Record Store Trade Group Sues Sony

The National Association of Recording Merchandisers (NARM), the tradegroup representing American record store owners and distributors, has sued Sony for what it describes as unfair competition.

Among the country stars who record for labels owned by Tokyo-based Sony are the Dixie Chicks, Patty Loveless, Joe Diffie, Mary Chapin Carpenter, Montgomery Gentry, Ty Herndon and Collin Raye.

How or if the outcome of this suit will affect consumers is not clear. However, it is clear that as more consumers buy their recorded music online, the “bricks and mortar” record stores are fighting to maintain their share of the market. Indeed, as the suit points out, many are establishing their own online divisions.

Specifically, the suit alleges that Sony includes within its enhanced CDs and packaging a variety of devices — from printed matter to Internet links — that lead record buyers to Sony’s own record club and online record store. Sony and Time Warner Entertainment are majority owners of the Columbia House record club and CDNow, the online record retailer.

NARM says its members cannot stop Sony’s practices simply by refusing to stock its labels since too many bestselling artists record for the giant company.

A side effect of Sony’s practices, the suit argues, is that record stores will have to charge more or pay less for albums from smaller labels to compensate for their loss of profits from the major record companies.

In addition, the suit continues, Sony unfairly competes with record stores by selling its albums cheaper to its own outlets and paying to promote these outlets.

The suit asks the court to stop Sony from engaging in the “unlawful and unfair” conduct charged in the complaint.

NARM filed its complaint Jan. 31, in the United District Court for the District of Columbia. A complete copy of the complaint is available at www.NARM.com.