Antitrust Time (Again)

An antitrust lawsuit claiming the major record labels illegally planned to charge high prices for online music received a second chance as a federal appeals court ruled it could proceed.

The lawsuit, which was originally filed on behalf of music consumers in New York in 2007 and combined 28 similar suits filed from December 2005 through July 2006, accuses the labels of scheming to fix prices and terms for selling music online.

But a lower court judge dismissed the lawsuit in October 2008. On Jan. 13, the 2nd U.S. Circuit Court of Appeals in Manhattan ruled that the lawsuit could proceed because alleged facts put forth by the plaintiffs supported their claims.

Defendants are the usual subjects – Universal Music Group, Warner Music Group, EMI Music North America and Sony BMG Music Entertainment.

According to the lawsuits, the labels allegedly conspired to charge at least 70 cents a song for downloads although their costs were much less than placing music in record stores. The suit also accuses the record companies of agreeing to an approximate 70-cent wholesale price floor when other download services began offering music at a cheaper rate.

The lawsuits also claimed the record companies signed distribution agreements in joint ventures allowing them to communicate among themselves about matters such as pricing, terms and use restrictions.

In delivering its ruling, the appeals court noted that eMusic charges 25 cents for songs that come with no restrictions and pointed out that the major labels have refused to do business with the subscription service, which is second in popularity only to iTunes.
The appeals court also said the New York State Attorney General is well under way to proving the alleged price fixing, and that the issue is the subject of two separate investigations by the U.S. Department of Justice.

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eMusic Loves WMG

The original indie online music service moved further into the corporate realm as eMusic announced it will stock Warner Music Group tunes in its digital inventory.

Warner isn’t the first major label to enter the eMusic fold. In 2009 Sony Music agreed to provide catalog recordings to the subscription service.

The WMG deal covers recordings from Warner Brothers, Atlantic and Rhino as well as indie imprints distributed by the label.

“As a leader in the music industry’s transition to a predominantly digital music business, we have worked hard to encourage and support innovative partners and creative business models that offer our artists unique ways to reach their fans,” said Stephen Bryan, WMG Senior VP of digital strategy and business development. “We are pleased to be making our music available to eMusic’s passionate membership.”

According to published reports, eMusic is also talking with labels about streaming music to its subscribers.

EMusic’s business plan is simple. Customers pay a monthly subscription fee to download a predetermined number of tracks. The higher the subscription rate, the more monthly downloads. Since all tracks are ripped as MP3s and are not copy-protected, music downloaded from eMusic will play on any device.

Evidently, eMusic began loading up on WMG product almost as soon as the ink dried on the contract. A quick perusal of the service’s forums on the day of the announcement showed fans remarking about new additions, such as a Paul Simon box set, Ramones CDs and the recent Flaming Lips release.

Or, as one customer wrote:

“I know we’re not supposed to like major labels, but screw it. This is AWESOME!”

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‘We’re All Fans’

The Recording Academy has joined with ad agency TBWAChiatDay Los Angeles to launch an advertising campaign for the upcoming Jan. 31 Grammy Awards intended to highlight the fan experience.

Called “We’re All Fans,” the project includes a Web site – WereAllFans.com – where content from major social media Web sites is drawn together in a digital tribute to specific artists.

For example, selecting an artist or band from a list at WereAllFans.com results in a colorful montage with content from YouTube, Twitter, Flickr and Facebook postings. Click on any individual shape within the montage and the content takes center screen.

Because of the user-generated sources, just about anything can happen.

You might end up with a photo montage depicting Taylor Swift in concert, fans lip-synching to Beyoncé songs or photos of the Dave Matthews Band in concert. Seeing a guy singing The Black Eyed Peas’ “My Humps” while driving down the street is kind of surreal, especially since the POV is from a camera placed on the driver’s dashboard.

In fact, the entire Web site is kind of like falling down the rabbit hole and emerging in a kind of cosmic wonderland where you never know what you’ll see next. Or, for that matter, not always understand just what you’re seeing.

But that’s what watching user-generated content is all about – seeing the same subject from different viewpoints. While you may be merely humming your favorite song, someone else might have taken the same tune and turned it into a Lego masterpiece. Like opinions, everyone has a different take on the same subject.

The user-generated content on WereAllFans.com is constantly refreshed, resulting in a “living” portrait of music artists. While this keeps people coming back, it does make it slightly difficult for those returning to show a specific chunk of content to others.

Along with drawing content from social media Web sites, WereAllFans.com also gives users the ability to upload and incorporate their own images with the user-generated content to create a kind of virtual portrait of themselves and the music makers they love.
In addition to the Web site, the Recording Academy and TBWAChiatDay Los Angeles will launch TV, print and out-of-home ads that will also include social media content.

TV advertisements will include Beyoncé, Lady Gaga and LL Cool J, while print and out-of-home ads will feature album of the year nominees as well as noms from other categories.

And it wouldn’t be a music campaign without T-shirts. Men’s designer John Varvatos has created a series of “We’re All Fans” T-shirts featuring this year’s album of the year nominees. Priced at $45, the shirts will be available in Varvatos’ own line of stores as well as through Bloomingdale’s.

“Fans have always been the driving force of music, but with the rise of social media they are now more powerful, more connected and more influential than ever,” TBWAChiatDayLos Angeles executive creative director Patrick O’Neill said.

“We wanted to tap into what music fans are already doing: sharing, tweeting, singing, about their favorite song/musician/lyric every second, every day, all over the Web. The ‘We’re All Fans’ Grammy Awards campaign harnesses this enthusiasm and puts the fans at the center of the idea. And we all know, music is nothing without the fans.”