Spotify Discovers the Marginal Value of Infringement in the Wrong Tail

by Chris Castle 

Spotify's music offering may have appeared to be the long tail, but now it looks like the wrong tail. After two class-action lawsuits for unlicensed songs and copyright infringement were filed against the company by songwriters in as many weeks, Spotify is doing back flips to blame the victim for its admitted failures to lawfully obtain mechanical licenses. But at the end of the day, the decision is governance not guidance, and Spotify's governance is solely in the hands of its corporate directors and officers. Those directors and officers must answer to shareholders for weighing the marginal value of millions of unlicensed songs over the infringement liability (not to mention an even worse press).

Free Lunch or Free Will?

According to press reports, 10 percent to 25 percent of the songs on Spotify "are not properly licensed and/or not distributing royalty payments." Spotify also claims to have licensed approximately 30 million recordings (of 30 million songs, give or take for covers).

Based on these assumptions, that means there could be three million to 12 million songs that "are not properly licensed and/or not distributing royalty payments." This is not a few songs that fell through the cracks like new releases, a 1/16th of a song for a sample, the odd songwriter who cannot be found or who is non-responsive.

Millions of unlicensed songs doesn't look like an understandable accident, it looks more like an unacceptable policy. And that would be a policy that is exactly what the compulsory mechanical license was designed to prevent.

At the end of the day, the policy, i.e., the choice, to go forward without licenses, rests solely with Spotify. The well-financed company could have complied with the compulsory license -- enacted by the U.S. Congress for this exact situation -- but the songwriter class actions will likely seek to prove that Spotify chose not to do so. Whoever Spotify hired to undertake the mechanical process of mechanical licensing, millions of unlicensed songs strongly suggests that someone at Spotify decided to go forward without complying with the law. It appears that the thinking was that the upside value of having "all the world's music" was greater than the downside risk of getting caught. The marginal value of another few million songs was greater than actually complying with the law and paying songwriters.

This decision is what is called "business risk." Incredible as it may seem, this decision -- this willful decision -- to accept the business risk of using millions of unlicensed songs was apparently driven by a belief that in order to have an effective consumer offering, Spotify had to have tens of millions of tracks available to consumers.

It's Not About a Database

You'll hear a lot of hand wringing (from many quarters including Spotify) about the lack of a central database that is constantly updated with complete rights information just so digital services can look up who to license from and who to pay. This database has never existed, but you know what does exist? The U.S. Copyright Office online searchable database of copyright registrations.

In David Lowery's case, the songs he complains of in his class action all were registered with the Copyright Office. He published a list of them -- with registration numbers -- on his blog on October 20, 2015. He also complained to the New York Attorney General about the problem in November with no response.

Evidently, Spotify did not bother to look up Lowery's copyrights at the Copyright Office registration system as required by the compulsory license rules. That's behavior that is consistent with having millions of unlicensed songs. If the industry were to go to the trouble and expense of building this unicorn database, it would not have solved Spotify's problem with David Lowery because evidently nobody bothered to do the song research.

And this is the most elegant explanation of why Spotify is in the situation they are in -- they don't want to look because they don't want to pay the cost of complying with the law that provides them the great benefit of a compulsory license and they don't want to pay songwriter royalties. If Spotify really wants to pay songwriters, wouldn't they have done at least as much as the Copyright Office does with unknown writers -- publish a list online with all the information that they have (like artist name and song title).

Enter the Long Tail

This policy of using millions of unlicensed songs may well have been informed by the "long tail" theory and thought experiment posited by one Chris Anderson (in case you forgot him). You can read all about it in Anderson's counterintuitive utopian book The Long Tail: Why the Future of Business is Selling Less of More which was based on a 2004 article in Wired.

I'd be very interested to know exactly where this consumer research is that shows the marginal value of an additional 12 million songs is so meaningful to a music service that it trumps the infringement exposure. I frankly have never seen it -- aside from Spotify's reliance on Anderson's version of the long tail.

Anderson goes down the wrong rabbit hole by relying on anecdotal observations of "Ben" an anonymized (or perhaps fictional) character (at pp. 3-5). "Ben" is a teenager from an affluent family in Silicon Valley who gets most of his music from "friends" and "Bit Torrent" (recall that Spotify's CEO was a developer of uTorrent, a key piece of the piracy picture acquired by Bit Torrent in 2006). So Anderson starts by analyzing a legal market with comparisons to the black market. That obviously wasn't going anywhere logical. Neither is any market of what the New York Times called "pixel-size niches".

