I've always thought that the prices of CDs were way too high.
First off let me qualify this by saying I trust my source, its nothing secret, but I have not had time to check out the validity of the story...
U.S. to probe for digital music price fixing
By Nancy Gohring, IDG News Service
European record labels were keeping quiet on Friday morning regarding a
potential U.S. Department of Justice (DOJ) investigation into digital music
Universal Music Group International didn?t have any information about possible
requests from the DOJ, which would most likely have been sent to New
York-headquartered Universal Music Group Inc., a unit of the French company
Vivendi Universal SA, said Adam White, a spokesman for Universal Music Group
EMI Group PLC hasn?t responded to a request for comment and Bertelsmann AG said
only Sony BMG Music Entertainment Inc., based in New York, could comment.
Reports of the investigation appeared Friday in publications including The Wall
Street Journal. In addtion to Universal, EMI and Sony BMG, the reports also
listed Warner Music Group Corp. among the companies said to be under
It?s reasonable for authorities to consider an investigation, said Mark
Mulligan, a research director for Jupiter Research. ?Even if there isn?t any
evidence, there?s this situation and the circumstances of the environment for
suspicions,? he said.
A few aspects of the music market, including the consolidation that allows four
major labels to control most of the revenues, make a situation ripe for
potential market manipulation, he said.
Also, those labels are under pressure to protect revenues due to the uncertainty
of the effect digital music might have on the bottom line in the future,
Mulligan said. ?The music industry still isn?t sure whether the legal downloads
market is going to grow or shrink the overall music market,? he said.
As a result, they?ve kept the price of digital music relatively high, he said.
?Let?s face it, the DOJ wouldn?t be doing this if they thought they were fixing
the prices too low,? he said.
In addition, authorities have already suspected record labels of fixing the
price of CDs, and the European Commission has found evidence of CD price fixing
by the major labels, he said. ?There?s a big part of this investigation that
would have to consider these different market factors to determine why prices
are where they are,? he said.