Sony's BMG Music branch has been fined for illegally collecting information from its youngest users.

The company has agreed to settle with the US Federal Trade Commission (FTC) over charges that it collected information of some 30,000 visitors to its artist web sites who were under the age of 13.

According to the 1998 Children's Online Privacy Protection Act (COPPA), all web sites are required to obtain parental permission to collect and store data on children under the age of 13. The $1m penalty is believed to be the largest ever levied for violating the act.

The FTC alleged that the violations occurred on at least 196 fan sites. Many of the sites also included social networking components and the ability to share photos and videos. The FTC charged that the sites were possibly allowing the children to interact with adults without any parental notification or permission.

"Sites with social networking features, like any web sites, need to get parental consent before collecting kids’ personal information," said FTC chairman William E Kovacic.

"Sony Music is paying the penalty for falling down on its COPPA obligations. "

News of the settlement comes as one of Sony's other branches is preparing a major launch.

The first beta versions of the Home online world have launched for the PlayStation 3 (PS3). The virtual community allows PS3 owners to interact with one another and form online clubs for specific games or special interests.

The new service will also feature specially themed zones for games and promotions similar to those in online worlds such as Second Life.