May 5, 2006 6:39 PM PDT
Warner Music faces 14 lawsuits over download fees
In documents filed with the Securities and Exchange Commission, Warner Music said the company has been named in 14 class-action lawsuits, most of which allege a "conspiracy among record companies to fix prices for downloads."
"The company intends to defend against these lawsuits vigorously," Warner Music said in its quarterly statement filed Friday.
The accusations come three months after Eliott Spitzer, New York's attorney general, began investigating whether several of the big music companies agreed to fix download prices. Such an agreement would violate antitrust laws.
Warner Music reported in its filing that it expects the 14 lawsuits to be consolidated into one.
Meanwhile, sales from digital-music downloads in the quarter ended March 31, were $90 million, equaling 11 percent of the company's total revenue and almost tripling sales from the same period last year.
Digital technology and the Internet are serving to overhaul the music industry, and big music companies are fighting to adapt. The illegal file sharing of the late 1990s was the first challenge, and now music labels must contend with the rise of the iPod, Apple Computer's wildly popular digital music player, and Apple's music download site, iTunes.
Large numbers of consumers have begun downloading music from the Web instead of buying CDs at their neighborhood music store. This has served to loosen the stranglehold the music industry once held on music distribution.
For the quarter, Warner suffered a net loss of $7 million, or 5 cents a share, compared with a profit in the year-ago period of $4 million, according to the company's SEC filing. (Shelby Bonnie, the CEO of News.com publisher CNET Networks, is a member of the Warner Music Group board of directors.)
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