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Legal
Pressplay and MusicNet allegations could go to court
By CMU Editorial | Published on Thursday 14 January 2010
The wheelings and dealings of the major record companies in the early days of the internet (well, the first half of the last decade) may go under the spotlight once again, following a US appeal ruling that a lawsuit accusing the music firms of anti-competitive behaviour should be given court time.
In October 2008 the lawsuit – Starr et al v SonyBMG et al – was dismissed by a lower court who said the plaintiffs didn’t have a decent enough case against the major music companies – who were accused of violating the US’s Sherman Antitrust Act – for the litigation to go to a full court hearing.
The lawsuit centred on the music industry’s first major dabblings in digital music – the always terrible Pressplay and MusicNet. The two services, the first backed by Sony and Universal, the latter by EMI, Warner and BMG, were early decade efforts by the majors to combat the then rapidly growing P2P file-sharing phenomenon, while ensuring the record companies got to control everything in the then emerging legitimate digital music market.
It was a disaster. Both services were overpriced, totally unusable and oozing with all that digital rights management nonsense that it took most of the majors until 2008 to wash out of their systems. The whole escapade left a gaping hole in the marketplace, which was nicely filled when Steve Jobs arrived on the scene with a genuinely consumer-friendly alternative.
And so it was Apple Computers who won control over everything in the early years of digital music. Pressplay was sold off to Roxio who picked off some of its technology for their legit Napster service, MusicNet became an independent digital media aggregator, now known as MediaNet.
By late 2005, all of this was already becoming a distant memory, but some of the deals made to prop up the major’s two doomed-to-fail digital music ventures have remained, in some circles, rather controversial ever since. Some allege the majors acted in a cartel fashion to give their own digital music ventures an unfair advantage, ensuring any rivals couldn’t compete on price and were saddled with the same DRM limitations as Pressplay and MusicNet.
In doing so the majors, it’s claimed, also dabbled in some more general price fixing, to keep the cost of digital music artificially high, so that downloads were priced on the same lines as CDs, even though the production and distribution costs of digital were obviously a fraction of those associated with physical music products.
A lot about those early major label digital dealings remain secret, but many involved in independent digital music ventures at the time are convinced that the big players employed protectionist strategies which, on a commercial level, held the legit digital market back five years giving illegal file-sharing services a head start on winning consumer interest, and on a legal level may well have violated the aforementioned Sherman Act.
The Starr lawsuit hoped to get to the bottom of it all once and for all, but in 2008 the Recording Industry Association Of America managed to persuade a US court that there wasn’t really any case to answer, and that all this talk of coordinated shady dealings designed to prop up the record industry’s collapsing CD market was really just a net fuelled urban myth.
The appeal court haven’t offered any opinion on whether the record industry did act anti-competitively in the early days of digital, but say that there is sufficient evidence for the case to be properly considered in court. The appeal judges noted: “The complaint alleges specific facts sufficient to plausibly suggest that the parallel conduct alleged was the result of an agreement among the defendants”. It’s not clear what the timetable for any new fuller court case would be.
All the big record industry players of the time are named as defendants, including EMI, Sony Corp, Warner Music, BMG owners Bertelsmann and Universal owners Vivendi. Time Warner are also named as defendants – I’m not sure if that’s because they owned Warner Music at the time of the alleged shady dealings, or because of their then ownership of AOL, who were also partners in Pressplay.
Some expected the defence in the Joel Tenenbaum P2P lawsuit last year to bring up Pressplay and MusicNet and all the allegations that surround the two services. Although the dates don’t totally work in the Tenenbaum case – when he was illegally file-sharing in 2004 the iTunes Music Store was open – some argue that had the majors not crippled the fledgling legit MP3 sector at the start of the decade through anti-competitive protectionist practices, then students like Tenenbaum wouldn’t have been forced to go to illegal content sources to get DRM-free digital music files.
It’s not a watertight argument, but it’s better than any of the other arguments put forward by Tenenbaum’s legal team last July.
