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Technology Stocks : Diamond Multimedia -- Ignore unavailable to you. Want to Upgrade?

To: Pirate who wrote (3732)	10/14/1998 5:48:00 PM
From: bob zagorin	Read Replies (3) \| Respond to of 4679

The battle over copyright infringement on the Net heated up last Friday when the Recording Industry Association of America (RIAA) sued Diamond Multimedia Systems, Inc. (Nasdaq: DIMD) over a portable MP3 recording device. Diamond's Rio player lets users copy MP3 music files from a computer hard drive to the memory of the MP3 recorder without a loss in quality. The player, which is smaller than an audio cassette, costs less than $200 and holds up to 60 minutes of music. According to RIAA, the product stands in stark violation of the Audio Home Recording Act (AHRA) of 1992. The AHRA requires a manufacturer to pay royalties to partially compensate the artists, composers, musicians, publishers and record companies affected by unauthorized copying. In addition, the manufacturer must incorporate a Serial Copyright Management System to prevent users from making illegal second generation copies. Diamond's Rio player, the RIAA argues, has failed to meet both of these requirements. "It was our hope that Diamond Multimedia would be an active participant in working with us to develop a solution that adheres to the law and protects the fundamental rights of all artists," said Hilary Rosen, president and CEO of the RIAA. "To our disappointment, Diamond declined to postpone its product launch so that we could constructively address the issues, leaving us with no other option than to take legal action to prevent the distribution of these devices." RIAA filed a temporary restraining order in a California Federal District Court barring distribution of Rio until the Court hears its motion for preliminary injunction. Unless Rio complies with the AHRA, RIAA will seek a preliminary and permanent injunction enjoining the sale or distribution of Rio. Diamond's VP of Corporate Marketing, Ken Wirt fired back in a conference call Friday that RIAA's accusations were unfounded, and that Rio does not violate the AHRA because it is a playback-only device, using content already stored on a computer's hard drive. Wirt continued, "Clearly, it appears that the RIAA's lawsuit against Diamond is being driven by the interests of its largest members, the big five record labels, who are seeking to maintain their control of music distribution and prevent the unfettered freedom of musicians without recording contracts at their member companies to distribute their music to a broad audience." The outcome of the suit, which erupted a day after the Senate passed a digital copyright protection measure, will be closely watched by the fledgling industry for the digital distribution of music. Diamond currently plans to ship Rio the first week in November. Contact: RIAA; 212.775.0101; webmaster@riaa.com; Diamond Multimedia; 408.325.7000; 800.468.5846 riaa.com diamondmm.com