation-related claims covered under MP3.com's policies. And it faces copyright lawsuits from a few indie labels. MP3.com (MPPP) set aside $170 million to cover legal damages, but setbacks could threaten its remaining $98.8 million cash cushion.
NEW REVENUES NEEDED
MP3.com must generate revenue streams beyond online advertising. It just started charging monthly fees beginning at $4.99 for classical and children's music services. It also charges yearly fees for access to songs from major labels. If the new businesses aren't hits, MP3.com will have a hard time making a profit.
Bertelsmann is allied with Napster, and Sony (SNE) and Universal are planning a joint site. MP3.com says it can be a third-party marketing resource for all labels. But it needs to find allies with deep pockets.