Did Music Labels Lie To The Justice Department On Digital Downloads?

from the new-evidence dept

Mon, Apr 24th 2006 2:47am — Mike Masnick

This story involves quite a bit of ancient (in internet terms) history, so we'll give a quick refresher for those who weren't around or don't remember. When the original Napster was being attacked by the recording industry, at least a few people within the industry recognized that they had to at least try to offer their own online music stores. The problem, though, was (of course) that they were scared to death of cannibalizing their own business, and so the two music label owned services, MusicNet and PressPlay, were dubbed MusicNot and PressPause for being about as useless as they could be -- which (not surprisingly) meant they got no business. Still, as they were being set up, the efforts caught the attention of the Justice Department, who wondered if the labels were colluding over prices. Eventually, with both services failing miserably, and others starting to get into the space, the DOJ dropped the investigation, claiming they hadn't turned up any evidence.

Meanwhile, following the fall of Napster, two of the record labels, Universal and EMI, both sued a third label, Bertelsmann. When Napster was originally taking off, Bertelsmann has a forward-thinking CEO who actually recognized that sharing could represent the future of music -- so he had the company invest in Napster (a move he was eventually fired for). This investment upset the other labels, as they wanted to have a united front against Napster -- and having one of their core members break ranks was a huge problem. To show their displeasure, Universal Music and EMI took the amazing step of suing Bertelsmann. The claims were really problematic, in suggesting that investors might be liable for the actions of a company. Taken to the logical extreme, it would mean that you could be responsible for the legal misdeeds of any company whose stock you owned. For obvious reasons, this seemed problematic -- but the case has continued.

Bringing these two stories together, is the fact that in that second (still ongoing) case, new evidence has been filed that suggests both EMI and Universal may have lied to the DOJ when both were being investigated concerning MusicNet and PressPlay. The evidence suggests that the two services were guaranteed to get the best prices for music and used consultants to share information that shouldn't have been shared (normally called collusion). These facts were apparently hidden from investigators. It's not clear what impact this would have either way -- but the judge in the case has ordered both labels to turn over documents concerning this hidden info, including stuff that would normally be protected by attorney-client privilege, under the belief that the labels used their attorneys for illegal purposes to hide info. Yes, everyone must be shocked to hear yet another story of record labels breaking the law -- just as our elected officials rush to give those labels more protection for their failing business models.

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13 Comments

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Axe, 24 Apr 2006 @ 3:54am

Obviously...
...that would be nice, but the reprocussions of the record companies losing such a battle would hardly put a dent in the lobbying money sent to Washington.

Who knows. Maybe Madonna will testify for them as well.
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Mr Rat, 24 Apr 2006 @ 4:08am

investors
the very concept of investors being sued for their part in prolonging Napster is of vital precidential importance... if the labels succeed in this action the future of innovation will be about as bleak as it can get, it is bad enough already that directors of companies such as Napster can be held personally liable - ie. their personal assets - in copyright litigation but its absolutely ridiculous to extend it to anyone that invests in a company. The doctrine of the separate legal entity (a company is its own person) - for the fiction that it is - is being warped to only apply when it suits record labels.
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Agonizing Fury, 24 Apr 2006 @ 4:45am

What? Music Labels Lie?
Next you'll be telling me that The RIAA is suing people without computers! and after confirming that fact, still trying to stongarm a settlement! Even more rediculous would be if they were to go as far as to sue dead people who never owned a computer

All joking aside, It seems to me it's time to get the RIAA and Music Labels to change their tune. They want to cry about how people breaking the law are costing them so much money, and in the end, they're breaking the law themselves! I think it's time to show them that breaking the law does cost money.
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Anonymous Coward, 24 Apr 2006 @ 6:05am

If the record companies produced material worth purchasing, then the record companies would make money. The record companies need to change their business model. I have not bought a CD in years. I only want to pay for music I want to listen to.
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Zeroth404, 24 Apr 2006 @ 6:20am

Off with the heads!

