Justice Dept. Launches Digital Music Pricing Probe, Following Spitzer's Lead

Authored by Mark Hefflinger on March 3, 2006 - 7:16am.

Washington - Likely spurred by a similar probe launched by New York Attorney General Eliot Spitzer, the U.S. Justice Department announced that it has opened an investigation into possible collusion between the major record labels on digital music pricing. "The Antitrust Division is looking at the possibility of anti-competitive practices in the music download industry," Justice Department spokeswoman Gina Talamona told Reuters. The investigations from Spitzer and the Justice Dept. both relate to the possible fixing of wholesale prices for digital music, industry sources told Reuters. Currently, the industry standard price for a digital song is 99 cents on services like iTunes and Napster, although label executives have said publicly they would like to initiate variable pricing for song downloads. Billboard reported that sources said Spitzer was investigating alleged "most favored nation" status that labels have with digital music services, such that no label can receive a deal worse than its competitors, effectively fixing prices. Record labels declined comment to both Billboard and Reuters, but sources close to the labels told Billboard that Justice Dept. subpoenas are expected to be forthcoming.
http://tinyurl.com/zlkc9 (Billboard)
http://tinyurl.com/lnrbu (Reuters)
http://www.usdoj.gov