Last Month, Universal accused MySpace of infringing its copyrights by allowing its customers to post music videos from artists such as Jay-Z on the site without permission. CEO Doug Morris called Myspace Copyright Infringers. These were the words that kicked off the war and the landmark battle.

This is a big one because this could shape the broader commercial relationship between traditional media companies and a new generation of internet start-ups that rely on them for content.

Both parties believe that the DMCA (the Digital Millenium Act) is on their side. The DMCA was written before social networking sites even existed. This will be a tough one because this battle is philosophical and debeatable. It’s a grey area.

There’s a lot of grey area here,� said Lee Bromberg, a partner at Bromberg & Sunstein, a Boston-based law firm that specialises in intellectual property

Kraig Baker, a partner at Davis, Wright, Tremaine: “It’s part of the continuing struggle between content owners and developers of technology,� he said. “People are trying to find out where the line is.�

“I think there’s a tension between the law as written, and the law as intended,� Mr Liebenson said. “The DMCA was enacted in a very different era.�

Regardless, this is just one of many lawsuits that will plague the future. Lawsuits are typical in these type of technological transitions. Labels will continue to do whatever they can to protect their empire even through the murky results.

Sirius Satellite Radio said on Monday that retail sales since the Thanksgiving weekend have been less than it expected and it now sees 5.9 million to 6.1 million subscribers by year’s end.

“This year’s retail sales results since the Thanksgiving weekend have not been at the pace we had anticipated,” Sirius Chief Executive Mel Karmazin said in a statement.

Bottom Line: will people pay for radio?

• Check out this week music releases here.
• Digital sales increasing rapidly.
  “I certainly think that more than half of music revenues will be digital in a relatively short period of time,” Warner Music chairman and chief executive Edgar Bronfman Jr. said during a conference call. “I don’t know whether that’s three years or five years, but it’s coming and it’s coming rapidly.”
• Sirius not solely reliant on Stern (King of All Media)
  “How are we reliant (on Stern)?” Karmazin said at the Reuters Media Summit in New York. “I don’t think we’re reliant in any shape or form. We have 135 channels.”
• Dallas based alternative rock band Kessler have signed to the Your Music America (YMA) label (distributed by ADA); Legal rep: Ben McLane; Mgmt: Albert Smith.
• BBC ‘damaging music industry’- UK
  A stinging attack on the music industry was launched, with the BBC accused of contributing to the mass manufacture of boy and girl bands. Think-tank the Economic Research Council, blames record companies for failing to break UK acts in the highly-prized US market. It says many of the music industry’s problems over recent years, which have seen sliding sales, have been “entirely self inflicted”.

Warner Music home to artists including Madonna and James Blunt, reported a fourth-
quarter profit on a gain from a legal settlement. Revenue fell as album sales declined. New releases from groups including Danity Kane and Mana failed to match last year’s recordings from Blunt and Faith Hill. CEO Edgar Bronfman boosted more profitable digital sales, which almost doubled to 12.2 percent of revenue. Music companies look to sales from downloads, cell phones and online videos to make up for falling CD revenue.

“Revenue was a little lighter than expected,” said Eric Handler, a Lehman Bros. analyst who rates the stock “neutral” and doesn’t own it. “Digital was quite strong — they’re outpacing the market on that,” Handler said. He said CD sales were “quite weak.”

Without the $13 million gain from a lawsuit against online file-sharing service Kazaa, the company lost $1 million

(reporter, Don Jeffrey )

• Doug Morris: The people who write music deserve to be paid for their compositions. The also should have some say about how their compositions are altered. I think that people are very lax about the respect that people should have for other people’s works. I hate…to see these groups work for two years, making an album spend enormous amounts of money, putting their creative juices into something that’s $9.99 in Best Buy and people would rather have it for free. For me, being a music person it’s very hard to watch that. (Read the full Reuters interview with Universal Chief Doug Morris)
• Radio exec gets Sirius again about XM merger
  Surius CEO Mel Karmazin has talked about a possible merger before, noting it could eliminate a lot of duplicate operating costs – not to mention, skeptics say, a lot of programming choice. Here is what to expect if a merger did occur:
  it would shrink music choices, since it would presumably not carry duplicate channels. Since XM and Sirius have different approaches in areas like oldies and popular standards, this could wipe out the sounds that enticed some people to subscribe in the first place. (Biz/Money)
• Russia agrees to shut down Allofmp3.com
  Russia has agreed to shut down Allofmp3.com and other music sites based in that country that the U.S. government says are offering downloads illegally. “AllofMP3 doesn’t expect the Russian government to take any action against the company since it operates within the current law,” said Rory Davenport, an Allofmp3.com spokesman. “The company is fully committed to its business.”

 Russia is known not to act out on its claims.

• Australia: Digital Sales are not filling the void of the loss of physical CD sales. (via Coolfer/The Age)
  “Digital ain’t filling the void,” says one industry veteran who did not want to be named. “While iTunes has made inroads there are still vast illegal markets.”

Sony BMG’s director of digital services, Gavin Parry, was one of the few industry executives to talk publicly this week.

“It has been pretty erratic,” he says of physical sales this year. “Some months have been down 10 per cent and other have been down 30 per cent. Globally there are some indications that digital isn’t replacing the void but for Sony BMG, it is. We are up. If people are sitting back waiting for iTunes to fix it, they’re in strife.”