South Korea's record companies have been handed control of the nation's leading music streaming Web site, Bugs Music.

South Korea's record companies have been handed control of the nation's leading streaming audio Web site, Bugs Music.

Park Sung-hoon, president and founder of Seoul-based Bugs Music, announced March 5 that he is relinquishing managerial control and his 60% stake in the company to a consortium of labels, led by one the country's biggest, Yedang.

The move follows industry lawsuits and repeated government attempts to rein in Bugs. At the end of January, Bugs lost a copyright case in the Seoul District Court; Park was found guilty of copyright violation and sentenced to 18 months in prison and a fine of 20 million won ($19,900).

Bugs' 16 million estimated users made it the leading service of its kind in Korea for several years.

Last summer, Bugs and regulatory bodies reached an agreement on royalty rates, under which the service was required to block access to tens of thousands of titles. Subscription fees and a reduced selection of songs led to a steep drop in usage. Sources say the service attracted peak usage of 4 million consumers a day in early 2004; this fell to less than 1 million by the end of the year.

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