Feds eye music site backed by two labels
Department of Justice wants information about music-subscription site supported by at least two of the top labels.
UPDATE: 5:02 P.M. Federal regulators have begun asking questions about a plan supported by at least two major record companies to launch a jointly operated music-subscription site.
The U.S. Department of Justice has requested information from Sony BMG Music Entertainment and Universal Music Group about Total Music, an iTunes competitor that plans to offer music from all the majors for a $5-per-month subscription fee, according to a report in the newsletter Music Alley.
Two sources close to both record companies confirmed that that the labels had received letters from the DOJ in an interview with CNET News.com. A spokeswoman for the Justice Department declined to comment. Representatives from Sony BMG, and Warner Music Group did not return calls. Universal Music declined to comment.
A spokeswoman from The EMI Group said that executives there have not been asked for information from the DOJ.
The Justice Department's investigation is unprecedented for something that has yet to get out of the concept stage, according to one of the sources who spoke on condition of anonymity.
Universal Music CEO Doug Morris, who according to an October story in BusinessWeek came up with the idea for Total Music, has only floated the plan past the other three record labels, the source said, adding that no contracts have been signed, no money has changed hands, and no final decisions about whether the site will ever be launched have been made.
Two sources said that the DOJ has asked Universal Music and Sony BMG for any documents or information that would help them learn about Total Music.
The source said that Universal Music has also spoken with Microsoft, Google, MySpace and Facebook about their interest in a subscription site.
Businesweek reported that Morris was interested in launching an iTunes competitor. Morris had already enlisted the support of Sony BMG and was in talks with Warner Music Group, the magazine reported. If the start-up was successful at securing deals from all the top three labels, then it would offer about 75 percent of the music sold in the U.S.
Morris' plan, according to the magazine, is to convince hardware makers and cell carriers to help carry the costs of the $5-per-month subscription fee, so Total Music can offer consumers a device that comes with "all-you-can-eat" music that's available for a very low fee.