Eliot Spitzer is reported to have subpoenaed Warner Music on Tuesday “in connection with an ongoing antitrust investigation into the pricing of digital music downloads”.
Music industry sources said the current probe appeared to center on whether the Big Four music studios — Warner, Sony Corp’s (6758.T) Sony BMG Music Entertainment, EMI Group (EMI.L) and Vivendi’s (EAUG.PA) Universal Music — colluded to set wholesale pricing for song downloads.
The investigation also could be related to the studios’ upcoming licensing renegotiations with Apple, maker of the wildly popular iPod digital music player, for its iTunes music store, the sources said.
A topic widely blogged – by me as well – this summer.
Techdirt covers the story today but curiously suggests the concern must be Warner requiring Apple to fix its final price. That of course would be problematic but still achieved easily enough by simply setting the wholesale price so high that the retailer has no choice – if it wants to sell at a profit – but to sell at the desired price or higher.
But this is obviously not possible if the wholesaler has competition (we’ll put aside the issue of every label having a monopoly of its own artists – an aspect of this business that is becoming problematic enough in its own right in this time of copywars). And that – as the sources above suggest – must be the concern here – the concern that the labels have been joining together to take a run at Apple en masse – which is the point I made when I originally blogged the story: if Bronfman wanted Apple to raise its pricing on his songs, why didn’t he just increase his prices?
It’s worth noting that this would probably not be happening – or would be less effective as a tactic – if the market were free to compete with the possibility of full cross-platform and cross-vendor interoperability of all music – a scenario we are unlikely to see in a DRM’d environment. The walled garden approach stands a good chance of killing the sale of online music before it really gets off the ground.
On a related note, I’ve recently abandoned iTunes as our music app of choice, principally because the DRM makes it too troublesome to use in a networked environment. I run one database of music off of 4 different PCs, and in their zeal to lock down iTunes Apple has made the app a serious nuisance to use in that type of setting. A small point, perhaps, but a good practical example of the impact DRM has on crippling the user experience.