Another Day, Another Lawsuit

SAN FRANCISCO (02/02/2000) - Did it seem like too many days had passed since someone in the music industry filed a Net-related lawsuit? If so, everyone can relax. The National Association of Recording Merchandisers got in the groove on Monday with a lawsuit against Sony Music Entertainment. The music retailers want to bar Sony from tucking hyperlinks to the company's online music stores into its enhanced CDs.

As more CDs become multimedia productions, NARM has begun to fear that its members - big retailers like Tower Records and Sam Goody - will be elbowed out of the way by links to the music companies' own sites. The association called the hyperlinks a violation of the Sherman Antitrust Act and asked for an injunction. Not all of Sony's music releases have the features, NARM President Pamela Horovitz told the Wall Street Journal. But the releases with the links include a CD by Ricky Martin. "No retailer wants to be without Ricky Martin," she said. Well, hey, we guess not.

NARM said Sony's size made it the group's first target. But CDs aren't all Sony is planning to peddle. Reuters reported that the company would start hawking consumer electronics products online in Japan through Sony Style.com. With a first-year sales target of $93.25 million, Sony isn't planning to tiptoe.

According to Reuters, the move makes Sony the first manufacturer in Japan to sell a range of consumer electronics directly online. News of the maneuver sent shock waves through Japan's dealer networks, Reuters reported, but their response will sound strange to followers of U.S. corporate practices:

"Sony's online sales target is quite large," Hiroshi Sato, president of major Tokyo-based merchandiser Sato Musen and spokesman for the Nippon Electric Big-Stores Association, told Reuters. "But we hope to react calmly until we are fully informed by Sony of its pricing policy and products to be handled." Yeah, yeah. But what do your lawyers say?

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