U.S. DOJ opens probe into online music pricing at major labels

“The U.S. Department of Justice has opened an investigation into online music pricing at the world’s major music labels, sources familiar with the matter said on Thursday,” Sue Zeidler reports for Reuters. “The DOJ probe closely tracks a similar investigation by New York State Attorney General Eliot Spitzer into the pricing of digital music downloads, the sources said. One music industry source said some subpoenas may have been issued already in connection with the probe, while other labels had been tipped off that subpoenas would likely be coming in the next few days… The major record labels are Warner Music Group, EMI Group Plc, Vivendi Universal’s Universal Music Group and Sony BMG, a joint venture of Sony Corp. and Bertelsmann AG.”

“Apple Computer Inc.’s iTunes music store dominates the industry, charging 99 cents for each of the vast majority of its songs, but some music labels have indicated they want to institute variable pricing,” Zeidler reports. “The two music industry sources on Thursday said the DOJ’s probe appeared to be focused on… whether the labels colluded to set wholesale pricing for song downloads. The investigation also could be related to licensing renegotiations with Apple, maker of the wildly popular iPod digital music player, for its iTunes store, industry sources have said. Last September, Apple Chief Executive Steve Jobs called the music industry “greedy” for considering hiking digital download prices and warned the move could drive iPod users to piracy.”

Full article here.

[Thanks to MacDailyNews Reader “James” for the heads up. If you’d like to submit a link, please click “contact” above to submit information.]

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Related articles:
New York State antitrust probe of music labels could benefit Apple, keep 99-cents per song price tag – January 04, 2006
New York Attorney General Spitzer probes digital download wholesale pricing – December 23, 2005

12 Comments

  1. Two things the record co’s don’t admit to.

    1) That they know people will justify ripping off music because the labels are ripping off the artists. They are less likely to want to subsidize shady record execs cocaine and hooker habits than they are giving their money to the artists.

    2) Record Co’s whine and scream about all the money they are “losing”. To calculate these losses they simply look at all the illegal downloads and translate those numbers into lost sales. Fact is, most people wouldn’t buy a large amount of the stuff they get for free. Doesn’t justify their behavior stealing the music, but it certainly makes it look like the record co’s are losing more money than they would have made otherwise.

  2. can anyone show which came first, dropping CD sales and downloads (illegal) I think that the numbers will show that CD sales were already dropping before P2P took off. That would show that public disenchantment came first.

  3. Trebor,
    If you look at the statistics, CD sales were at their highest back in 2000. And guess what was big then? Napster. Napster was actually helping the record industry, but they would never admit it. Once Napster was killed off, CD sales started dropping.

    I probably downloaded about 100 songs from Napster during its heyday and I wound up buying about 10 CD’s based on music that I had downloaded. Thats 10 CD’s that I would have never bought before. Not too mention the extra concerts I went to because I had heard the band’s music using Napster where I would have never heard their music on the radio.

    Remember, Napster was good for about 95% of the artists out there. It wasn’t good for Brittany Spears, InSync, Back Street Boys or Metallica.

  4. What hubris to suggest that loss of profit is due solely to illegal downloads. I could make the argument that crappy music is the primary factor that led to decrease in sales.

    But, I could be wrong. Maybe Department of Justice is the world’s expert in “judging” the artistic quality of music. DOJ can develop an immutable maximum price structure for each and every song and album sold in United States.

  5. Unlikely to hear that too often on this thread, but it is about as justified as all the anti-Bush whining we heard a while back to the effect that the DOJ was biased in favor of the recording industry, M$, etc.
    Me, I couldn’t care less about this suit. Apple can already has ’em by the b*lls without the help of the federal government.
    Kate

  6. Apple doesn’t have the labels by the b*lls, or anything else.

    Legal downloads (all together) don’t amount to more than 7-8% of total music sales. Apple only has about 80% of that 7-8%.

    Roughly estimating, Apple accounts for about 6.5% of music sales, in the U.S.

    The labels (together) can put the iTunes store (along with all the iTunes store wannabes) out of business, by opening their own online music download stores. Obviously, for this to work, their music will have to be priced appropriately – say 50 to 99¢ per track, and their music will have to be compatible with all existing players – meaning DRM-less, mp3 files.

    The labels are the perfect example of the moral of the story of the goose that laid golden eggs.

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