Wednesday, January 13, 2010

Price fixing case against RIAA reinstated by 2nd Circuit

Hat tip to @cbcalvin on Twitter, and betanews:

In Starr v. SONY BMG Music Entertainment, an antitrust class action against the RIAA, the complaint -- dismissed at the District Court level -- has been reinstated by the Second Circuit.

Among other things, the Appeals court noted the following allegations:

First, defendants agreed to launch MusicNet and pressplay, both of which charged unreasonably high prices and contained similar DRMs. Second, none of the defendants dramatically reduced their prices for Internet Music (as compared to CDs), despite the fact that all defendants experienced dramatic cost reductions in producing Internet Music. Third, when defendants began to sell Internet Music through entities they did not own or control, they maintained the same unreasonably high prices and DRMs as MusicNet itself. Fourth, defendants used MFNs in their licenses that had the effect of guaranteeing that the licensor who signed the MFN received terms no less favorable than terms offered to other licensors. For example, both EMI and UMG used MFN clauses in their licensing agreements with MusicNet. Fifth, defendants used the MFNs to enforce a wholesale price floor of about 70 cents per song. Sixth, all defendants refuse to do business with eMusic, the #2 Internet Music retailer. Seventh, in or about May 2005, all defendants raised wholesale prices from about $0.65 per song to $0.70 per song. This price increase was enforced by MFNs.
January 13, 2010, Opinion of US Court of Appeals for the Second Circuit

Commentary & discussion:

Associated Press via New York Times

Keywords: lawyer digital copyright law online internet law legal download upload peer to peer p2p file sharing filesharing music movies indie independent label freeculture creative commons pop/rock artists riaa independent mp3 cd favorite songs intellectual property portable music player


RonK said...

What exactly does MFN stand for? I don't seem to find it on AcronymFinder. It is kind of ironic that one of the possibilities is "Money For Nothing".

Anonymous said...

Well, it's about time someone starts sticking it to these greedy vultures.


Travis said...

It seems pretty clear to me that if the Record Companies stopped colluding that the price of music would be so cheap there would be no incentive to pirate music.

raybeckerman said...

Most favored nation clause.

Anonymous said...

Didn't these guys get slapped for a separate price-fixing incident back about 1997? I seem to recall at the time charges of price fixing music CD's to the $12 range even though production costs of CD's were already in the pennies.

Travis said...

The argument of course is the same with software, the first one costs a a million (or 10 million or whatever)and the rest cost pennies. I honestly have no problem with them charging whatever they want for CD's or MP3's or whatever. Its their product they can charge what they want, it's not in anyones best interest to tell a business what they can and cannot charge for their product. What I do have a problem with is

1) Collusion.
2) Screwing artists out of money on a regular basis.
3) Wasting taxpayer money on frivolous court cases.
4) Having copyrights that are effectively eternal.

If Bach and Beethovan would have signed with a record label their works would still not be in the public domain.

Anonymous said...

That's exactly what I'm talking about: collusion among the labels to set prices and agree not to cut them.