Warner Music Faces 14 Price Fixing Lawsuits

Published: 2006-05-08
After turning down $4.2 billion from UK-based record company EMI, Warner Music has been named in 14 class action suits for allegedly playing a part in fixing prices of digital music.

The lawsuits come after a pair of investigations, one by the Attorney General of the State of New York and one by the Department of Justice, looking into price-fixing of digital music by the largest record companies. The alleged price-fixing comes in two forms.

The first is the price of the typical online song purchase for $0.99. No one is quite sure where that number came from, or whether it reflects the true cost of getting the music to a customer. Secondly if you 'rent' your music, by paying a monthly fee to a music distributor, record companies apparently have an agreement dictating that any deal given to one record company must be given to all, reducing the potential for fair competition.

Now 14 lawsuits have found their way to Warner Music Group, which Warner says all cover "the same general subject matter." They suspect the suits will be consolidated at some point.

The news comes just as Warner announced a growth in digital revenue of 157 per cent, up from last quarter to become 11 per cent of the company's total revenue.

Writer: Michelle Garcia



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