Digital Music Price Fixing Suit Moves Ahead

The U.S. Supreme Court recently rejected an appeal filed by Sony, Vivendi, Warner Bros. and EMI to halt a lawsuit that accuses the four labels to have engaged in a digital music price fixing scheme.

If you think about the common pricing of digital music across different labels today, you may wonder why it has taken so long that a suit in fact was filed.

This specific cases targets Musicnet and Pressplay, which are DRM-laden services that were created by those labels in 2001. The suit questions the pricing of 70 cent per song and alleges that there has been illegal collusion. The suit also complains about the unusually high subscription price of $240 per year. Some might file this under the initial clumsy attempts to squeeze music money out from consumers after the time of Napster, but the Supreme Court now found that there is enough substance to the claims to allow the suit to proceed. According to the court, there was a sufficient allegation of the violation of Section 1 of the Sherman Act under Twombly.   

If found guilty, the case may not reach through to third-party resellers such as iTunes, but collusion could get rather expensive and it seems reasonable that the four labels will try to settle out or court.

Pressplay was originally founded as a joint venture between Universal Music Group and Sony and sold to Roxio in 2003, which renamed the service to Napster. MusicNet was formed in a partnership between AOL Time Warner, Bertelsmann, EMI and Real Networks in early 2001. In 2005, the platform was sold to private equity firm Baker Capital. In 2008, MusicNet was turned into MediaNet, a platform for digital content fulfillment services.