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EMI Group is the latest major music label to reach a settlement with XM Satellite Radio over the Pioneer Inno device, the companies announced Tuesday.

EMI, one of several music labels that filed a copyright infringement lawsuit against XM in May 2006, is withdrawing from the complaint. Terms of the settlement were not disclosed.

The initial lawsuit stems from XM's Pioneer Inno, which has the capability to record and store music delivered over satellite radio. EMI, along with other major music labels, had contended that the device could violate their copyrights.

With the settlement, EMI is joining Universal Music Group and Warner Music Group, which in December also reached a settlement with XM. Last February, Sony BMG and XM also settled.

UPDATE:To include CBS statement.

Warner Music Group has pulled its entire catalog from Last.fm, a company spokeswoman confirmed Friday.

Warner Music would not comment on the reason for leaving Last.fm, but the label's departure is certainly a setback for the social-networking site. Warner was the first of the major labels to do a deal with Last.fm.

Last.fm offers an on-demand streaming service that's free to members but has been seriously hamstrung by limits placed on song playback. The site allows users to listen three times to a song. At rival Imeem, users can listen to free streaming music as many times as they want.

Silicon Alley Insider reports that Warner Music licensed its music to Last.fm on a month-to-month basis and hasn't renewed it.

"We are currently negotiating a new agreement with Warner Music Group," CBS, which acquired Last.fm a year ago, said in a statement. The network added that it was "working hard to build the most comprehensive music service on the Web."

Note:CBS has agreed to acquire CNET Networks, parent company of News.com.

Qtrax, the free music site with the questionable history of signing labels, has cut a licensing agreement with EMI Music, the company announced Tuesday.

"EMI's music will be available free to registered Qtrax users for unlimited streaming or downloading to a PC," the companies said in a statement. "(Users) can also load downloaded tracks on up to three portable devices and play them while their membership remains active."

Here's the rub: users must sync their portable device every two months so the number of plays can be counted so that artists are accurately compensated. New York-based Qtrax offers links to online retailers for users who decide on buying the songs.

Qtrax is an ad-supported music and legal P2P site that is best known for an embarrassing episode last January when all four of the major recording companies denied Qtrax's assertion that it had cut deals with them. Since then, the company has been chugging along.

Last month, Qtrax signed a licensing agreement with Universal Music Group, the largest of the four biggest music labels.

Once Qtrax signs the two remaining majors, Warner Music Group and Sony BMG, and has the licenses it needs, executives have said it will offer more than 25 million songs. The company has already signed agreements with the publishing units of the four top labels.

What's right about the service is that it's free. What's wrong is that users can't burn music to disc. However, signing more major labels is a step in the right direction for the company.

Qtrax, a company that stumbled badly out of the gate, appears to be on the road to recovery.

The legal P2P music service has signed a licensing deal with Warner/Chappell music publishing, according to a spokeswoman with Warner Music Group. The move comes a week after Qtrax inked a deal with Universal Music Group, the largest recording company.

If you remember, Qtrax was the company that claimed in January when it launched the site to have signed all four of the top music labels, only to see the companies deny such agreements existed. Since then Qtrax has continued to plug along at the negotiating table.

But the contract with Warner/Chappell doesn't mean Qtrax can start offering music from Warner Music. In the convoluted way music licenses are handled, an online music store must secure publishing and recording rights. In this case, the recording rights are of course owned by Warner Music and the company's spokeswoman had no idea when a deal might be reached with the fledgling service.

Before the emergence of digital music, album covers were an integral part of music buying.

As people thumbed through record racks, eye-catching album art could prove to be a deciding factor on whether people bought. The cover could convey something about the music inside or whether the act was creative or cool.

Jimi Hendrix's Axis: Bold as Love, Led Zepplin's Houses of the Holy, Peter Gabriel 3, The Rolling Stones Let It Bleed and The Beatles Sgt. Pepper's Lonely Hearts Club Band are just a few classic works.

But in the digital age, people hunt for music on computer screens, and an album cover is often reduced to a thumbnail print if it even accompanies the music at all. Wired.com has a couple of stories on how designers are trying to keep up with the changing times.

