digital music/video
03/03/2006, 9:25am, EST
Friday, March 3rd
Probe examines digital music pricing
A new federal probe is looking into fixed music pricing (subscription required), following a similar investigation by New York State Attourney General Eliot Spitzer. The Wall Street Journal reports that the Justice Department has served the four major music companies with subpoenas stemming from an investigation of online music pricing, which could include "so-called most-favored-nation clauses used by music companies in contracts with certain kinds of online music services" as well as "vertical collusion" between retailers such as Apple and the music companies, according to the report. The Justice Department confirmed that antitrust enforcers are "looking into the possibility of anticompetitve practices in the music-download industry," while the report says that executives have already been depositioned in the state of New York investigation.
All four major music labels have received "civil investigative demands," which were sent out on Monday, according to The WSJ. 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.
Filed under: industry
Other story tags: digital music/video
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Soon we're going to see songs "starting at" 99 cents. I don't want to go there.
How much they make is immaterial to how much they want to charge. If Sony Music wants to charge $30 for a CD, that's perfectly legal and allowed. Of course, they'll sell very few CDs, but that's not the point.
The investgation on price fixing is both about collusion (all the labels getting together and deciding "We're going to charge $30 for a CD"), forcing retailers to charge specific prices and nothing lower, and, in this case, signing agreements that say if a label makes a deal with Napster, then makes a better deal with Buy.com, then the contract with Napster gets updated to the better terms of the buy.com contract (better here, of course, means better for the labels, i.e. more money to them).