New York State Attorney General Eliot Spitzer sent out something less than a
cheerful Christmas jingle to major music publishers: subpoenas.
In a Securities and Exchange Commission filing last week, Warner Music Group disclosed that it had
received subpoenas regarding the pricing of digital music downloads.
Apparently, WMG wasn’t the only music publisher to receive holiday greetings
from Spitzer. According to the document, Spitzer’s office is conducting an
“industry-wide investigation” into possible antitrust violations.
In the document, WMG said it planned to “cooperate fully” with the probe.
WMG officials were unavailable for comment Tuesday while Spitzer’s office
did not return telephone inquiries.
WMG, along with Sony BMG, EMI Group and Universal Music, are the world’s four
largest music publishers.
Currently, the largest source of music downloads is through various illegal
peer-to-peer (P2P) services. Apple’s iTunes, which charges 99 cents per
tune, is the largest source of legal downloads, having sold more than 600
million downloads.
Apple’s music download service accounts for than 80 percent of all legal
music downloads.
In September, Apple CEO Steve Jobs called the music publishers “greedy” for
seeking price increases at iTunes for their music. Speaking at the Apple
Expo in Paris, Jobs claimed the publishers already make more profit on a
digital download than they do on a standard CD because of manufacturing and
marketing costs.
Warner Music Group CEO Edgar Bronfman responded to Jobs by saying almost all
consumer products have varying price points depending on the popularity of
the item. He also complained that the music companies do not share any of
the profits from iTunes.
Bronfman and the other music publishers want Apple to move to a tiered
pricing scheme where popular songs sell for more than older tunes.
In November, Warner Music and Sony BMG settled a complaint brought by
Spitzer accusing the music industry of making payments to radio stations to
promote certain songs over more in a classic “payola” scheme.
Warner Music paid $5 million to settle the dispute while Sony BMG paid $10
million.