Anderson's long-tail thought experiment has been criticized by a number of people such as Harvard Business School Professor Anita Elberse in the Harvard Business Review and most famously in the music business by Will Page, the former economist for PRS, the UK performing rights organization.

Any record company production manager could have chimed in -- and perhaps would have if it wasn't so obvious that it did not really bear much discussion. The corresponding transaction costs of a variety of functions including rendering royalty statements for minuscule unit sales were not worth keeping the title in the catalog. You know, kind of like sending a royalty statement for three streams. Preparing the statement may well cost more than the royalty even if the statement is itself digitally delivered. Not to mention taking the phone call from the angry songwriter who got a statement for $0.19.

Record companies are no strangers to the long tail -- that's often called classical and instrumental jazz. It is worth noting that record companies have for decades deleted titles that didn't sell enough to justify keeping the title in the company catalog. This is consistent with Professor Elberse's research demonstrating that "the tail increasingly consists of titles that rarely sell and that are produced by smaller-scale players." Professor Elberse assumed that there were no infringement costs associated with those "titles that rarely sell" thus exponentially increasing the cost of the tail, or as this particular tail is known in some circles, the wrong tail.



Is the Long Tail the Wrong Tail for Spotify?


Then-PRS economist Will Page reached a similar conclusion after analyzing PRS royalty payments in 2008. Those who have had about enough sanctimony from Spotify about how it is God's gift to fighting piracy will find this nugget of interest when wondering how much the marginal value of the last 12 million tracks that don't sell really is worth if they are all unlicensed:

Will Page, the former economist for PRS, found in his 2008 study that famously debunked Chris Anderson's absurd "long tail" theory, the "long tail" is pretty meaningless for music services:

[PRS] found that only 20% of tracks in our sample were 'active', that is to say they sold at least one copy, and hence, 80% of the tracks sold nothing at all. Moreover, approximately 80% of sales revenue came from around 3% of the active tracks. Factor in the dormant tail and you're looking at a 80/0.38% rule for all the inventory on the digital shelf.

Mr. Page joined Spotify in 2012, which was after Spotify's U.S. launch in 2011. If Spotify's policies led to its problems with songwriters, that is certainly not Mr. Page's fault, but Spotify could have just asked him about the cost/benefit analysis before continuing to take the business risk of failing to get compulsory licenses on what apparently is a gargantuan scale.

Was the marginal value of the long tail worth it for Spotify when compared to statutory damages? Commentators often mock statutory damages, especially for willful infringement, as being over the top. In the case of the compulsory mechanical license, you can look at this another way.

Congress did backflips to make the compulsory license easy to get. If a well funded company like Spotify (last valuation reportedly $8.4 billion) chooses to ignore Congress's efforts, then perhaps Congress wants to make sure that the marginal value of ignoring the compulsory license is always less than the statutory damages for choosing to do so.

Spotify Threatened With Another Class-Action Lawsuit As Disputes Over Royalties Intensify

A class-action lawsuit recently filed against Spotify by Michelman & Robinson, LLP on behalf of Cracker frontman and college professor David Lowery will soon have company, Billboard has learned. The law firm of Gradstein & Marzanno -- itself in the midst of litigation on behalf of the Turtles against Sirius XM and Pandora -- will file its own class-action suit.

This new suit will make similar claims as Lowery and Michelman's, alleging that the subscription service is not fully licensed for some of the music it offers subscribers, and that the company is not issuing complete royalty payments. One source counters that additional lawsuits won’t add to Spotify’s problems because the company's potential liability remains the same regardless. As well, class-action lawsuits are difficult to implement and maintain, especially in instances where similar suits are ongoing in parallel. The law firm was unavailable for comment.

"We would look to see what crossover there was" with any parallel actions, says Mona Hanna, co-lead counsel on the Lowery/Michelman & Robinson case. “This is not a turf war. It is about protecting the industry and the artists. Let's get this issue resolved.”

The major labels could add to the drama by threatening their own cases against the company as leverage in licensing negotiations. And while Spotify may be the service under fire, all interactive streaming services are at risk on this issue, including Rhapsody, Rdio, Amazon Prime and Apple Music. To that end, sources tell Billboard a similar lawsuit is being prepared against a competing company.

