U.S. opens probe into online music pricing

The U.S. Department of Justice has opened an investigation into online music pricing at the world's major music labels, sources familiar with the matter said on Thursday.

The DOJ probe closely tracks a similar investigation by New York State Attorney General Eliot Spitzer into the pricing of digital music downloads, the sources said.

One music industry source said some subpoenas may have been issued already in connection with the probe, while other labels had been tipped off that subpoenas would likely be coming in the next few days.

It appeared that Sony BMG had already received a subpoena, the second industry source said.

The major record labels are Warner Music Group, EMI Group Plc, Vivendi Universal's Universal Music Group and Sony BMG, a joint venture of Sony Corp. and Bertelsmann Ag.

Executives from the labels were not available or declined to comment. A spokeswoman for the DOJ was not immediately available for comment.

Apple Computer Inc.'s iTunes music store dominates the industry, charging 99 cents for each of the vast majority of its songs, but some music labels have indicated they want to institute variable pricing. Rival online music stores include those run by music subscription service Napster, Inc.; retailer Wal-Mart Stores Inc. and RealNetworks Inc., which makes software for playing video and music on computers.

In late December 2005, Warner Music Group disclosed in a U.S. Securities and Exchange Commission filing it had been subpoenaed by Spitzer in connection with an antitrust investigation into the pricing of digital music downloads.

The two music industry sources on Thursday said the DOJ's probe appeared to be focussed on the same issues, which included whether the labels colluded to set wholesale pricing for song downloads.

The investigation also could be related to licensing renegotiations with Apple, maker of the wildly popular iPod digital music player, for its iTunes store, industry sources have said.

Last September, Apple Chief Executive Steve Jobs called the music industry "greedy" for considering hiking digital download prices and warned the move could drive iPod users to piracy.

Spitzer is also studying alleged pay-for-play radio promotion practices in a separate inquiry.

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