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On Music: Supreme Court OKs lawsuit accusing major record labels of price fixing
By Jim Hagerty
A decades-old lawsuit, accusing four record labels of price fixing, will continue after the U.S. Supreme Court agreed the group of consumers who filed the complaint have a legitimate case.
According to the suit, Sony Entertainment, Warner Music Group, EMI Group and Universal Music Group (UMG) are accused of over-charging consumers for online music services.
Consumers claim the labels entered into a partnership with MusicNet and Pressplay, two online distribution companies. To obtain music from the labels, users had to subscribe to both distributors, which constituted a double-dipping, collusion and price-fixing.
The lawsuit said the average user of both services—which distributed the same music—was required to spend about $240 per year to download music from the labels.
The suit was originally filed in 2001. Several officials, including former congressman U.S. Rep. Rick Boucher (D-Va.), warned the labels in early 2002 that the partnership with the distribution groups was in danger of violating anti-trust statutes.
The complaint was initially dismissed in 2008.
There is no word on the amount of damages sought. Insiders say the case could go to trial by the end of the year and “prove expensive” for the labels if they are found guilty, and an out-of-court settlement cannot be reached.
From the Jan. 12-18, 2011 issue