For its part, Spotify is betting that settlement talks currently underway with National Music Publishers’ Assn. (NMPA), and the company's announcement of plans to build a publishing administration system, will placate music publishers and songwriters. The NMPA settlement would allow publishers to claim payments for monies owed to them by Spotify in exchange for waiving any legal claims they might have against the music service over copyright infringement or copyright non-compliance. Any money remaining at the end of the process would likely be divided between the participants by market share. The proposal could also result in a code of best practices intended to plug any holes in royalty distribution going forward, as well as bolstering Spotify's plans for a music publishing database with the aid of the NMPA and other collection organizations.

An executive involved in the negotiations contends that the class-action suits won’t impact the NMPA talks. “Remember, there was a class-action lawsuit against YouTube," that executive tells Billboard. "When the NMPA reached a settlement with YouTube [in 2011], most music publishers opted in instead of pursuing the class action lawsuit, which was eventually dismissed."

At least one company will not participate, believing they can secure better remuneration for their songwriters through an independent deal. At press time, only Warner/Chappell Music had been confirmed to be opting out of the negotiations and going its own way on the issue. Sources suggest that the major's choice to opt out of the NMPA settlement is directly tied into the current licensing negotiations between the three majors and Spotify.

A major issue in negotiations between Spotify and the three majors is the service's free tier, which pays one-seventh as much per stream as its paid tier. Some would like to see the free tier eliminated; others say they will work with the free tier, but will demand a bigger minimum payment this round.

“These lawsuits... increase negotiating leverage over rates on the free tier,” says one major label executive. Another executive counters that Spotify's leverage increases with its revenue, which continues to rise.

Is Spotify Backing Down From Its Hardline Stance on Free Music?

The major labels are fully committed to interactive streaming services -- with paid subscribers -- as the industry’s future. Warner Music Group's second quarter saw streaming overtake downloads as its central source of digital revenue, and companies don’t want to short-circuit that growth by engaging in damaging lawsuits against the services. If Spotify were to be held fully liable for each copyright infraction, it could trigger mutually assured destruction, according to one industry participant.

Many in the industry were well aware that a problem with improper licensing and royalty payments existed, but it wasn't until Audiam began matching master recording royalty payment statements against music publishing payment statements that the true extent of the problem became obvious. Depending on who is talking, between 10 to 25 percent of songs interactive on services like Spotify are not properly licensed and/or not distributing royalty payments. Sources tell Billboard that Spotify owes music publishers and songwriters around $25 million, however another estimate puts that figure at $17 million.

"We are committed to paying songwriters and publishers every penny," said Spotify global head of communications and public policy Jonathan Prince in a statement on Monday's news of David Lowery's filing. "Unfortunately, especially in the United States, the data necessary to confirm the appropriate rights holders is often missing, wrong, or incomplete. When rights holders are not immediately clear, we set aside the royalties we owe until we are able to confirm their identities…”

But many take issue with that assessment, contending Spotify and other interactive services knew they had a problem from the beginning but ignored it and did not build the proper systems to manage licensing.

Spotify Announces Database to Properly Manage Royalties

“Spotify blames everyone but Spotify for its infringement, non-payment and non-compliance,” says Audiam founder and CEO Jeff Price. “Its rationale appears to be [that] everyone else caused Spotify to infringe on music as all of us don’t have the 'data.'  This is a misleading statement. First, Spotify does not need to know who wrote a song to determine if a composition is licensed. If Spotify does not know who wrote the song, then it most likely doesn't have a license. Therefore, don’t use the song.” Price points out that Audiam has supplied data to the catalogs that it administers and it still is not being properly paid by Spotify.

“The real issue is that Spotify built limited-to-no systems to get licenses, accept data and make payments,” Price complains. “It took the world’s music without, in many cases, knowing whose music it was, and used it with no licenses and without making payments, similar in many ways to the original Napster.”

Sanford L. Michelman of Michelman & Robinson LLP makes a similar argument. “The underlying issue is Spotify has a business model that is catch-as-catch-can,” he says. “If you are going to take a songwriter's work, then get the permission to do it. It's not a system where if you catch me without permission, [Spotify] will pacify you with some more dollars.” It's not supposed to be about the songwriter catching the service with its hand in the cookie jar, he says. Mona Hanna tells Billboard that the firm's case "is designed with the express purpose of protecting artists' rights and hoping that this result in a change in how Spotify operates."