"We've been looking at a few technologies (for digital album art) and have been trying to bring these to Apple, to encourage them to bring that level of experience to the iPod," George White, Warner Music Group's senior VP of strategy and product development told Wired. "A very simple demonstration that we've done takes the Gnarls Barkley liner notes and does a fly-through (using Adobe Flash Lite). You're actually moving through the lyrics and artwork...It's really cool-looking on an iPod."

MySpace is essential for independent artists. Every band I've played with in the last five years has had a MySpace page, and it completely changed how we did things compared with the pre-Internet days. Getting gigs, maintaining mailing lists, fliering--all of those formerly labor-intensive tasks could be accomplished by sitting in front of a computer. One group I played with got 90 percent of our gigs through other bands on our friends list. Another had a couple dozen teenage fans who'd come to every all-ages show when they read about it on our MySpace page. (We were all in our late 30s and 40s and had no idea that ska would appeal to that demographic.)

But there was always a major gap: if we wanted to sell downloads, CDs, or anything else, we had to guide fans to another site or service, such as our own home page with a PayPal account or CDBaby.

Today, MySpace announced a deal with three of the four majors (EMI is sitting out for now) to offer DRM-free MP3 downloads, ringtones, and merchandise through the artist pages on MySpace. This is long overdue: the music industry needs to go where their fans already are, and with 30 million people regularly listening to music on the site, it's a mystery why the labels haven't tried to reach these folks before now.

But major label acts are a small part of the MySpace experience. The only reason you ask The Police or Death Cab to be your "friend" is to show off your impeccable taste to your real friends, the individuals and small-time artists who you're actually connected with. These are the folks who leave individualized comments on your page and send you instant messages, and their gigs appear right alongside Radiohead's on your home page. MySpace is the ultimate long tail site for musicians, where bar bands and small-town heroes can appear in the same context as the biggest bands in the world.

So I'm not sure that MySpace Music will be a game-changer. Fans of big bands already know where to buy merchandise--the band's Web site, or Amazon's CD section, or iTunes, or their local retail store. Sure, big fans who count major-label acts among their "friends" might now stay within MySpace to buy new songs from these bands, and some MySpace users might discover (and buy music from) new acts via friends of friends. But a lot of fans don't know (or care much about) the difference between major and independent artists, and might wonder why only some acts make their wares available for purchase. The inconsistency will be confusing, and drive users back to the traditional music-buying sites (or free file-trading services, which aren't going away).

The real game-changer comes when MySpace offers a full e-commerce store--downloads, CD sales, the works--to every artist with a musician's page on the site. That way, users would never have to leave the site to buy any music they heard on the site. The challenge would be building the infrastructure, but once things like billing and provisioning downloads are in place for the majors, it might not be much harder to set up a CDBaby-like system for everybody else.

A new music service jointly owned by News Corp.'s MySpace.com and three record labels will be announced Thursday, according to a source familiar with the deal.

MySpace Music has been expected for weeks and will offer streaming music, downloads of unprotected MP3s, concert tickets, ringtones, and other merchandise, the source told CNET News.com. The source added that MySpace is hopeful the service will open in the next few months.

The deal immediately catapults News Corp. Chairman Rupert Murdoch into competition with Apple CEO Steve Jobs' iTunes, which offers music and video downloads. Backers are hoping MySpace Music can compete against iTunes by providing MySpace's 110 million worldwide monthly visitors a sweeping range of music services and products that eclipse iTunes' offering.

It's been well-reported that label honchos think Jobs and his ubiquitous iPod have amassed too much control. MySpace Music is apparently part of a strategy by the big music companies to find an iTunes competitor, even if they have to help create one.

The music service enables MySpace to leap past competitors Imeem and Last.fm, which beat MySpace to the punch when they began providing free, streaming music to users. But now, MySpace can present everything those services do and much more. Facebook was reportedly also in talks with the major record labels, but the music industry source said that unless something dramatic happens, Facebook is months away from being where MySpace is now.

