Appeals court OKs suit vs major music studios

A Second Circuit Court of Appeals in New York today reinstated an antitrust lawsuit accusing EMI, Sony, Universal and Warner of illegal price fixing for digital music. Putting aside a dismissal from October 2008, Judge Robert Katzmann said there was enough evidence to "plausibly suggest" that the music labels might try to keep download prices artificially high through collusion.

The judge centered his attention on two online music services that kept running in spite of their struggling performance. It would have taken "some form of agreement" just to keep them profitable, Judge Katzmann noted in his decision.

Originally, the suit had accused labels of using early deals and licensing agreements to artificially create a raw cost of 70 cents per track that was then enforced at deals with other stores.

Since the suit was filed, pricing has become variable at most online music stores but still usually sits at a minimum of 79 cents per song and scales up to as much as $1.29 for new releases. Labels have justified the shift as necessary to spur demand for their back catalog and to generate more profit from their most recent music.

By Electronista Staff