Supreme Court lets online music price fixing trial proceed

By Geoff Duncan January 10, 2011

The United States Supreme Court has cleared the way for a lawsuit to proceed against all of the “Big Four” music labels—Warner Music Group, Universal Music Group, Sony, and EMI—over conspiring to fix pricing for online music downloads at $0.70 cents a song back when the online music business was just getting started. The court’s decision is actually one of inaction: the Supreme Court has declined to review a federal appeals court decision that the case could proceed to discovery. The decision means the appeals court ruling stands, and the case can proceed to trial.

The case is Sony Music Entertainment v. Kevin Starr (No. 10-263), although Warner Music Group, Universal Music Group (in the form of Vivendi SA), and EMI are all involved. The case alleges that the record labels conspired to set a minimum price of $0.70 per song then they began selling digital music downloads through subscription services like pressplay and MusicNet. The origins of the case go back to 2005; in 2008, a federal judge threw out the lawsuit saying that the plaintiffs had not presented enough facts for the claim to be considered at the summary judgement phrase or a trial; an appeals court later reversed that decision, finding that that the plaintiffs had presented enough information to move forward with the case. The record companies then appealed to the Supreme Court, asking that the original judge’s action to throw out the case be upheld.

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The case may now proceed to the discovery phase, but that doesn’t mean a settlement or trial are in the near future: lawyers must still assemble their materials and evidence, and it’s likely the record companies will fight the case tooth and nail using whatever means they have at their disposal—and the stakes could be high, since the four major record labels account for about 80 percent of U.S. music sales. The earliest industry watchers expect the case to come before a court is late 2011.

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