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Music industry faces pricing probe

updated 07:40 pm EST, Sat December 24, 2005

Online music probe

As sales of digital music continue to rise, the music industry faces a new probe on the price of digital music. On Saturday, The Wall Street Journal reported that the New York State Attorney General "has subpoenaed at least three of the four global music companies as part of what one company described as 'an industry-wide investigation' into ." Sony BMG, Warner Music Group, and Vivendi Universal have all received subpoenas. The reports notes that the labels have been pressuring Apple to change its 99-cent-per-song pricing: "But in a battle that has become increasingly public over the past several months, Apple and the music companies have fought over pricing. The music companies want to move beyond the flat-price model pioneered by Apple, arguing that new hit songs should cost more than 99 cents, while perhaps older material might cost less. Apple Chief Executive Steve Jobs has been just as vocal in insisting that prices need to remain at a straight 99 cents to keep building the digital marketplace."

The report says that the state of New York has already settled with some of labels on a separate collusion issue, following a year-long investigation into whether the music companies tried to influence what music radio stations play. "Earlier this year Sony BMG settled the investigation for $10 million and admitted wrongdoing; Warner, which is about half the size of Sony BMG, settled for $5 million."

According to Nielsen SoundScan, Apple along with other online stores have sold more than 315 million tracks, which is more than double the 127 million that were sold in 2004.

by MacNN Staff



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