ALBANY, N.Y. – New York State investigators have subpoenaed several major music companies as part of a preliminary inquiry into whether the digital music services have engaged in any illegal price-fixing activity.
Darren Dopp, a spokesman for New York Attorney General Eliot Spitzer, said the office was seeking information on wholesale prices the music labels charge for digital music files that can be downloaded. Dopp said Tuesday that it would take months for the office to launch a full investigation, if one is warranted.
Warner Music Group Corp. (WMG) said in a regulatory filing Friday that the subpoena it received is part of "an industrywide investigation."
"As disclosed in our public filings, we are cooperating fully with the inquiry," Amanda Collins, a spokeswoman for Warner Music Group, said in a statement.
The Wall Street Journal reported earlier that Sony BMG Music Entertainment and Vivendi Universal SA's (V) Universal Music Group had also received subpoenas.
Neither company returned calls for comment. Calls to EMI Group PLC's offices in New York and London went unanswered.
In September, Apple Computer Inc. (AAPL) CEO Steve Jobs publicly criticized music companies, calling some major labels "greedy" for pushing Apple to hike prices on its popular iTunes service. Recording company executives have scoffed at the suggestion.
In a speech before an investors conference, Warner Music Group CEO Edgar Bronfman Jr. said that Apple's 99-cent price for single tracks ignores the issue that not all songs are the same commercially and, like any other product, shouldn't be priced the same.
Such discord has not kept the labels from licensing their music videos to Apple. Still, as their contracts with Apple come up for renewal, the music companies are seeking to improve their take.
"All the prices do seem to move in lock step," said industry analyst Phil Leigh, who runs U.S. market research firm Inside Digital Media. "There has been talk of raising prices for several months. I'm surprised (music companies) raised the issue. It's clear the industry convention is 99 cents."
The subpoenas issued this month are not the first time Spitzer, a Democrat running for governor in 2006, has looked into the music industry.
In November, Warner Music agreed to pay $5 million to settle an investigation into payoffs for radio airplay of artists. In July, Sony BMG agreed to pay $10 million and stop bribing radio stations to feature artists.
Spitzer also asked for documents from EMI Group and Vivendi Universal in that probe.