Just as MySpace is readying to make a re-energized comeback onto the social networking scene, one of its co-founders is being forced to pay $US 6.6 million for illegal use of licensed material, but not the traditional copyright infringement of audio recordings.

After a case spanning over two years, Brad Greenspan – one of the co-founders of MySpace in 2003 who profited from its $US 580 million sale in 2005 – has been ordered to pay damages to his plaintiffs for the use of 528 song lyrics without paying the necessary license fee to publish them.

LiveUniverse which ran several lyrics websites under one umbrella banner, was threatened back in 2009 with sanctions of up to $US 100,000 by the Federal Court of the Central District of California, ordering a takedown of the sites within 48 hours.

After Greenspan failed to do so, he was charged with contempt of court and in August 2010, the current court case got underway.

The sites consisted of hundreds of song lyrics which were posted without license fees being paid to publishers.

The main plaintiffs in the case included publishers Peer Music, Bug Music, and Warner Chappell Music, who picked 528 songs whose lyrics were used without their permission, to be represented in the case.

LiveUniverse is being charged $12,500 for each song on the list which includes songs such as, “Georgia On My Mind” by Ray Charles, “China Girl” by David Bowie, and Van Morrison’s “Moondance”.

Greenspan certainly didn’t help in defending his case for publishing lyrics without permission during the course of the two-year case, often failing to show up to depositions and key hearings, while going through countless attorneys.

Paul Fakler, an attorney who represented the music publishers told Ars Technica: “Towards the end he [Greenspan] would show up, and have either a new lawyer, or no lawyer [at all].”

Greenspan’s last lawyer withdrew from the case in August 2011, and he appeared in court for the ruling, without a legal team.

While five or six years ago lyrics sites were making very little profit, over the last two years much larger streams of revenue have been flowing through, but many lyrics sites are still neglecting to pay for the content they’re using.

“These sites are making hundreds of thousands, if not millions of dollars a year, on the backs of people who write this music and own this music.” said Ross Charap, another of the plaintiff’s attorneys. “This is an important new stream of revenue for publishers.”

A standard license fee would require that sites pay 50 per cent of their revenue to the publishers whose work they are sharing. Payment is based on the number of hits individual songs get; and while the publishers were missing out on a key stream of cash flow, so too were their songwriters whose main source of revenue is the licensing of their lyrics.[do action=”pullquote”]These sites are making hundreds of thousands, if not millions of dollars a year, on the backs of people who write this music and own this music[/do]

“The intent here was to persuade all the sites based here [in the US] to take licenses, to try to persuade ISPs to tell their customers to be lawful, and to persuade advertisers not to be on these sites.” says Charap.

LiveUniverse isn’t the only lyrics destination to have been targeted by publishers, with the National Music Publishers Association sending cease and desist notices to hundreds of other illegal sites, both warning them of their infringement, as well as offering opportunities to license the content they’ve posted.

The $6.6 million ruling sets a potentially risky legal precedent. Essentially opening the door for record labels and publishers to point towards Greenspan’s infringement as a case demonstrating that the posting of lyrics – in any format – can be proven by a court to be illegal, or financially damaging to publishers and the musicians they represent.

It now means that record labels and music majors can seek further damages against potential infringers if they so choose. Better not tell Sony/ATV Music Publishing, who absorbed Britain’s EMI Music Publishing last July, making it the largest music copyrights company in the world controlling a third of the world’s publishing revenue.

Think about that next time you quote your favourite song on Facebook…

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