San Diego Magazine / June 2000 / Michael Robertson Rolls the Dice

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Michael Robertson Rolls the Dice

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His company has been named in a fistful of high-profile, high-stakes lawsuits filed by moneyed music-industry plaintiffs. And he’s now the sworn enemy of the powerful Recording Industry Association of America (RIAA). Yet Michael Robertson—the rich but embattled CEO of MP3.com, the renegade San Diego Internet music concern—is characteristically optimistic.

“Recently we escorted the music business into the digital age, and the record industry woke up and choked on their bagels,” says Robertson, 33, a giddily defiant Conan O’Brien lookalike and self-described computer geek who’s generally amiable but demonstrates pit bull tendencies when challenged. “When you’re on the right side of an issue,” he says, “you just don’t worry.”

Maybe he should. On April 28, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York ruled that Robertson’s my.mp3.com violates copyright law. The judge issued a terse order holding MP3.com “liable for copyright infringement.”

“It’s still business as usual here,” says Robertson, with characteristic obstinance. “We think the judge’s decision means a great loss for consumers. When new technologies like this one are shut down, it creates a vacuum that will in fact be filled by entities that are actually unfriendly to artists and record labels. We are and always will be a champion of artists’ rights.”

Robertson still maintains what he is doing is legal and that it actually promotes and benefits the recording industry. “The my.mp3.com service requires the user to purchase a CD to function,” he says. “Despite claims by the recording industry that this product has hurt record sales, the fact is that sales are up 8 percent in the first quarter of 2000 over the first quarter of 1999.”

And Robertson insists he isn’t worried about the financial viability of his company. “I have no regrets about what this company has done. We know that, actually, we are in this fight against five heavyweights [the five major record labels]. This is a shot for us, but we are still a strong, viable company. MP3.com is one of the best capitalized Internet companies. We still have $350 million in the bank as of today.”

But the company also finds itself entangled in nasty legal battles, with its stock (MPPP on Nasdaq) on a mostly downward spiral and some high-ranking executives bolting. From its peak price of $105, the stock has steadily eroded—and after the judge’s ruling, it dropped another 40 percent to a low of $6.50 in early May.

Sources for this story, even some who’ve been philosophically supportive of Robertson previously, say that with his my.mp3.com service, he’s put his company’s future at risk. Adopted a few months ago, my.mp3.com allows consumers to listen to digitized versions of their CD collections from any computer hooked to the Internet—provided that CD already is stored in MP3.com’s ever-growing CD database. The consumer must prove that he is in possession of the CD before the process can take place.

But that’s not good enough for the recording industry, whose lobbying entity, the RIAA, insists that my.mp3.com’s entire collection is being used without permission because these digital recordings are actually coming from the company’s CDs, not the consumer’s. Says Hilary Rosen, president and CEO of the RIAA, “Michael built a vast database of CDs that simply don’t belong to him in clear violation of copyright law.”

The judge, obviously, agrees.

Although MP3.com recently reached a licensing agreement with the American Performing Rights Organization, Broadcast Music Incorporated (better known as BMI), which represents more than 140,000 U.S. songwriters and composers and more than 60,000 U.S. publishers, the agreement won’t mean much to the company unless and until Robertson manages to reach settlements with the ever-powerful individual record labels.
So who is this guy Robertson? And where did he find the hubris to take on the omnipotent recording industry? Camped out at his oversized desk in his otherwise sparse second-story corner office at MP3.com’s University City headquarters—a surreal blend of organic and industrial metal designs more appropriate to a futuristic techno nightclub—Robertson jumps to his own defense.

“What we’re doing here is a risk, I suppose, but risks are something every good businessperson must take,” he says. “We’re changing the music industry for the better. We’re fighting the good fight.”

An Orange County native and UCSD graduate, Robertson grew up playing with computers and listening to R&B and ’80s rock. Before MP3.com was born, he was known in San Diego’s computer community as an ambitious techie who first appeared on the radar screen when he was hired to write an Apple Macintosh column called “Mr. Mac” for ComputorEdge, the popular free weekly. That gig lasted about a year before editors moved in another direction.

“His columns started out okay, but as they went along, his ego did get in the way,” says Patricia Smith, senior editor at ComputorEdge. “The columns became more and more about personal things. It sort of turned into a brag column.”

Says another former ComputorEdge colleague, “Michael was always extremely, extremely confident. Actually, he’s arrogant. He wasn’t the best writer in the world, either, but that was typical back then of people who knew more about computers than writing. And because he was a Macintosh guy and 90 percent of the people he worked with were PC people, he could be very defensive at times. He put people off.”

But Robertson has staunch allies. Sid Karin, director of the San Diego Supercomputer Center, which provides research to science and government, describes Robertson, who once worked as a Macintosh consultant at the center, as a “go-getter, an aggressive and ambitious guy who has plenty of confidence. Michael recognized early the potential of these new technologies. I know he’s alienated some people because of his in-your-face style, but he’s a good guy, an ethical guy. He sincerely believes what he’s doing is right.”

While working for the computer center, Robertson first demonstrated his entrepreneurial bent when, in January 1994, he started MR Mac Software, a business that sought to capitalize on his Mr. Mac identity, to develop networking and computer tools. Less than two years later, Robertson started another company called Media Minds Inc. to develop software for creating digital photo albums.

In late 1996, he also set up a number of Web sites to explore the possibilities of on-line commerce, using search-engine software and related technology that had been developed in Norway. As he closely monitored use of his sites over the next year and a half, Robertson saw that most people were using the technology to search the Internet for MP3-based music (MP3 enables computer users to convert sound into compressed, easily manageable digital files).

As a result, he focused on the idea of building an Internet-based business around this new technology. And the rest is digital history.