Michael Robertson (businessman)

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Michael Robertson (born 1967) is the founder and former CEO of MP3.com, which quickly became one of the most popular Internet music sites. In the years following his departure from MP3.com, Robertson launched several small start-up companies, including Linspire, SIPphone, MP3tunes, and Ajax 13.




Robertson was the founder of the original MP3.com. Despite the early success of MP3.com on Wall Street (the day of the stock IPO (ticker:MPPP), the stock rose from $28 to peak at $103[1]), Robertson quickly led his company into a firestorm of lawsuits generated by the major record labels and music publishing concerns. The litigation sprang from Robertson's "Beam-it" program, a functionality that allowed people to quickly load their existing CD collection into online lockers at my.mp3.com and access their private music collections online from anywhere in the world. And also "Instant Listening" which allowed instant access of CDs purchased online from participating retailers. However, to launch the service Robertson essentially had to duplicate every music CD ever created. Although MP3.com purchased the CDs for their index and users had to supply their own copy as well, MP3.com violated copyright laws by failing to acquire licenses for the music that was internally duplicated by digitally storing the material on their servers.

Massive lawsuits erupted, with MP3.com claiming fair use and record labels claiming copyright infringement. Virtually every major record label sued MP3.com with MP3 settling the majority of the law suits for tens of millions of dollars. Universal Music, however, held out and took the issue to court. After the trial started, in the landmark case of UMG v. MP3.com, MP3.com was found to have violated copyright laws[2]. MP3.com paid $53.4 million to settle Universal Music's claim [3]. This legal outcome triggered a class action complaint charging MP3.com and certain of its officers, including Robertson, and directors with violations of the Securities Exchange Act of 1934. The complaint was boilerplate class action language but revolved entirely around the copyright lawsuit and subsequent stock price decline.

The action was ultimately resolved under the terms of an agreement whereby the defendants, while continuing to deny all liability, paid into an escrow account $35,000,000 and agreed to issue 2.5 million shares of MP3.com common stock which MP3.com valued at the time at $5,391,000, in exchange for complete dismissals and releases of all claims with prejudice. In addition, under the Stipulations, MP3.com agreed to institute certain corporate governance enhancements. [4]

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