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DoJ 'to probe music download pricing'

Spitzer enquiry proving fruitful?

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US Department of Justice investigators have begun to probe major music labels' download pricing policies, sources close to the world's four biggest recording companies told Billboard magazine.

According to the report, the DoJ has started sending out subpoenas to Warner Music Group, EMI, Sony BMG and Universal Music Group, though only EMI would comment officially, claiming it had yet to receive anything from the DoJ.

The DoJ has not yet confirmed the investigation, which is believed to parallel a similar probe being conducted by New York State Attorney General Eliot Spitzer. That enquiry began looking at the way labels promote music on the radio, but is believed to have been extended to digital music pricing, with subpoenas sent out late last year.

Spitzer is concerned that the major labels may have effectively colluded to set download wholesale prices by imposing terms and conditions that ensure none of them get a worse deal than the rest.

Whether that's anti-competitive or not is open to question. Consumers buy by artist not by price, and since the labels have exclusive rights to individual recordings, there's little or no scope for direct price competition. How likely is it, for example, that a Tom Petty buy Wildflowers (on Warner) rather than, say, Southern Accents (on UMG subsidiary label MCA, now Geffen) solely because it's 10 cents a track cheaper to download? ®

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