updated 10:25 am EST, Fri March 10, 2006
Music labels, price fixing
A major name in class-action lawsuits has filed a complaint in the federal court, accusing major record labels of fixing prices for internet music downloads as well as CDs. San Diego attorney William Lerach's lawsuit claims that Sony BMG, Universal Music, Time Warner, Bertelsmann, and EMI fought together to keep the online music market from emerging, and then "conspired to fix and maintain" music prices once services like Apple's iTunes Music Store became inevitable, according to a report from the Red Herring. The class-action suit follows hot on the heels of a U.S. Department of Justice investigation into online music pricing, and New York Attorney General Eliot Spitzer has initiated a similar probe. The suit alleges that the music labels "use their market power to coerce online music retailers to sign 'most favored nation' agreements that specify that the retailers must pay each of the defendant labels the same amount. By setting a wholesale price floor at $0.70 per song, defendants have fixed and maintained the price of online music at supracompetitive levels," the suit reads.