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Labels' pricing for music subscriptions criticized

New York State attorney general Eliot Spitzer has an open investigation into the way that record labels are pricing digital music for download stores. But according to the Wall Street Journal (subscription required), subscription music services are now also complaining about the wholesale pricing policies they face.

No services complain for the record in the story, but at issue are the so-called "Most Favored Nation" clauses in the wholesale pricing agreements under which labels provide music to companies such as RealNetworks, Yahoo, Virgin or Napster.

These contract clauses allow a label to get the same deal any of their competitors has negotiated, even if they themselves have initially settled for a lower price. The effect of this is to slowly ratchet prices up over time, the services argue.

There's no sign yet that Spitzer is investigating this specifically, but it's a good bet that some music services have quietly suggested it to his office.