New York Attorney General Eliot Spitzer is initiating another investigation of the music industry, this time seeking information to determine whether the pricing of digital music downloads violates antitrust laws.
Warner Music Group disclosed in its Dec. 23 filing with the Securities Exchange Commission that it was served with a subpoena on Dec. 20 “in connection with an industry-wide investigation” of industry practices concerning the pricing and whether the practices violate federal and New York laws. The New York Times has reported that all four major labels were served with subpoenas.
Indie labels have been grumbling for some time that online service providers such as Apple Computer and others pay major labels more for rights to offer their recordings — around 65-70 cents per download — than they offer to indie labels — about 60 cents — under non-negotiable contracts.
Another pricing complaint has been made public through speeches and media reports over the last four months. WMG CEO Edgar Bronfman Jr. has argued that prices to consumers should be varied — some more than 99 cents per download — to reflect the differing values of music. In response Apple CEO Steve Jobs called the major labels “greedy” for requesting a price hike for downloads.
WMG and the attorney general’s office were not immediately available for comment.
The federal Sherman Act prohibits any contract or any combination in the form of a trust that restrains trade or commerce. New York law prohibits the same and similar conduct.
Spitzer has an ongoing investigation of the recording and broadcast industries over payola. His office reached settlements with Sony BMG in July and WMG in November to end those investigations, which are still pending against other companies. The settlements included agreements to end certain business practices and to pay $10 million by Sony BMG and $5 million by WMG, which would be distributed to certain non-profit organizations.
