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Feds Probe Online Music Pricing
Friday, March 3rd, 2006 at 8:25 AM - by Staff
The U.S. Justice Department is in the process of serving subpoenas to Universal Music Group, Sony BMG Music Entertainment, Warner Music Group and EMI Group as a part of an investigation into online music pricing tactics. According to the Los Angeles Times, the Justice Department is conducting an investigation similar to one started by New York Attorney General Eliot Spitzer last year.
The probe is investigating the legality of clauses in music contracts with the iTunes Music Store (iTMS) and other online digital music services that guarantee competing labels get the same prices for their music.
Some critics of the tactic fear that the clauses are creating an artificial price for music and are undermining the legitimate market for digital music downloads. They also are concerned that the clauses will force companies like Apple to raise its standard US$0.99 per song fees.
Music executives aren't concerned, however, noting that this is standard practice in other industries.
Despite the fact that Apple has stuck to its guns on song pricing, the contract clauses do raise the possibility that the music labels could try to force an across-the-board price hike at the iTMS.
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