August 1, 2007 -- Red-hot social networking service Facebook has pulled the plug on a popular music application in a bid to avoid legal problems with the recording industry.
The third-party feature, called Audio, allowed users to upload music playlists that other users could listen to on a streaming basis, but not download. It wasn't licensed by labels and publishers.
Analysts called it a looming litigation and cost headache for the company.
Facebook did not return calls seeking comment.
While no lawsuits had been filed by the recording industry against the service, playlist swapping on Facebook didn't go unnoticed by the major labels. A source at one label alleged the company was engaging in "massive infringement."
Facebook's move comes as labels are moving aggressively to force Web 2.0 companies to share revenues from music-related audio and video offerings. MySpace, Grouper, Bolt and Imeem have all been sued or threatened with litigation by the major labels for not seeking proper licenses for ad-supported music and video services.
Whether or not Facebook brings back a similar music offering remains to be seen. With more than 26 million unique visitors in the U.S., according to ComScore, analysts said yesterday that the company is likely to come back with a music feature that ensures payment to record companies.
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