RSSDOJ Investigating Digital Music Prices
By Ed Oswald | Published March 3, 2006, 11:39 AM
The U.S. Department of Justice has opened up an collusion inquiry to investigate the digital music prices set by four major record labels, the Wall Street Journal reported on Friday. While at this time it does not appear to be a criminal investigation, "civil investigative demands" -- similar to subpoenas -- have been sent to all parties.
Universal Music Group, Sony BMG, EMI, and Warner Music have received these notices. According to sources close to the case, the investigation is similar to one being carried out by New York Attorney General Eliot Spitzer. A Justice Department spokesperson said that antitrust lawyers are looking into the possibility of anticompetitive practices.
However, the record companies may only be the start of an investigation. The report indicated that Justice Department lawyers might be also interested in looking into "vertical collusion" as well. This implies some kind of unspoken deals between music services and record labels.
But some online music stores may beg to differ with that notion. Steve Jobs last September called record labels "greedy", and vowed to keep individual song prices at 99 cents despite pressure to relax on that requirement.
"We're trying to compete with piracy, we're trying to pull people away from piracy and say, 'You can buy these songs legally for a fair price,'" Jobs said. "But if the price goes up a lot, they'll go back to piracy. Then everybody loses."
At least for the time being, the onus appears to be on the labels themselves. If the case is indeed similar to the New York query, the labels may need to defend their wholesale pricing, as well as their practice of "most favored nation" clauses in music service contracts.
So-called MFN clauses allow record labels to receive the same favorable terms as its competitors after they renegotiate their deals, without having to sit at the bargaining table. This has resulted in music services complaining to both state and federal authorities questioning the legality of such a practice.
"[W]e spent a lot of time on this at Listen.com where we did extensive price elasticity testing on download sales, coming to the conclusion that dropping the price of all music downloads to $.50 would increase overall revenue by 350% over a sustained period of time, but the labels wouldn't go for it."
Sean Ryan - http://ryanfamily.typepad.com/about.html
http://seven.pairlist.ne...05-December/000577.html
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|Bah.
Good idea, folks. Jump right over CD price fixing and go straight to the heart of the matter.
Wait....what?
Oh, the CD came before the download?
Huh..
Talk about putting the cart before the horse...
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|I'm all for putting presure on the labels. I pirate all my music and for good reason. The cost of 99 cents is to high considering it isnt perfect cd qaulity. What is the point of buying subpar music. Buying a record in the store is a ripoff to cause you have to dish out 15 or so dollars for 1 or 2 songs.
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|allofMP3.com
A tad more legal than pirating, at a fraction of the cost. :) (I think the going rate @ RIAA is what, $4000 per song? AllofMP3 only charges ~2¢)
At least that way, you're "trying" to pay for it.
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|Spitz is fishing again. This guy wants to be New York Governor so bad he's willing to engage in frivolous activity just to get his name out there.
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|How can they stop it though? I mean if a store that sells a CD for $30.00 can do it, they just wont sell any. Same with digital music, if its too high - dont buy it..
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|Today IS a good day.
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|Well its about DAMN time!
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|That is great and all, but why not investigate something like, I don’t know, gas prices first.
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|Gas prices isn't price fixing, that's just those damn ARABS ripping us off, we can't do anything about foreign nations. We can however utilize alternate fuel sources, so investigating something that has an alternate route, makes no sense.
You don't like it, don't buy gas. Period. You can always ride a bike.
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|Since your so quick to blame Arabs in general why don't you be the first to offer a real solution. We have massive problems refining oil into gas because we don't have enough refineries so why don't you volunteer your community to become the next site for a refinery.
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|Current gas pricing is not the result of collusion. Were it so, prices would not have tumbled over the past year. Please, get a rudimentary economics education and a political clue before you spout this kind of crap.
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|I don't think they need to investigate gas prices. They should actually be higher, don't you know how much Europeans pay? In the UK it's almost 7 dollars per gallon. We use twice as much oil as the second closest industrialized nation. The UN should sue us for all the pollution and raise our prices further. And for the record I do ride a bike, it's a $2000 (MSRP) Motobecane road bike. Also there's nothing wrong with Arabs aside from those involved in religious persecution.
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|Oh, we could do a lot if we wanted to.
We are just nice guys so we don't.
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|Did you know gasoline is a byproduct of making kerosene? The gasoline was disposed of until a use was found, the automobile. Now the refinery companies make much more money with both the gasoline and the kerosene. Today, kerosene is mainly used in aviation/jet fuel.
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|Who is this "we" you speak of, and how can I get in contact with them? ;)
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|Of course!
Build more refineries!
That's the answer! I can't believe we never thought of that before.
Brilliant. Forget pollution, or the fact that it's a non-renewable resource, or hazardous to transport... More is always better, right?
I thik it'd be far better to volunteer to use alternatives than to force greater dependancy on a source already known to be damaging to ourselves and the environment, not to mention limited in supply.
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|We can only hope that this does turn into a criminal investigation and that it will also include media sold in stores as well. I find it hard to believe that in the last ten years, with all the amazing technological leaps, that it still costs them the same amount to produce and distribute albums.
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|My friend, cost decrease = profit increase for these monsters. I hope the government scares the **** out of these monsters from ever doing what they are doing again.
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|I agree, it's ridiculous that a cd still costs over $10. I can not only get DVD's for that price, I can find them cheaper! Most stores have $1-$5 DVD bins. When was the last time you saw a CD that cheap?
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|I couldn’t agree more.
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|Yes, in case anyone cares, this has been my argument as to WHY I won't pay 1 dollar to download a song, I don't care to be legitimate, as long as they are greedy.
As I have been saying for years, if they simply charge 25 cents for a song, I might be encouraged to pay for them, but not for a dollar, 15 songs is still the same price as a Regular CD.
And yes, it is rediculous to charge the same as they did 15 years ago.
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|Recording the CD SHOULD be cheaper, due to digital equipment costing less, but I think studios either inflate the price, or labels allow their artists to spend more time recording.
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|Consider yourself lucky. We're still paying up to 30AUD for a CD, or 23USD. Yeah, that seems fair. :P
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|I agree as far as MP3, AAC, and other lossy formats go.
If they were to offer FLAC or APE encodes of the original CD (Or the virgin WAV file), I'd be willing to pay much closer to ~CD prices of $1 a song.
I can live without the cover-art and lyrics...although most players now provide both in one form or another.
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