A U.S. District Court judge in New York has ruled that MP3.com is liable for copyright violations by allowing the public to access a CD archive through MP3's "Instant Listening Service" and "Beam-It" services.

The ruling emerged Friday (4/28) in a brief that precedes a complete written decision, due in the next two weeks. The complete decision may bring closure to a lawsuit filed in January by the RIAA on behalf of several of the world's largest record labels.

Word of the ruling sent MP3.com's stock price into a nosedive, shedding nearly 40% of its value to close at $7 per share on Friday.

The record industry is seeking $150,000 per copyright violation, which could amount to billions of dollars, given the estimated 45,000 CDs in MP3.com's archive at the time the lawsuit was filed (recent estimates place the current total closer to 80,000 CDs).

At the heart of the lawsuit are two MP3.com services: ''Instant Listening Service'' and ''Beam-It.'' The services, which were still accessible at press time, allow users to access songs stored in MP3.com's archives after representing to MP3 that they already possess a copy of the CD.

The RIAA's claims against MP3.com noted that this re-distribution of music was unlicensed and did not incorporate proper payment of performing, songwriting or publishing royalties inherent to other broadcast mechanisms.

MP3.com argued that by having its users register ownership of an authorized copy of the recordings before accessing them, labels and other entities were collecting proper payment and that MP3.com and its users should be free to listen to their previously purchased musical selections without restriction.

In February, just weeks after the RIAA suit against MP3.com was filed, MP3.com filed a suit against the RIAA and its president Hilary Rosen, alleging among other things that Rosen and various RIAA members were actively trying to damage MP3.com's relationships with musical artists and to drive down the company's stock price.

The RIAA is also pursuing copyright infringement claims against Napster for enabling person-to-person distribution of MP3 files, many of which are songs ''ripped'' from CDs of major labels' top-selling acts. In recent weeks, Metallica and Dr. Dre have initiated separate lawsuits against Napster and several universities that allow their students access to the Napster online network.

In response, the Metallica-named colleges (University of Southern California, Yale University and Indiana University) have removed or severely curtailed student access to the service, and Metallica has dropped them from it's litigation. The Dr. Dre lawsuit will pursue charges against six universities and is expected to name several students on charges related to their trading of Dr. Dre songs via the Napster network.