Supreme Court Refuses to Red Light Antitrust Case Against Music Labels
Supreme Court Refuses to Red Light Antitrust Case Against Music Labels
Posted 01/11/2011 at 7:54am
| by Paul Lilly
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"Suck it up, buttercup, you're going to have to defend your actions." The Supreme Court didn't word things that it way, but it might as well have when it refused to review a ruling that reinstated an antitrust lawsuit accusing major record labels of conspiring to fix song prices, Reuters reports.
The lawsuit, filed by a group of music buyers, alleges that several record companies (including EMI Group, Sony, Universal Music Group, and Warner) agreed to set a wholesale price floor of around 70 cents per song when competitors started to sell music online for lower prices.
In addition, the suit claims shenanigans on MusicNet and Pressplay, a pair of services the record labels started way back in 2001 to sell songs online.
"All defendants signed distribution agreements with MusicNet or Pressplay," the lawsuit contends. It goes on to say that the labels "sold music directly to consumers over the Internet through these joint ventures. Both the joint ventures and the (RIAA) provided a forum and means through which defendants could communicate about pricing, terms, and use restrictions. To obtain Internet Music from all major record labels, a consumer initially would have had to subscribe to both MusicNet and Pressplay at a cost of approximately $240 per year."
The case was dismissed in 2008, but an appeals court ruled that the federal judge involved erred in doing so, a decision upheld by Supreme Court justices refusing to review the case.
Image Credit: Flickr deltaMike
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violian
January 11, 2011 at 12:11pm
Of course they have to set a price floor. What was their logic for this lawsuit? That music should be free because it costs nothing to duplicate the files electronically? And therefore shouldn't have a price floor? Music is an intangible good so there has to be some sort of artificial pricing - ideally, at least enough to cover all overhead expenses in running their business (in this situation: EMI, Sony, etc). Without price-flooring, assuming anyone can just go into the business of distributing music, songs would literally sell for pennies and nickels.
Tenhawk
January 11, 2011 at 3:02pm
To my understanding, it's not the fact that company's set a price floor per say, but rather that they collaborated with each other to set the SAME floor. That's the source of most antitrust cases, when a group of companies that jointly hold what is effectively a monopoly make deals behind the backs of law makers and the public to artificially elevate their prices.
The US System is based off of Capitalistic concepts, which in theory are supposed to preclude monopolostic actions. The free market is supposed to set the prices, and you can't have a free market if the main suppliers are artificially constraining the supply.
This is why in the US this is actually one of the more serious crimes a company can commit, and it always warrants high level federal attention.
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