MySpace Music will launch with songs from three of the top four record labels: Universal Music Group, Warner Music Group, and Sony BMG Music Entertainment. The only label that hasn't agreed to the deal is EMI Music Group, said the source, who added that MySpace and EMI executives are working around the clock to close the deal and everyone involved is confident that EMI will eventually be part of the service.

All the labels will receive a minority share in the company and a share of all the revenue generated from the site, according to the source, who spoke on condition on anonymity.

Universal Music Group was thought to be holding up the service because of a copyright-infringement lawsuit that it filed against MySpace last year. MySpace has agreed to pay a "huge" settlement, according to Peter Kafka at Silicon Alley Insider.

Updated 6:20 AM PDT to reflect the official announcement from SpiralFrog.

On its face, the signing of a deal with Warner/Chappell Music, the publishing arm of music label Warner Music Group, would appear to be a breakthrough for SpiralFrog.

Warner Music is one of the top four record companies. And SpiralFrog, which last week claimed the position of third-largest music download site on the Web, has toiled for five years to convince the major labels about the soundness of its ad-supported business model. But so far, SpiralFrog has signed a deal for full rights to offer music with just one of them: Universal Music Group.

What's sad about the Warner/Chappell licensing deal, which SpiralFrog announced Monday, is that the troubled music service may be years away from actually featuring music from James Blunt, Green Day, Linkin Park, or any other Warner Music artist. That's because in addition to gaining the music's publishing rights, SpiralFrog must also acquire the recording rights in order to offer the music.

SpiralFrog cut a deal with EMI's publishing unit 18 months ago, for example, but you still won't find any of EMI's songs on the site. No recording rights.

If you're actually looking for substance from SpiralFrog, you're missing the point. What makes this company so fascinating to watch is how it continues to deliver more pretense than substance. The latest example came Friday when Joe Mohen, SpiralFrog's founder and chairman, came to San Francisco and met with me. I was led to believe that we were meeting to discuss the company's upcoming earnings report.

"Shouldn't the only two metrics that matter from SpiralFrog be the number of downloaded free songs, and the amount they have paid the labels? How is the number of free signups a meaningful measure of any success?"

--David Pakman, eMusic CEO

SpiralFrog, which had previously reported earnings, was supposed to report them this week for the quarter that ended December 31. Music fans, journalists, and insiders were finally going to get a peek at how the service, which launched in September, was faring during its first full quarter in business. In 2006, SpiralFrog drew wide press coverage after announcing that it planned to compete with illegal file sharing by giving away ad-supported downloads. The business model was experimental and, at the time, the record labels appeared desperate to find a legal alternative to piracy.

During my meeting with Mohen, no sooner had we sat down then SpiralFrog's public relations people sheepishly told me that the company was filing a Form 15 with the Securities and Exchange Commission later that day. SpiralFrog would no longer be reporting them publicly.

It's important to note that SpiralFrog is not a public company. Its shares do not trade on any exchange. An unusual arrangement with some early investors required the New York-based company to publicly report. Turns out new investors aren't as fussy about public disclosure, and the board decided to do away with the practice. According to Mohen, some of the company's partners also didn't like SpiralFrog revealing details of its business model to the public.

What this means is that Mohen no longer has to reveal his company's progress--or lack thereof--since reporting a dismal third quarter. For the quarter that ended September 30, SpiralFrog posted a loss of $3.4 million on revenue of just $20,400.

SpiralFrog's "silly" claim
So the public doesn't get any insight into SpiralFrog's business model. What the company offered instead were highly questionable claims. Last week, SpiralFrog announced that it had topped 850,000 registered users, making it the third-largest music download site on the Web behind iTunes and RealNetworks' Rhapsody music service.

"What about Amazon and eMusic?" I asked Mohen.

"We have more registered users than eMusic," he responded. He added that Amazon doesn't count because it's a store. SpiralFrog is an ad-supported service where consumers don't buy anything. I didn't bother pointing out that iTunes is also a store. It was obvious SpiralFrog's carefully tailored triumph could come apart all too easily.

