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Labels' Price Guarantees

Report: Spitzer's Digital Music Probe Centered on Labels' Price Guarantees

Authored by Mark Hefflinger on January 12, 2006 - 3:50am.
Los Angeles - New York Attorney General Eliot Spitzer's ongoing probe into digital music price-fixing is centering on the "most-favored nation" status that record labels have demanded when licensing their songs to online services, ensuring they get the same rates as their rivals, the Los Angeles Times reported on Thursday. "Some of the major labels have proposed and re-proposed and insisted on the inclusion in their licenses of most-favored nations clauses which would grant that label the benefits and pricing negotiated by a competing label," Jonathan Potter, executive director of the Digital Media Assn., which represents Apple, Yahoo and others, told the Times. "Collusion has never been known to lower prices." While executives at some music companies told the Times that such clauses have not been activated, executives at online music retailers said they have been enacted several times -- to ensure a label gets the highest-price download, or even mandate that a retailer exert equal marketing efforts to promote a label's artists.
tags: Music | Labels | Spitzer | Digital Music Probe | Labels' Price Guarantees |