MP3 Player Could Skirt Legal Challenge

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October 21, 1998 (6:29 AM EDT)

By Andy Patrizio and Malcolm Maclachlan,

In a climate of growing record-industry opposition to the MP3 format, a small British company is working on a mobile MP3 player for cars that combines laptop and stereo technology as well as the Linux operating system.

Empeg, of Somerset, England, said it plans to ship its Empeg MP3 player by the end of this month for £699, or $950. The unit is similar in size to a standard car radio and is removable. It features an FM tuner, a docking station for connecting to a PC, serial and USB cables, and Windows software for converting songs on CD into the MP3 format.

The company is taking preorders for the player on its website, but has not announced plans for U.S. distribution, a move that could land it in a legal minefield. Earlier this month, the Recording Industry Association of America (RIAA) filed a lawsuit to block the release of the Rio, a portable MP3 player from Diamond Multimedia.

Friday, the RIAA won a preliminary injunction blocking the release of the Rio. It is seeking to block the Rio until it complies with two rules of the 1992 Audio Home Recording Act: royalty payments to the recording industry to be distributed among artists and record labels, and a copyright-protection scheme to prevent unlimited recording of music.

The Empeg MP3 appears to comply with the second rule. The software that takes songs from CDs only lets them be saved to the Empeg player and not to a hard drive. Likewise, MP3 files can't be copied off the player to another device, such as a computer.

But Jay Cooper, an attorney and board member of the Alliance of Artists and Recording Companies, said the Empeg MP3 is more than just a playback device; therefore, Empeg should pay royalties of $8 per unit.

"If it's going to be sold here, it has to comply with U.S. law," Cooper said.

Michael Robertson, president of the MP3.com website, which distributes MP3 files, disagreed. "RIAA would have some trouble stopping this device because it is a PC," Robertson said. "The Audio Home Recording Act specifically excludes PCs."

The Empeg MP3 contains an Intel StrongARM CPU and 8 megabytes of memory. It also comes with a 2.1-gigabyte hard disk, which can hold around 35 hours of music, plus a bay for another 2.5-inch laptop hard disk. The player uses the Linux OS.

Empeg, the company, has thrown its weight behind Diamond Multimedia.

"We're currently hoping the RIAA will lose," said Hugo Feinnes, technical director at Empeg. "The RIAA appears to have picked a 'soft' target, i.e., a U.S. company. They conveniently ignored the MP3man." The MP3man is a device similar to the Rio made by Saehan, a South Korean company.

Empeg is also considering shipping the product without MP3 software, making it little more than a PC designed to fit into a car. Users could then download third-party MP3 players directly onto the Empeg MP3.