"This claim is silly," David Pakman, eMusic's CEO, said in an e-mail to CNET News.com. "(SpiralFrog is) a free ad-supported service, right? It costs nothing to sign up, right? You simply put in a username and password, no credit card required, right? And they only have 850,000 signups? We have well more than 400,000 paying subscribers. Those are people who have enrolled in a pay service with a valid credit card and are being billed. Those people have paid for and downloaded almost 200 million songs."

Pakman continued: "Shouldn't the only two metrics that matter from SpiralFrog be the number of downloaded free songs, and the amount they have paid the labels? How is the number of free sign-ups a meaningful measure of any success?"

A check of Alexa.com, which measures Web traffic, shows eMusic far outpacing SpiralFrog in rank, reach, and pageviews.

As for Pakman's question about what the important metrics are for judging SpiralFrog's success, it doesn't matter. The company isn't talking about them...anymore.

The controversy over whether an internet service provider should charge for music is once again coming to a boil.

Pundits, music-industry insiders and members of the public are bashing Warner Music Group exec Jim Griffin after he acknowledged in a interview that he is working on a plan to collect music fees from consumers via their ISP bills.

I haven't seen backlash like this since rocker Trent Reznor told me in an interview two months ago that an ISP tax might be a good idea. It didn't matter to some that Reznor also made a seemingly conflicting statement in the same interview when he said perhaps music should be given away for free.

This kind of off-the-cuff musing was enough to make Reznor a target of widespread criticism. Nobody seemed to care that the leader of the band, Nine Inch Nails, was a digital-music innovator and had long called on the record industry to improve its treatment of fans. What happens is that people hear the word "tax" and objective analysis goes out the window. People condemn and vilify. Out comes the torches and pitchforks.

"It would be unfortunate if a creative and fruitful dialogue were sidetracked by a rush to judgment."

--Jim Griffin, Warner Music Group

Nearly two weeks after our Q&A appeared, Reznor disavowed his statements about the ISP tax. Griffin now appears to be tip-toeing away from some of his comments.

"We are in the earliest stages of what is a dynamic conversation about licensing opportunities in the global digital marketplace," Griffin said in a statement issued by Warner Music on Friday. "It would be unfortunate if a creative and fruitful dialogue were sidetracked by a rush to judgment about what was simply my own illustrative example of one of many concepts I have in this space."

The proposal outlined in the interview Griffin gave Portfolio.com suggested that ISP fees could create a $20 billion pool that would go to artists and copyright holders. Consumers would have the option of paying the fee or submitting themselves to advertising.

"All stakeholders stand to benefit from the kind of process that results from the willingness to consider a variety of raw concepts without prejudice," Griffin said in the e-mail.

But there's plenty of prejudice and Griffin should know this. The reality is music fans are distrustful of record companies. They resent talk about charges being quietly tucked into their monthly bills.

Griffin could have hardly done more to stoke paranoia than to attempt to sell his plan with comments such as this: "Music will feel free," Griffin told the magazine (the italics are mine).

He could be a digital-music genius for all I know. But Warner Music should have been smarter in broaching the subject of ISP fees than to allow Griffin to casually toss out ideas in print if--as he said in his e-mail--this is only one of "many concepts" the label is considering.

Warner Music now has a firestorm on its hands and few are trying to assess the idea dispassionately. That's too bad because the label, like its top three competitors; Universal Music Group, Sony BMG Music Entertainment and the EMI Group have appeared to be headed in the right direction of late. They've been experimenting with models and ideas they flat out rejected not long ago.

The labels have finally embraced open MP3s and struck deals to offer ad-supported music (albeit only in a streaming version) with social networks Imeem and Last.fm.

"There's a lot of experimentation in the marketplace right now and that's ultimately a good thing for the industry and for fans," said Mitch Bainwol, chairman and CEO of the Recording Industry Association of America. "It's important to note that all of the many ideas being floated out there involve voluntary payment systems, and not a government-imposed compulsory license. This would be the marketplace at work."

Bundling subscription fees into ISP bills on a voluntary basis may prove to be a bad idea. At this point, nothing is certain so shouldn't every proposal at least be explored?

We won't know if the public will embrace an all-you-can-eat music service from the ISPs until the music industry presents a formal plan, one that will hopefully be coolly and carefully analyzed.