The major labels have reached a $10.5 million agreement to settle their copyright-infringement lawsuit against owners and operators of the Puretunes.com Web site, the RIAA announced today (Oct. 25).

The major labels have reached a $10.5 million agreement to settle their copyright-infringement lawsuit against owners and operators of the Puretunes.com Web site, the RIAA announced today (Oct. 25).

Madrid-based Sakfield Holding launched the site in May 2003, offering low prices for material from high-profile acts: unlimited downloads for eight hours at only $3.99 or for an entire month at $24.99.

The company claimed it entered into licenses with Spanish rights societies, complying with the country's copyright law. Before suspending operations in June 2003, the site described its service as "the most exciting authorized subscription digital music download service on the Web."

"Puretunes.com duped consumers by claiming it was a legitimate online music retailer when, in fact, it was no such thing," says RIAA president Cary Sherman. "When consumers go online to buy music from those advertising themselves as licensed, they have every right to expect that they are buying legitimate, licensed products. Puretunes.com ignored that obligation. It's essential for the integrity and security of the legitimate online music marketplace that imposters like Puretunes.com are held accountable."

Although operations were suspended, the major U.S. labels in July 2003 sued Sakfield and 10 unknown owners or accomplices in federal District Court in Washington, D.C., for illegally selling copyrighted music.

After an extensive international search of several corporate entities in multiple countries, the labels identified the actual operators of the site as Daniel Rung, Michael Rung, Matthew Rung and Wayne Rosso, who were brought into the suit.

Under the settlement agreement, EMI, Warner Music, Universal, Sony and BMG (now Sony BMG) will receive a share of $10 million from Sakfield and $500,000 from the four individual operators. All defendants are also permanently enjoined by a federal court from infringing or contributing to the infringement of the labels' copyrights.

Although Puretunes was distributed through the Grokster peer-to-peer network in the United States, it was not a P2P application; it functioned through a central-server-based system similar to that of MusicNet.

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