Ok everyone, lets all go downloade some songs just to further piss them off. woot!
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- AnarChaos, 24 Apr 2006 @ 8:27am
  
  Re: Downloading
  w00t!
  
  okay, just downloaded 4 different alblums and 7 discographies - total reatil value: aprrox US$784.35
  
  Take that RIAA!!
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Not a Rock Star, 24 Apr 2006 @ 8:44am

Record companies, the new Mafia.
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Angry Rivethead, 24 Apr 2006 @ 8:55am

Rediculous.
This whole thing is nuts. Yes, its wrong to download music you don't own. But my ongoing argument is that back in the days of palavista, napster, and random people with FTP sites with thier entire collections posted, the music industry had two competing DL sites: Jack and Sh*T and Jack left town. Now they have DL sites...however they cost the same or MORE than retail CDs and have foolish DRM. Point being is that, why should I buy DRM'd music when I can get a physical CD for the same price with no lame DRM and rip it myself?

I think a legitimate company needs to model thier online sales like allofmp3.com and target so most songs will be around $0.50, where they SHOULD be due to the SUBSTANTIALLY less overhead compared to retail CD sales.

The RIAA has and alway WILL have thier heads up thier 4th point of contact.
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Anonymous Coward, 24 Apr 2006 @ 11:24am

So how much do they spend on???
So how much does the RIAA and these music labels spend on high priced lawers and just how much do they get out of sueing people? My guess is the reason you get fined for $500k when the most you pirated was $100 of music cd's, is that the other +$400k goes to the damn lawyers...

Maybe they should drop the lawyers and the budget for them, and use it to come up with services worth using!
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- RIAA Spokesperson, 24 Apr 2006 @ 1:06pm
  
  Re: So how much do they spend on???
  "Maybe they should drop the lawyers and the budget for them, and use it to come up with services worth using!"
  
  Our lawyers are an important part of our new business model. We only put out so many products worth purchasing (if any) so the only way for us to make money anymore is by suing fans of the artists who download music files. Without our lawyers and mob-tactics we couldn't get away with calling it piracy because its obviously fair use. The days of "make money with quality products and services" are long gone. Lawyers and lawsuits are where its at!
  [ link to this | view in chronology ]
  - Justin, 24 Apr 2006 @ 3:30pm
    
    Re: Re: So how much do they spend on???
    Our lawyers are an important part of our new business model. We only put out so many products worth purchasing (if any) so the only way for us to make money anymore is by suing fans of the artists who download music files. Without our lawyers and mob-tactics we couldn't get away with calling it piracy because its obviously fair use. The days of "make money with quality products and services" are long gone. Lawyers and lawsuits are where its at!
    
    And boy is it ever lucrative. You see, gulity or not, people facing our lawsuits will always fork over 5K to settle rather than risk fighting us in court. The DMCA unlocked this magic formula, terrorism is helping us strengthen it.
    [ link to this | view in chronology ]
  - Justin, 24 Apr 2006 @ 3:31pm
    
    Re: Re: So how much do they spend on???
    Our lawyers are an important part of our new business model. We only put out so many products worth purchasing (if any) so the only way for us to make money anymore is by suing fans of the artists who download music files. Without our lawyers and mob-tactics we couldn't get away with calling it piracy because its obviously fair use. The days of "make money with quality products and services" are long gone. Lawyers and lawsuits are where its at!
    
    And boy is it ever lucrative. You see, gulity or not, people facing our lawsuits will always fork over 5K to settle rather than risk fighting us in court. The DMCA unlocked this magic formula, terrorism is helping us strengthen it.
    [ link to this | view in chronology ]
  - Justin, 24 Apr 2006 @ 3:31pm
    
    Re: Re: So how much do they spend on???
    Our lawyers are an important part of our new business model. We only put out so many products worth purchasing (if any) so the only way for us to make money anymore is by suing fans of the artists who download music files. Without our lawyers and mob-tactics we couldn't get away with calling it piracy because its obviously fair use. The days of "make money with quality products and services" are long gone. Lawyers and lawsuits are where its at!
    
    And boy is it ever lucrative. You see, gulity or not, people facing our lawsuits will always fork over 5K to settle rather than risk fighting us in court. The DMCA unlocked this magic formula, terrorism is helping us strengthen it.
    [ link to this | view in chronology ]