U.S. DOJ looks into possible price collusion among music labels in music download business

“Last week America’s Department of Justice opened an inquiry into ‘the possibility of anti-competitive practices in the music-download industry.’ The department’s action is the second investigation into possible price collusion in music-downloads in America: in December 2005 Eliot Spitzer, New York’s crusading attorney-general, announced a similar inquiry. But nearly nothing is known about exactly what practices prompted the investigations,” The Economist reports. “What has probably happened is that Mr Spitzer and the Department of Justice have been dragged into a massive public row between the music industry and Apple, a computer-maker which has 83% of the market for music downloads through its iPod music players and iTunes download service. The music majors want Apple to stop charging a fixed price of 99 cents per track and $9.99 for an album. They want variable pricing, so that new releases can be priced higher than older stuff.”

“The music companies will soon have a chance to get their way,” The Economist reports. “Their contracts with Apple are up for renewal from April onwards. They will presumably tell Steve Jobs, Apple’s chief executive, that he cannot have their music unless he pays them more than the 65-75 cents they get now. That could force Apple to raise its retail price. The music firms’ strongest position, of course, would be to present a united front. That three of the big four—Sony BMG, Warner Music and EMI—are all saying roughly the same thing about Apple’s pricing has aroused the suspicion that they may be colluding, says a Washington lobbyist. The music labels reckon that the Digital Media Association, which represents Apple, among others, has complained to the Department of Justice.”

Full article here.

[Thanks to MacDailyNews Reader “David G.” for the heads up.]

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EMI chief: Apple’s Steve Jobs may alter iTunes pricing model within the next 12 months [UPDATED] – November 16, 2005
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35 Comments

  1. That’s gratitude for ya! Greedy bastards… Jobs was their saving grace and now they want to strong arm him and rip us off in the process. If they would just spend as much time and money on cultivating artist’s careers they’d have better products to sell. Instead they put all thier eggs into one, maybe two hit singles off an album, the rest being filler. The companies know that and want to charge more for those hit singles. If they just made better music they’d make more money!

  2. If the big music labels force Apple to renegotiate its pricing structure perhaps
    some of the labels big acts will consider renegotiating their own relationship with
    the big labels as well….or maybe negotiate with an independent.
    I can’t say I really know how the money is allocated after the bills are paid but
    how will the extra income from more recent higher priced recordings be distributed?
    Will the artists see more of it or will most of it end up in the execs pockets?
    Will the argument that was made recently become operative? …..that is an imposed
    pricing differential be deliberately used to hurt an artist if the label desired or to force
    the artist to negotiate a contract in fear? Hasn’t the pricing structure so far been a boon
    to the labels reducing piracy and encouraging purchases that would never otherwise
    have been made?
    Personally, I think the labels should push for two things: liner notes
    and a higher bitrate. Otherwise, leave the model alone.

  3. The article says that Jobs’ greedy charge is unfair because the labels have to allow selling singles instead of albums, and because people fill their iPods from CDs. The logic doesn’t hold fully.

    If people are filling iPods from CDs, then the labels are still making money off of CDs. If people are buying singles online instead of albums, then the labels are getting 70 cents or so in revenue per single vs. a few dollars per CD album. But factor in that some percentage would wind up not buying the album at all (too lazy or too annoyed to go to the store) and some percentage would just get it through piracy (reasoning that they wouldn’t buy it otherwise). And factor in that the label can sell many more songs digitally from their back catalog on iTunes then they would if they had to make CDs and stock music stores.

  4. I gotta say the RSS feed with Safari is great. It provides the number of new MDN stories at a glance.

    Interesting, though, that the deal with the music labels end in April. I feel like this is the cuban missile crisis with such brinkmanship. Again, the labels can’t go anywhere and lose out on all the profits. But the apple stock will plunge if the store is shut down. There’s a lot of middle ground, though the 99¢ song price should be a lock. Maybe Apple could offer 5% more song share to the labels.

  5. “..the music business has always been disreputable: its artists get arrested, music charts are rigged and two leading companies recently got caught bribing radio stations. Now it seems that big music companies may also be illegally conspiring to fix prices on the internet. Last week America’s Department of Justice opened an inquiry into “the possibility of anti-competitive practices in the music-download industry.”…

    Maybe its about time the DOJ did its job, unless there are people within the DOJ enjoying their payoffs.

  6. The DoJ has been a lap-dog instead of a watchdog for a very long time now. WHat we need is an Attorney General like NY AG Eliot Spitzer. While the US DoJ was looking the other way or whatever they were doing instead of their job, he used the NY AG’s Office against all kinds of corruption to the benefit of all Americans. By virtue of location, he had jurisdiction in cases that other state AG’s could only watch from the sidelines.

    Read the full wiki. BTW- he is running for NY Governor. Someday, maybe President.

  7. It figures people finally stop downloading pirated music thanks to apple and now the greedy music industry wants to go and shake things up again. Actually its really simple if the music companys get really greedy and start charging prices that we as the consumer don’t like then its back to pirated music. Don’t they realize this. I actually started to feel like I was helping out by buying so much music from Itunes. If it starts getting to prices higher than 9.99 then I am done buying music online, especially since its not even cd quality.

  8. It figures people finally stop downloading pirated music thanks to apple and now the greedy music industry wants to go and shake things up again. Actually its really simple if the music companys get really greedy and start charging prices that we as the consumer don’t like then its back to pirated music. Don’t they realize this. I actually started to feel like I was helping out by buying so much music from Itunes. If it starts getting to prices higher than 9.99 then I am done buying music online, especially since its not even cd quality.

  9. It figures people finally stop downloading pirated music thanks to apple and now the greedy music industry wants to go and shake things up again. Actually its really simple if the music companys get really greedy and start charging prices that we as the consumer don’t like then its back to pirated music. Don’t they realize this. I actually started to feel like I was helping out by buying so much music from Itunes. If it starts getting to prices higher than 9.99 then I am done buying music online, especially since its not even cd quality.

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