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NY State Attorney General Subpoenas Music Labels Over Digital Music Pricing

Warner Music, Sony BMG, EMI and Universal Music have been sent subpoenas by the office of New York state attorney general Eliot Spitzer, who is looking into whether or not the companies broke any laws when it comes to the wholesale pricing of digital music. Apple has experienced friction with the music industry in recent months as some music labels have called for more flexible pricing of iTunes Music Store selections.

Aline van Duyn, writing for MarketWatch, reported on Monday that Warner and Sony have confirmed receiving the subpoenas but EMI and Universal representatives were unavailable for comment. A spokesman for Mr. Spitzer told her: "It is too early to call it an investigation. It is a preliminary enquiry for information."

An anonymous music industry executive speculated: "It is hard to see how there could be collusion in [wholesale pricing], although perhaps Mr. Spitzer is looking at the calls from a number of companies to change the pricing model going forward."

As Ms. Van Duyn pointed out in her article, Apple in August launched an iTunes Music Store in Japan without offerings from Sony BMG because of the pricing issue, and in September, Apple CEO Steve Jobs labeled the industry "greedy" for pushing to change music pricing.

Mr. Spitzer recently looked into a resurgence of "payola" in the music industry, with music labels accused of offering lavish gifts to key radio station personnel so that their songs would get played. Warner and Sony paid US$5 million and $10 million, respectively, to settle their cases in that investigation.

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