U.S. Investigating Online Music Pricing

An anonymous reader writes "Times Online has a story about the U.S. Federal Government investigating whether the music labels are fixing prices for online music sales. 'The antitrust division is looking at the possibility of anti-competitive practices in the music download industry ... Mr Jobs suggested such a move would drive owners of Apple's iPod, the hugely popular digital music player, to piracy, a problem that has cost the music industry billions in revenues in recent years.'"

Comments

all I know..

[Anonymous Coward]

Is I've worked on productions where the label buys up copies of their cd to go platinum.....

how did everyone get so damn crooked????

Worst quote ever

[mcc]

The full version of the quote, if you fill in the ellipsis, is:

Justice Department has launched an official inquiry into possible price fixing in the online music industry.

It is thought the probe will investigate allegations that music labels have colluded to fix the wholesale prices they charge online retailers such as Apple, which sells digital music through its iTunes website.

"The antitrust division is looking at the possibility of anti-competitive practices in the music download industry," a spokeswoman for the department said.

Last year, Steve Jobs, Apple's chief executive, accused the music industry of being "greedy" for wanting to raise digital download prices.

Mr Jobs suggested such a move would drive owners of Apple's iPod, the hugely popular digital music player, to piracy, a problem that has cost the music industry billions in revenues in recent years.

The way the slashdot article quotes this-- jumping right from talking about the justice department "launching a probe" to talking about Jobs complaining about "such a move"-- makes it sound like Jobs is objecting to the investigation.

In fact Jobs is complaining about the behavior being investigated, I.E., Jobs is objecting to price fixing.

Jobs has been vocal for a long time against attempts by the labels to try to forcibly raise online music sales.

Re:new lower pricing model

[Anonymous Coward]

Is the itunes store really that convienient?

Yes. From iTunes you can browse, buy want you want and have it on your ipod instantly. How long does it take to get a CD from wherever warehouse? Lets take a quick look at their shipping rate page shall we:

CDs & DVDs & Games
Shipping Method First Item Each Additional Item
  Standard (1-3 weeks) $2.50 $0.40
  Expedited (4-7 days) $5.25 $0.55
  Rush Delivery (2-4 Business Days) $9.75 $1.00

So, you do the math. You can download what you want instantly, for 1$ a track or you can wait 1-3 weeks and get some used CD with 5 tracks you don't want. Are you new to entire concept of online music or something?

Re:clarify this paragraph:

[VoxCombo]

Heck, if the music companies were found to be colluding by charging $15+ per CD years back (they were), what are the chances they are doing the same now when the per-tune cost remains the same as distribution costs drop?

If I may clarify this......The labels were sued not for the price of CDs, but for their minimum advertised price policy. Basically, when Best-Buy and Wal-Mart were using CDs as loss-leaders to bring consumers into the door, the labels tried to slow this with a MAP policy. The labels didn't tell those stores how much to sell CDs for, they just wanted to forbid advertising prices that low, for fear that it would drive small record stores out of business and hurt the availability of non-hit recordings (best-buy and walmart mostly only stock the "hits".

MAP policies are very common among individual companies in many industries, but the courts found that since the labels were doing it together through an industry association (RIAA), that the practice was illegal.

Re:Its called an OLIGOPOLY

[dwandy]

Then IBM would resurrect its line of x86 CPUs and sell them for $3-400. The trick with price fixing is to make sure that your price is something the market will bear (if only just), and sufficiently low that you keep the barrier to entry in your market sufficiently high.

Actually all you need is a barrier to entry: copyright gives the RIAA the barrier that ensures that no one else sells "their" songs. As long as the RIAA retains copyright, they can retain control of artist's access to the fans, and they will retain their monopoly.

Courtney Love said:

record companies figured out that it's a lot more profitable to control the distribution system than it is to nurture artists. And since the companies didn't have any real competition, artists had no other place to go. Record companies controlled the promotion and marketing; only they had the ability to get lots of radio play, and get records into all the big chain store. That power put them above both the artists and the audience. They own the plantation.

She goes on to say that the internet removes those gates; but it doesn't quite do so, because of copyright...

For the Intel/AMD collusion, and the entrance of IBM with a cheaper chip, we would need to arrive at a 5th major label who was not only willing to undercut the existing majors, but could attract sufficient talent to become a major label. Others have tried - I'm not holding out hope.

that's completely bogus

[fribhey]

"iTunes can't deliver that"
that's completely bogus, have you even looked at the itunes music store?

from itunes:
James Brown: 20 All Time greatest Hits! = 20 songs for $5.99 = $.30 per song

from your best deal you ever got:
Essential Clash = 40 songs for $13 = $.32 per song

there are also other good deals to be found on itunes if you bothered to look:
Best of Pixies = 23 songs for $9.99
Neil Young Greatest Hits = 16 songs for $9.90
U2: Pop = 12 songs for $6.99
NIN: downward spiral deluxe edition = 27 songs for $11.99