Concurrently, Spotify has apparently settled with Another Victory (an Audiam client), the publishing arm of Chicago-based hard rock label Victory Records, as the publisher's songs are now available to stream on Spotify. Price says the service is still playing hardball with his company, however, as well as many other publishers and catalogs, including those of Metallica and Bob Dylan. Price claims Spotify is ignoring his communications about getting his company's other clients properly licensed and paid.

Spotify, Warner/Chappell, Sony/ATV and Universal Music Publishing Group declined to comment for this report. Executives at the other streaming services were unavailable for comment.

Top 20 Countries With The Most Illegal Music Downloads

As the piracy saga continues with the “six strikes” initiative coming soon to the United States and news that BMG is looking to cash in on $20 settlementswith alleged file sharers, it’s worth taking a look at just how big illegal file sharing really is these days. According to data collected by the monitoring firm Musicmetric, it’s still pretty rampant, especially in the United States – which has more total files shared than anywhere else in the world by a huge margin.

The United States comes in first with 96.8 million total shares, which is more than double that of the runner up (the United Kingdom at 43.3 million). The data collected by monitoring firm Musicmetric (and published by the 


) delivers the total number of torrent downloads over the past six months and the most popular shared artist in each country. 

The Top 20 Countries With The Most Illegal Music Downloads

1. United States: 96,868,398 (most popular artist: Drake)

2. United Kingdom: 43,314,568 (most popular artist: Ed Sheeran)

3. Italy: 33,226,258 (most popular artist: Laura Pausini)

4. Canada: 23,953,053 (most popular artist: Kayne West)

5. Brazil: 19,677,596 (most popular artist: Billy Van*)

6. Australia: 19,103,047 (most popular artist: Hilltop Hoods)

7. Spain: 10,306,829 (most popular artist: Pablo Alboran)

8. India: 8,965, 271 (most popular artist: Billy Van*)

9. France: 8,400,869 (most popular artist: Sexion d’assaut)

10. Philippines: 8,351,260 (most popular artist: Maroon 5)

11. Mexico: 7,522,865 (most popular artist: Jesse y Joy)

12. Netherlands: 6,671,428 (most popular artist: Birdy)

13. Portugal: 5,587,198 (most popular artist: Pablo Alboran)

14. Poland: 5,029,204 (most popular artist: Gotye)

15. Greece: 4,919,567 (most popular artist: Billy Van*)

16. Hungary: 4,470,948 (most popular artist: Pitbull)

17. Chile: 4,210,641 (most popular artist: Los Bunkers)

18. Romania: 4,152,252 (most popular artist: Billy Van*)

19. Sweden: 4,074,594 (most popular artist: Laleh)

20. Belgium: 3,880,900 (most popular artist: Gotye)

*Unlike others on this list, Billy Van allows his music to be downloaded via torrents and encourages donations from fans (see the case study here).


It’s 4am in a hotel room far from home and you’ve just broken up with your lover. Aside from the minibar, there’s no empathy on offer: not a soul to talk to, no shoulder to cry on.

You update your Facebook status with news of the split. Seconds later someone on the other side of the world sends your smart phone a digital version of What Difference Does It Make?, allowing you and Morrissey to wallow together in self-pity. Someone else sends you Paul Simon’s Fifty Ways to Leave Your Lover, which cheers you up a bit. This may sound far-fetched, but the hope of the music industry rests upon such connections. A future where songs are not bought, but accessed via telephones, sent across cyberspace, and passed around friends through platforms such as Twitter, is what is hoped will save music from the twin ravages of illegal downloading and a lack of strategic direction.

The full extent of the crisis was illustrated with the news that EMI, the label that gave the world the Beatles and Pink Floyd, faces the possibility of break-up if it fails to find £120 million by June. The smallest of the “big four” record labels, it has suffered from the battle between its parent company and bankers over a £2.6 billion debt — despite a jump in profits and the signing of 200 artists in 18 months.

“EMI are perceived to be in a terrible situation, worse than they actually are, and that’s putting off some artists,” said James Sandom, manager of the Kaiser Chiefs. “It’s a shame because they’ve got some great creative people and are out to prove a point.”

The internet is the big battleground. Piracy remains rampant, with more than seven million illegal file-sharers in Britain alone. Shops such as Woolworths and Zaavi have collapsed, further depressing CD sales. Albums, which bring in the most amount of revenue to record labels, have been hit by digital websites such as Apple’s iTunes that allow users to “cherry-pick” their favourite singles. Falling revenue has had an inevitable effect on talent.

“The number of artists getting signed is down 50 per cent from 2006,” Mr Sandom said. “The class of 2003 and 2007, including Franz Ferdinand and the Kaiser Chiefs, were able to build massive careers. There’s not been one artist in the past three years, apart from Kings of Leon, given the backing to achieve that success.

“There are a couple of the major labels that have made it very clear internally that they don’t believe signing bands is a viable prospect. Solo artists need less investment, they either work on the radio or they don’t.”

The desperate situation has pre-empted two radical approaches: labels have invested in new subscription services such as Spotify, and artists have increasingly moved towards corporate sponsorship.

“As an industry we’ve fought back from near collapse,” said Paul McGuinness, the U2 manager who masterminded the Irish band’s current multimillion-pound sponsorship deal with RIM’s Blackberry.

For the right band, Mr McGuinness said, “Record label funding can be replaced by the right corporate sponsor. And falling CD sales can — hopefully — be made up for by subscription packages.”

Feargal Sharkey, the former lead singer of the Undertones and chief executive of UK Music, agreed. “Research shows that 80 per cent of 14 to 24-year-old UK filesharers would pay for a legal service. Quite clearly, this is the direction in which we need to be heading.”

Daniel Ek, 27, the founder of Spotify, the online music site, told The Times that he expected his company to be one of a few players in a $50 billion-dollar industry in five years’ time.

Spotify currently has seven million users in Britain, Spain, France, Sweden, Norway and Finland, of which about 5 per cent pay a monthly subscription fee to listen to advert-free music. Based on recent venture capital investment, the four-year-old company is now worth about $250 million (£164 million).

“By 2012 half of all telephones will be smart phones and we’ll see impressive growth in ‘access’ music services such as Spotify,” Mr Ek said. “The overall industry will be worth $40 to $50 billion dollars and, if you look at how internet companies develop, there will be only a couple of really dominant players. We hope to be one of them.”

If Mr Ek’s valuation is correct he will become a very rich man. The entrepreneur reportedly co-owns 47 per cent of Spotify along with its co-founder, Martin Lorentzon. But Spotify’s growth particularly its delayed American launch, has been hampered by concerns that not enough users would upgrade to its “premium” service.

“While Spotify Premium is a good product, we doubt that the majority of music fans will want to sign up to a monthly subscription service in the near term,” a recent report by Enders Analysis concluded. “The majority of people do not spend £10 a month on music.” Record labels doubt that advertiser-funded services can provide a sustainable business model.

Edgar Bronfman Jr, chief executive of Warner Music, has condemned such services as “clearly not positive for the industry”. Universal Music, however, has praised Spotify as a “sustainable financial model”.

Mr Ek expects the number of paid subscribers to reach 700,000 “in the not too distant future”, he said — and growth in subscribers has “shot up” since his company introduced an iPhone application last September. He is also working with record labels to offer incentives to premium users, such as exclusive tickets to gigs and early song releases.

Spotify is also looking to introduce new “household” subscription services, allowing a parent to pay for the family’s content, as well as partnering with more internet service providers and telephone companies.

In a few years time, Mr Ek predicts, “I will be able to update my status on Twitter to ‘I’m feeling lonely’ and someone will send me a track to cheer me up. But we’re only at the beginning. This will only work if there’s massive adoption of people paying for music.”

Those in the industry accept that the days when record labels such as EMI could spend an alleged £200,000 a year on sex and drugs for artists were over. “There are concerns over how much money advertising-funded models will bring in,” said Jon Webster, the chief executive of the Music Managers Forum. “But we want to embrace new models.

“There are people who believe the music industry should have the same revenue as it had ten years ago. But unfortunately the world has changed.”

And, if any further warning were needed, Spain offers a salutary lesson to those who doubt the effect of music piracy, which the British Recorded Music Industry, or BPI, claims cost the worldwide industry £1.2 billion between 2008 and 2012. There, the music market is currently about a third of its 2001 level.

“We have made a great effort to create new business models on the internet,” said Salvador Cufi, chairman of Musica Global, a Spanish independent label. “But there is no way in today’s market that we can make those investments profitable. It’s a very sad situation that we can no longer invest in new artists in the way we would like.”

Plummeting investment has seen local artist album sales in Spain fall by 65 per cent.

“Spain is a sign of what could happen in the UK if we don’t deal with piracy and invest and support new services,” said John Kennedy, chief executive of the IFPI, which represents the recording industry worldwide. “I don’t know how many years we can cope with revenue declines of 8 or 9 per cent.”

