The Supreme Court handed a big blow to record companies last week when it refused to review a lower-court ruling reinstating a 10-year-old class action suit against four major record companies for price-fixing in the MP3 market.
All I can say is, "Too bad, so sad for them." Can you think of a group of corporations that deserve a bit of grief more than the myopic, annoying, and sometimes abusive record companies and their corporate mouthpiece, the Recording Industry Association of America (RIAA) ?
Record companies have been whining for as long as I remember. They whined when cassette tapes came out because you could create a copy. They whined when CDs came out because it was a perfect digital copy, making taping even more attractive, and of course they whined the loudest when MP3s arrived in the 90s and everyone could make a digital copy.
Now, I don't blame the record companies for taking down Napster and trying to stem illegal downloads, but they used the legal system and their considerable power to bully individuals, rather than trying to innovate and find a way to take advantage of the new digital market.
Who can forget the famous RIAA lawsuit against a 12-year-old girl, for instance? Way to make friends and influence people, record companies.
The fact is that long before MP3s came along, record companies were making obscene profits and charging a ton of money for albums, first for records and cassettes, and later for CDs. When young people found a way around the record companies -- rightly or not -- they jumped. The record companies have to lay at least some of the blame for the market shift on their own greed.
Meanwhile, Napster changed everything, and then came iTunes, and still the record companies were paralyzed, trying to maintain their old model -- selling physical CDs. When they finally got in the game, they apparently weren't satisfied to let the market decide prices.
Instead, they were accused of fixing the prices to suit their needs. Specifically, as this Paidcontent.org article explains:
The litigation consolidated 28 lawsuits filed between 2005 and 2006 that argued the labels’ first online music projects illegally raised prices for digital music, because the labels colluded to create a price ‘floor’ that was around 70 cents per track. That was far higher than the 25 cents per track being charged by indie-music provider eMusic, at the time leading competitor to iTunes.
The two music services involved in the suit, PressPlay and MusicNet, don't even appear to exist anymore, but the litigation lives on.
That the Supreme Court wouldn't hear the case doesn't mean it's end-game for the record companies, however. They still have a shot at winning their case in the lower courts, although, as the Paidcontent article pointed out, Warner CEO Edgar Bronfman didn't help the record companies' case when he infamously suggested that the labels were opening a digital music store precisely to control pricing, “because we are concerned that the continuing devaluation of music will proceed unabated unless we do something about it."
Interestingly, last week, Reuters reported that a Paris court found Bronfman guilty of shady stock trades from the same time period. He is appealing that ruling.
In the end, whether they ultimately win or lose this case, I have to admit it's fun to see the record companies squirm a bit, and it seems like a bit of poetic justice that an industry that has had such disdain for the Internet (and for its own customers, for that matter) could end up paying a bit more for their own stupidity before all is said and done.
— Ron Miller is a freelance technology journalist, blogger, FierceContentManagement editor, and contributing editor at EContent magazine.
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