Music Retailers Sue Sony Music To Halt Pirating Away Customers
The National Association of Recording Merchandisers (NARM) has announced that it is filing a lawsuit on behalf of its retail members against Sony Music Entertainment, and its parent, Sony Corporation of America, in order to halt what it believes to be the illegal practice of forcing retailers to direct its customers to Sony's on-line stores. The lawsuit, filed in the US District Court for the District of Columbia, charges that Sony is illegally using its power in the sale of music to force retailers to carry compact discs that contain not only music but also software (hyperlinks), and promotional inserts directing consumers to competing retail locations owned or operated by Sony. The complaint also alleges that Sony engaged in copyright misuse, illegal price discrimination by favoring its own record club and on-line music retailer (CDNow/Columbia House) over other retailers, unfair competition, and false advertising. ""Retailers have been complaining to Sony since early last year about the practice of using hyperlinks on CD's to divert retail customers to its own retail sites, but the complaints have fallen on deaf ears,"" said Pamela Horovitz, President of NARM. It's not the hyperlinks per se that have retailers angry since many retailers enhance their own web sites through negotiated hyperlinks to other sites. ""We object to not having the option of buying CDs without these hyperlinks,"" said David Lang, President of Compact Disc World. ""The links come embedded in selected enhanced CD's and their presence is never even communicated to retailers,"" Lang added. ""I'm angry that after all the effort Tower puts into helping Sony artists, these links are being used to drive sales at Sony stores instead of at our stores,"" notes Stan Goman, Executive Vice President of Tower Records and Chairman of NARM's Board of Directors. ""Litigation is never a first choice,"" said Gil Wachsman, Vice-Chairman of The Musicland Group and a member of NARM's Board of Directors. ""But online or offline, a business model based on pirating customers is simply not fair. It seems unlikely that the marketplace is well positioned to resolve this dispute without significant disruption to current projects and relationships. Therefore NARM is turning to the courts as the most logical place to iron out this disagreement."" About NARM NARM is the not-for-profit trade association which represents over 1000 member companies engaged in music retailing, wholesaling and distribution.