So what of EMI? Elio Leoni-Sceti, chief executive, accepted that “the issues around the debt are not easy”. But he said he was confident that the label would cope.

“We are a leaner, fitter organisation,” he said. “We’ve removed any bureaucracy, left our baggage behind and got better at listening to both our consumers and our artists.”

The question remains: in five years time, will we be listening to them?

Making Art and Commerce Thrive in a Hybrid Economy


In many music and entertainment circles, the name Lawrence Lessig needs no introduction, but for those who don't know his work, here's some background.

Lessig is a lawyer and activist whose interests are mostly in intellectual property, copyright, technology, and political reform.

He's has written five influential books, including Code and Other Laws of Cyberspace (2000), The Future of Ideas (2001), Free Culture (2004), Code: Version 2.0 (2006), and Remix: Making Art and Commerce Thrive in the Hybrid Economy (2008).

Remix was just published in paperback in October 2009 .

Over the past 10 years, Lessig has worked for both Harvard Law School and Stanford Law School. He is currently a lawyer at Harvard Law School and director of the Edmond J. Safra Foundation Center for Ethics at Harvard University.

Lessig is a founding board member of Creative Commons. In 2008, Lessig launched the Change Congress campaign, now called Fix Congress First. Lessig talks about Creative Commons during the interview, but in a nutshell it's an organization with copyright tools that allows content creators to give various levels of freedom to others for them to remix and build upon the original work.

The idea behind remix culture is how an artist can take a work that a pervious artist has produced and build upon it to create something new. The term has become more commonplace in the last decade, but in fact the concept has been in use for decades, most notably in rap music starting 30 years ago.

Growing up in Queens, New York, I was lucky enough to hear the rap bands of the first era pretty early on (granted, thanks to bands like Blondie and The Clash and college radio putting Grandmaster Flash, The Sugar Hill Gang, Kurtis Blow, and Afrika Bambaattaa on my radar) which usually utilized sampling techniques when creating their music.

I have long been a fan of the groups who fine tuned the ideas behind audio sampling to perfection, in Long Island's Public Enemy and De La Soul. I’ve always thought both groups pushed the ideas behind sampling in ways that few others did before or since, albeit in very different directions.

With Public Enemy’s 1988 album It Takes a Nation of Millions to Hold Us Back and De La Soul’s3 Feet High and Rising, at the moment it seemed like the idea of what music “is” was being reinvented. But, after a series of lawsuits for a variety of musicians and labels, the art of sampling and remixing was largely hobbled, in either using others work with or without their consent.

Twenty years later, it is still mostly the domain of those willing to tread in dangerous waters or for artists who want to engage their own fans by allowing them to remix work as part of the growing participatory culture community. For remix artists who might be looking to push their ideas further, it’s unlikely they can put their work into the public without a sizable budget.

Having read all of Lessig’s work and seen two recent documentaries about the remix culture (Brett Gaylor’s RIP: A Remix ManifestoCopyright Criminals), I wanted to speak with Lessig about how current musicians could utilize Creative Commons and share with their own audience as well as look at how we music fans can better understand this era of shared creativity, which dramatically changes the idea of those performers vs. us in the audience.

and Benjamin Franzen’s

In addition to these films and Lessig’s Remix book, some good reads on the subject include DJ Spooky’s book Sound Unbound (2008) and Matt Mason’s The Pirate’s Dilemma: How Youth Culture is Reinventing Capitalism (2009). The show includes music from the earlier era of sampling as well as some recent examples of mainstream musicians offering up their work for remixing, including David Byrne and Brian EnoRadiohead, and Bjork.

US Court Brings Back Price Fixing Lawsuit Against Major Record Labels


For many years, we've wondered why the major labels haven't gotten in trouble for what appears to be clear price fixing -- having all of the major labels band together to both demand identical wholesale pricing


attempt to dictate retail pricing by partners as well. There have been various investigations by both local and federal officials, along with a few lawsuits -- but nothing has really gone very far. One lawsuit was tossed out by the district court back in 2008, but in a surprising move, the 2nd circuit appeals court has revived the lawsuit, claiming that the evidence is "sufficient to plausibly suggest" price fixing by the major labels with regards to digital music. So now it goes back to the lower court. I still doubt this will really have much of an impact, but it's nice to see some recognition of what's seemed pretty obvious for quite some time.