Summary:

Music social net Project Playlist is still barred by Facebook and MySpace but a deal with EMI Music adds considerably to the startup’s legit…

imageMusic social net Project Playlist is still barred by Facebook and MySpace but a deal with EMI Music adds considerably to the startup’s legit music firepower — and drops the number of majors still suing the startup to two.

EMI Music is the second major to sign on, following a December deal with Sony (NYSE: SNE) Music Entertainment. The Sony and EMI deals are good news for those banking on Playlist’s success. Bob Pittman’s Pilot Group is an investor and Pittman is on the board; former Facebook COO Own Van Natta signed on as CEO. Project Playlist helps users find and share custom media playlists, providing tools to stream and download. But the tools work with or without copyright permission and this is what has the labels and the RIAA in a knot. MySpace, which is a partner with the four major labels in MySpace Music, quickly gave in and banned Playlist apps from working on its pages. Facebook finally followed after considerable pressure.

EMI also has dropped out of the RIAA lawsuit filed against the Palo Alto-based company last April, but Warner Music Group (NYSE: WMG) and Universal Music are still in the hunt. And in another of those one-step-forward, at least one-step-back moments that Project Playlist has been having all along, today a judge for the U.S. District Court for the Southern District of New York denied the startup’s motions for dismissal and change of venue to northern California.

One reason: half the key witnesses for the defense are based in LA and still would have to get on a plane. U.S. District Judge Denny Chin also smacked Playlist down on its argument that having its key employees shuttling back and forth without internet access for five-to-six hours at a time could place its survival in jeopardy. In refusing to dismiss the case, Chin agreed that Playlist has some immunity under the Communications Decency Act but was unimpressed by arguments that the immunity applied to intellectual property. The parties have been ordered to show up for a conference on April 10.

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