Facebook Stares Down Labels Over Project Playlist Takedown Demand

Earlier this afternoon MySpace scrubbed all traces of Project Playlist music widgets from the site, and users are unable to embed any further playlists. The scrub was the result of infringement notices from the major labels, all of which are in litigation with Project Playlist.

The labels, sources say, sent the same takedown notices to Facebook, which has 660,000 users with playlists from Project Playlist. But Facebook has refused to comply with those demands, our sources say.

Facebook for their part are refusing to comment, as is Project Playlist. But our music industry sources are calling Facebook’s refusal to comply “irresponsible” and saying that a lawsuit is inevitable if Facebook doesn’t remove the application and widgets.

It’s not clear Facebook is fully aware of what they’re stepping into (although the experience of Mark Zuckerberg’s friend Sean Parker, who is the founding President of Facebook and the cofounder of Napster, with labels should give them some indication). The labels aren’t screwing around, and their fury with Project Playlist, who they say have been stalling on a music licensing deal for months, is unchecked.

Expect users to give Facebook a big thumbs up for staring down the labels. My question is, how far is Facebook willing to go to protect Project Playlist? The potential litigation exposure is massive.