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eMusic Promises Lawsuits If Apple Offers


NEW YORK (Hypebot) – Apple is in discussions to offer unlimited access to iTunes with the purchase of a premium iPod or other device. Apple is reportedly promising labels a $20 one time payment for every unit sold. A similar "Comes With Music" plan by Nokia reportedly offers labels $80.

But if Apple's controversial plan goes forward, eMusic CEO David Packman is promising a nasty lawsuit. "They're basically saying, let's give a piece of every iPod sale to the record labels in exchange for bundling in all the music you can eat with every iPod," says Pakman. "That's classic Sherman Antitrust Act behavior. It's called tying, and it's where a company with a monopoly position in one market uses that monopoly position unfairly to compete in another."

LA antitrust lawyer Maxwell Blecher agrees that Apple could face legal challenges if others are prevented from distributing songs on a "new" iPod. "Apple is going to argue that they compete with lots of other similar devices," Blecher said. "You have to look at whether there are exclusionary aspects or conduct. In that debate lays the outcome of any lawsuit."


While Packman is correct that the proposal is another attempt by Apple to close its eco-system, it IS ironic that the CEO of eMusic would be the first to promise a legal challenge. After all, another effect of Apple's plan would be drastically lower payouts to labels and artists and eMusic has usually led the charge for lower prices. In fact, the typical eMusic transaction nets payouts of around 30 cents to labels; less than half that paid by iTunes.