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Insiders skeptical of Sony's 'mistake' on Houston music prices

Sony says an "employee error" was the cause of a price hike on Whitney Houston music following her death. Yeah? Then why hasn't Sony issued refunds?

The cover of Whitney Houston's 'Ultimate Collection' album, which saw a dramatic price increase in the U.K. after the singer's death Sony Music

Sony Music Entertainment says the price hike in the United Kingdom on Whitney Houston albums following the singer's death was a "mistake," but some industry insiders are skeptical.

On Sunday, a day after Houston was found dead in a Beverly Hills hotel, prices for two of her albums: "The Ultimate Collection" and "Greatest Hits" jumped in price in the U.K. iTunes store. In dollars, the prices rose from $7.80 to $12.50.

Right away, Sony and Apple came under fire from consumers who believed one or both of the companies were trying to cash in on the singer's death. But not until yesterday did one of the companies respond to the furor.

Sony issued a statement yesterday: "Whitney Houston product was mistakenly mispriced on the UK iTunes store on Sunday. When discovered, the mistake was immediately corrected. We apologize for any offense caused."

Billboard talked to someone from inside Sony on background who explained the price increase lasted for just a few hours and was due to "employee error."

This sounds like the mistake was made by some low-level clerk who keyed in the wrong number. Music industry insiders told me that such a scenario was unlikely.

Indeed, that's not what happened. According to sources close to the situation, "the mistake" was made by a Sony Music middle manager who had the authority to change prices. So was it just a math error or a typo? Or did the manager make a decision that led to a controversy and that's what Sony considers a mistake. We'll probably never know.

Be that as it may, Sony deserves credit for backing down from the increase. At this point the price hike only appears to have affected one retailer in one area of the world. We should also note that Sony Music did not boost prices on Michael Jackson albums following his death in 2009.

As for Sony's slow response and why the company waited two days to respond, some Sony executives were in Los Angeles on Sunday where they attended the Grammy Awards and that may have contributed.

That said, if the price increase was a goof, and Sony is sincere about making things right, then why not show good faith and issue refunds to the people who paid the higher price for the Houston albums?

My sources say that Sony has yet to do that.

If it were truly an isolated mistake, Sony should rectify it by making those people whole.

Sony and Apple representatives declined CNET's request to comment.

Update at 9:35 a.m. PT: The response of industry insiders has been clarified. They do not believe it likely that a low-level clerk keyed in a wrong number.