MANHATTAN (CN) - Major record labels must face a consolidated class action lawsuit claiming they fixed prices on digital music, a federal judge ruled.
The defendants include Bertelsmann, Sony BMG Music Entertainment, Sony Corporation of America, Capitol Records (dba EMI Music North America), EMI Group North America, Capitol-EMI Music, Virgin Records America, Time Warner, UMG Recordings and Warner Music Group, which allegedly control 80 percent of the digital music in the United States.
Consumers claim in the proposed class action that all of the labels signed distribution agreements with two joint-venture entities called MusicNet and Pressplay, through which they allegedly conspired to fix the price, terms of sale and restrictions on digital music.
Each licensing agreement allegedly included publicly hidden Most Favored Nation clauses, guaranteeing that one licensor would receive at least equivalent licensing terms as another licensor. In effect, these agreements set wholesale price floor at 70 cents per song for Internet music, increasing prices as the cost to distribute Internet music fell to essentially zero, consumer class says.
More details here:
A copy of the ruling itself can be found here: