The suit alleges that Universal, Sony, Warner and EMI have been conspiring to fix prices for a decade. The claims were dismissed by a district court, but this decision was overturned a year ago on the grounds that the plaintiffs had presented enough evidence to allow a case to proceed.
The record labels appealed, but the latest ruling means that the suit can now go ahead.
The case was brought by Kevin Starr, and alleges that the labels conspired to fix a minimum price of $0.70 per song through subscription services.
These were Pressplay – a joint venture between Warner and Sony – and MusicNet, offered by Warner, EMI and Bertelsmann. Both services launched in 2001.
But its alleged that the services’ terms were unreasonably restrictive, with costomers barred from transferring songs to their portable music devices. It also says prices were fixed too high, with a combined subscription of $240 per year.
Meanwhile, the Canadian arms of the same four labels have agreed to pay songwriters and music publishers $47.5 million in damages for copyright infringement and overdue royalties.
Led by jazz musician Chet Baker, the class action lawsuit alleged that the record companies knowingly sold more than 300,000 songs either without a valid license or without paying royalties.