Warner Music lawsuit dropped as new announcement takes hold

A month after filing lawsuits against one another, Warner Music Group (NYSE: WMG) and AnywhereCD have dropped the suits against each other and agreed to end the agreement they made early, on September 30 Billboard reports today. AnywhereCD is a website that sells both physical CD albums and digital albums, allowing consumers to download a Digital Rights Management technology-free MP3 version of a CD purchased on the site. The dispute began in late April when Warner terminated its agreement and requested that AnywhereCD remove all Warner content from the site because AnywhereCD gave consumers the option of purchasing only the DRM-free MP3 files. AnywhereCD subsequently sued for breach of content and defamation.

This news comes just days after Warner entered an agreement with Lala.com, a new internet music site that plans to sell music tracks that download directly to consumer's Apple Inc. (NASDAQ: AAPL) iPod's. The founders of Lala.com, formerly a site designed to allow consumers to trade CDs, intend to make the site into one that bypasses the traditional storage place for music files: a computer's hard drive. Warner is the only label so far that has licensed content to the site and their products will sell for $0.99 each (similar to iTunes?) and members can sample full tracks with Lala paying Warner one cent per sample play (iTunes offers only 30-second samples). Lala will also feature no advertisements or subscription fees and sell new CDs and continue to allow consumers to trade old CDs with each other for a $1 fee.

DRM will not play a role in the new site though, because Lala sells tracks that transfer directly to iPod, eliminating the chance that the average consumer can share files on peer-to-peer networks. This difference from a site like AnywhereCD likely made dropping DRM usage for Warner more feasible because the company still controls how the file is used.