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Following Napster's make-your-own-deal lead, online music provider Listen.com bowed out of its lawsuit against a group of record labels Monday and agreed to take down aspects of its service.

In a joint statement with the Recording Industry Association of America (RIAA), which is representing the labels, Listen.com said that it agreed to withdraw from a lawsuit filed against the RIAA by the Digital Media Association (DiMA) and a group of music sites.

The statement said that Listen.com and the member companies of the RIAA had "resolved their differences over Listen.com's Webcasting services." The company did not disclose Monday the services it plans to discontinue.

The development comes as part of ongoing legal wrangling between the record industry and online music sites as they struggle to define their tenuous relationship. The Web companies involved in the case offer customized jukebox services that give users options such as requesting certain types of music or skipping over songs they don't like.

The music sites and DiMA, a group representing Webcasters, filed a declaratory lawsuit against the record labels earlier this month, asking to be granted legal protection normally given to online radio sites that do not let users choose what they want to hear. The labels cited in the suit include units of Bertelsmann AG, EMI Group, and Sony.

Avoiding the 'Interactive' Tag

The Web companies are hoping to avoid classification as "interactive" music sites, which would require each to negotiate independent licensing agreements with copyright holders under the 1998 Digital Millennium Copyright Act (DMCA). If deemed by the courts to be noninteractive radio providers, the sites would pay a compulsory flat fee to copyright holders.

According to the RIAA, the DMCA defines interactive as a program that a site specifically creates for the recipient.

Listen.com's withdrawal from the lawsuit came after the RIAA filed a countersuit against three of the Web companies Friday. The suit named MusicMatch, Xact Radio, and MTVi Group (the online holding of Viacom's MTV cable network), and accused them of infringing on the record labels' copyrights by using their music without permission.

The RIAA has deemed the countersuit "procedural," saying that it wanted to move the case to the U.S. District Court where the RIAA has a similar case brewing. The association is referring to its lawsuit against online music company Launch Media, in which the RIAA is seeking to have the Web company classified as an interactive site that has to negotiate licensing agreements with individual labels.

None of the sites remaining in the case against the RIAA were available for comment Monday.

However, reacting to the countersuit the RIAA filed Friday, representatives for MTVi said in a statement that they are confident that they are in full compliance with the DMCA and have not infringed on any copyright interests. MTVi said that it recognizes, however, that "there is a need for clarification as to the degree of consumer influence permitted under the DMCA's compulsory license."

While the exact details of Listen.com's negotiations with the RIAA were still undefined Monday, it was clear that until the industry agrees on guidelines ruling the use of music online, the haggling will continue.

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