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Record Industry Faces Digital Music Pricing Probe - 28 Dec 2005

The four leading music companies--Warner Music, Sony BMG, Universal Music Group, and EMI--have been subpoenaed by New York State Attorney General Elliot Spitzer as part of a potentially wide-ranging investigation into collusion on the prices of digitally downloaded music. Although Spitzer hasn't publicly discussed the investigation, a spokesperson for his office said the "preliminary inquiry" might lead to a full investigation.


At issue is the standard 99-cents-per-song price charged by Apple Computer and other online digital music stores. Record company executives have complained recently that newer songs should sell for more than 99 cents, while old songs could sell for far less. But Apple CEO Steve Jobs, whose company's iTunes Music Store virtually controls the distribution of online music, has refused to budge from the fixed-price scheme. Jobs labeled music industry executives "greedy" for wanting to change it.


It's unclear whether Spitzer is concerned about Apple's fixed pricing or a possible, as-yet-unverified collusion among the top four music companies to establish a new pricing scheme that they'll require Apple and other online music stores to follow. Apple's contracts with Warner Music, Sony BMG, Universal Music, and EMI will expire in 2006, and some of these companies have been very vocal about wanting to move away from fixed pricing.

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