It seemed only a matter of time before New York attorney general Eliot Spitzer turned his gaze of justice toward the online music download scene. And, as we learned last week via a regulatory filing from the Warner Music Group, Spitzer has in fact kicked off "an industry-wide investigation" into download pricing by handing out subpoenas to the major labels.
According to reports, Spitzer's office has privately revealed the intended scope of the investigation. Spitz the Blitz wants to see if the pigopolists violated any anti-trust laws with their online song pricing. Along with Warner Music, Sony BMG, EMI and Universal Music Group have received subpoenas.
This is hardly unfamiliar territory for the music mob. The FTC once accused the major labels of costing consumers close to $480m via CD price-fixing. The pigopolists denied the charges but did agree to hand over $67m in cash and $76m worth of CDs to the suing states.
Now there's a question of just how the labels set download prices. Analysts often peg the per song sale price at about 70 cents. Companies such as Apple and Real then resell the songs for about 99 cents.
The record companies have been pushing hard to increase the per song download price for hotter acts. Why not get $1.39 per song for the latest American Idol spawn?
Proving that the pigopolists all got together and vowed to set industry-wide download pricing and pricing goals will be tough.
By nature, the music moguls tend to think alike. They gravitate toward the obvious and abhor change. Typically, this means that a secret gathering in Bermuda to discuss price-fixing isn't necessary. These dinosaurs all wake up thinking the same, debilitating way without any encouragement from each other.
The threat, however, of Spitzer's gaze of justice is sure to keep things above board for awhile. Apple CEO Steve Jobs no doubt appreciates the helping hand. ®