New York - Digital music store provider BurnLounge announced on Thursday that it has come to a cooperative agreement with the Federal Trade Commission (FTC), which several weeks ago branded the company's business model a pyramid scheme.

Since the FTC filed its complaint, BurnLounge announced that it would abandon the "network marketing" aspect of its business model, where customers were rewarded when they recruited others to sign up and pay BurnLounge fees to create their own digital music stores. The company's CEO Alex Arnold, one of the defendants named in the FTC complaint, also resigned.

"Network marketing was a unique channel to promote our products, but the strategic decision to voluntarily remove this part of our business was the right decision on all fronts," said BurnLounge CEO Grant D. Johnson.

The company will continue to offer consumers free music download stores that provide them a cut of sales, as well as personal Web pages with customizable widgets.

"While we still disagree with the FTC's contention that our previous model violated FTC statutes; agreement to the stipulation was the only way to protect our retailers and artists while we continue to run our business and work towards a final resolution," said BurnLounge co-founder and president Ryan Dadd.

Related Links:
http://tinyurl.com/2r6v8w

http://www.ftc.gov/opa/2007/06/burnlounge.shtm

http://www.burnlounge.com