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Dept. of Justice looking into labels' "Operation: Beat Apple"

Posted on: 02/08/2008

From an article in today’s Wall Street Journal: In a challenge to a music-industry initiative that has barely reached the planning stages, the Department of Justice has begun an inquiry into a new way of selling music that Vivendi SA’s Universal Music Group has proposed to its three main competitors.

Universal and Sony BMG Music Entertainment, the No. 1 and No. 2 music companies world-wide by market share, have gotten letters of inquiry from the Justice Department, according to people familiar with the matter.

Of Universal’s competitors among the so-called big-four music companies, Sony BMG has expressed the strongest interest in the project — known as “Total Music“ — according to people familiar with the situation…

Total Music would integrate a music-playing gadget and online or wireless delivery for a flat fee. In one version of the service that has been discussed, a fee tacked on to the price of compatible gadgets would give users unlimited access to a vast catalog of music from Universal and whichever of its competitors signed on…

The project has been generally viewed as an effort to create a strong competitor to Apple Inc.‘s iTunes Store, which dominates digital-music sales. Record labels have been unhappy with iTunes’ insistence on a single price for all songs and have been frustrated with the mixed performance of subscription music services like that of Napster Inc.,
which let users effectively rent unlimited amounts of music for a flat monthly fee…

In 2001, the major labels faced scrutiny over their work to create digital-music services named Pressplay and MusicNet. Both those efforts proved duds with consumers, for reasons largely unrelated to pricing.

Wall Street Journal subscribers can read the full article online here.

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  1. Interesting article. It raises an equally interesting question: could it be that the major labels, through SoundExchange, wants to make sure that an independent, entrepreneurial Internet radio industry dies, in order to set themselves (the major labels) up as the only online alternative to broadcast radio?

    One of the things that make you go, “Hmmmm.”

    Russ Hines · Feb 8, 07:30 AM · #

  2. Oh yeah, they want to destroy anything they don’t directly have control over. Then they can set up shop with little or no competition. Kind of like terrestrial radio.

    Glenn · Feb 8, 07:40 AM · #

  3. Why don’t the labels just get behind Rhapsody and Napster, the two most successful non-Apple retailers? They could give some wholesale price relief until the two companies gain solid financial footing, they could assist in marketing simply by putting a Napster Approved/Rhapsody Approved stamp on their products and they could speed up their already decided move to DRM-free licenses. I subscribe to Napster and love it.

    wyly · Feb 8, 12:42 PM · #

  4. No offense to no. 1, but this has been their goal from the get-go. last.fm is the perfect example. Everything that the major labels have complained about with regard to internet radio can be found on that very site. Artists are not paid at CRB approved rates, an incredible amount of tracks are available on demand circumventing the DMCA that controls what internet radio can play, etc. And, the major labels direct licensed their music to last.fm but they don’t want internet radio to thrive. All of this is about control, nothing else, not fairness of royalty rates to fairly pay the artists, not any of their other reasons that were given in their smokescreen to Congress.

    Internet Radio Listner · Feb 9, 01:45 AM · #

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