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US Launches Price-Fixing Probe into Online Music Market

Posted on: Saturday, 4 March 2006, 18:00 CST

By Simon English

Music companies including EMI, the company behind Coldplay, are under investigation for alleged price fixing in the surging online market.

In the latest blow to the troubled music industry, officials from the US Justice Department are poised to issue subpoenas to leading players as they open an inquiry into the issue.

Although the investigators were tight-lipped yesterday, it is understood that the UK's EMI, along with Germany's Bertelsmann, Warner Music of the US and Japan's Sony are central to the inquiry.

The US Justice Department, which usually works in conjunction with the FBI, said yesterday: "The antitrust division is looking at the possibility of anticompetitive practices in the music download industry."

At the heart of the investigation is the suggestion that the four major labels have been plac-ing pressure on Apple, the com-puter company that has taken a strong hold of the download market, to increase prices.

Apple has been highly successful via its iTunes system in allowing people to download individual songs from its online music store for 99p in the UK and 99 cents in America.

It has sparked a near revolution in the music industry, which has been worried for years about illegal downloading and has, say critics, been slow to embrace the internet.

Eliot Spitzer, the attorney gen-eral of New York who came to prominence for his assaults on Wall Street fraud, is already looking into the matter. His concern is that large record labels may be overcharging Apple to sell music online, as they fight to cling on to market share.

It seems likely that this new investigation was sparked by complaints from Apple to the Justice Department, though the company declined to comment.

Revenues from digital sales of music are soaring, and could top pounds 1bn this year. Sales of CDs and other more traditional music formats are plummeting.

The big four claim that Apple's pricing policy is itself uncompet- itive. They would like to charge less than 99p for old songs but potentially much more for new releases. EMI would offer no comment on the inquiry yesterday.

It is understood that that the big four have received what are known as "civil investigative demands" - requests for more information. Full subpoenas are likely to be sent out in the very near future.

Source: Independent, The; London (UK)

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