In a joint statement, the Recording Industry Association of America (RIAA), the Alliance of Artists and Recording Companies (AARC) and Diamond Multimedia Systems Inc., the maker of the Rio, said they had reached "mutually satisfactory resolution of outstanding legal issues."

"Rio has set in motion a new age in digital music enjoyment," Ron Moore, general counsel of Diamond Multimedia, said in a statement. "We felt it was important to bring this exciting new technology to market for all of those who create, distribute or enjoy music."

The announcement Wednesday marked a formal end to months of litigation over the "Rio", one of a new breed of portable, pager-sized Internet music players that can download and play CD-quality songs encoded in the so-called MP3 format.

Sensing a potential new threat for music piracy, recording industry executives asked the courts to issue an injunction barring sales of the device. This was denied, and the companies appealed.

In June, a federal appeals court in San Francisco ended all hope for blocking the Rio when it ruled that the device was not primarily a recorder and thus was not subject to 1992 federal anti-piracy laws.

In the meantime, however, both MP3 player manufacturers and the recording industry have cooperated in developing the "Secure Digital Music Initiative" (SDMI), a joint effort to establish guidelines for Internet music formats and devices by the end of the year.

As part of Wednesday's announcement, all the major players vowed to continue cooperation in hopes of bringing order to the fast-growing Internet music scene.