Four big music labels namely, Sony, Warner Music, EMI, and a unit of Vivendi SA, the company behind Universal Music Group have been sued for infringing works of thousands of artists.
An antitrust case has been issued on the companies accusing them of making an agreement with each other not to lower the price of each tune than 70 cents even though some of their rivals were selling music on the Internet at a much lower price.
Although the companies made an appeal to the U.S. Supreme Court to review the ruling, the justices rejected the appeal without any comment. However, the companies agreed to pay a collective $45 million to settle the copyright infringement claims.
But the labels refused to acknowledge their engagements stating that the payout is not an admission of guilt. Instead, the companies apparently stated that , The settlement is a compromise of disputed claims and is not an admission of liability or wrongdoing by the record labels.
The complaint also alleged that two services, Musicnet and Pressplay, started in 2001, charged buyers unreasonable rates.
Music infringements have caused grave problems across the globe thereby harming the intellectual property owner, who loses the revenue that would have been gained had the legitimate recording been purchased.
In fact, piracy of recorded music leads to loss in revenue and profits, thereby, affecting the country's economy as a whole.
A study conducted by the Institute of Policy Innovation (IPI) states that recorded music piracy costs American workers significant losses in jobs and earnings, and government substantial lost tax revenue.
As per the analysis by IPI, music infringement has the following consequences:
- As a consequence of global and U.S.-based piracy of sound recordings, the U.S. economy loses $12.5 billion in total output annually.
- As a result of sound recording piracy, the U.S. economy loses 71,060 jobs. Of this amount, 26,860 jobs would have been added in the sound recording industry or in downstream retail industries, while 44,200 jobs would have been added in other U.S. industries.
- Because of sound recording piracy, U.S. workers lose $2.7 billion in earnings annually. Of this total, $1.1 billion would have been earned by workers in the sound recording industry or in downstream retail industries while $1.6 billion would have been earned by workers in other U.S. industries.
- As a consequence of piracy, U.S. federal, state and local governments lose a minimum of $422 million in tax revenues annually. Of this amount, $291 million represents lost personal income taxes while $131 million is lost corporate income and production taxes.
The situation becomes all the more worse when major labels like Sony and Warner Music take part in the process. Over the years, record companies have used tracks from musicians who have not signed with them. While their tracks are kept on a pending list, the music labels have profited immensely from them without having to pay the artists any royalties.
Although the penalty of $45 million has raised the hopes of artists across the globe, much remains to be seen whether any permanent legal standards can be achieved to prevent further infringement situations.