A proposed order in a file-sharing lawsuit would force the recording industry to divulge closely-held details of their wholesale pricing arrangements.
UMG v. Lindor is one of the highest-profile file-sharing cases in the news today, due in no small part to the efforts of Marie Lindor's attorney Ray Beckerman, who maintains the Recording Industry vs The People Blog along with Ty Rogers.
Lindor, like hundreds of others, was sued by the RIAA after a John Doe lawsuit resulted in her ISP turning over information to the record labels tying an IP address allegedly used for illegal downloading to her. Lindor has mounted a vigorous defense against the charges rather than settling with the RIAA as a large number of other defendants have.
The record labels are strenuously opposing Lindor's attempts to gain access to the pricing information. They have argued that it shouldn't be divulged, and if it is, it should only be done so under a protective order that would keep the data highly confidential. The RIAA regards the wholesale price per song—widely believed to be about 70¢ per track—as a trade secret.
The pricing data really may not be all that secret. Late in 2005, New York Attorney General Eliot Spitzer launched an investigation into price fixing by the record labels, alleging collusion between the major labels in their dealings with the online music industry. At issue are "most favored nation" clauses that require a distributor to guarantee a record label the best possible rate. Here's how it works: if Apple signs a deal with UMG for X¢ per track and later agrees to pay Sony BMG Y¢ per track, then Apple will also have to pay UMG Y¢ track, assuming X < Y.
Beckerman argues in a letter to the judge that the only reason the labels want to keep this information confidential is to "serve their strategic objectives for other cases," which he says does not rise to the legal threshold necessary for a protective order. The proposed order would force the labels to turn over contracts with their 12 largest customers. Most details—such as the identities of the parties—would be kept confidential, but pricing information and volume would not.
The pricing information could be crucial for Lindor as she makes the argument that the damages sought by the RIAA are excessive. In this and other cases, the labels are seeking statutory damages of $750 per song shared. Lindor argues that the actual damages suffered by the RIAA are in line with the wholesale price per song, and if that is indeed the case, damages should be capped accordingly—between $2.80 and $7.00 per song—if infringement is proven.
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