You will be redirected back to your article in seconds

DOJ logs off its online music store inquiry

Gov't sees licenses as fair and competitive, not stifling

With the digital music market advancing so fast in the past year that its inquiry became largely irrelevant, the Justice Dept. has dropped an antitrust investigation of Pressplay and MusicNet, the online music services launched by the major record labels in 2001.

DOJ found that Pressplay, a joint venture of Sony and Universal, and MusicNet, owned by Warner, EMI and BMG, did not stifle competition, relying largely on the recent growth of iTunes and its expanding cadre of competitors as evidence.

“The development of the digital music marketplace … belies any concerns that the record labels used their joint ventures to stifle the development of the Internet music marketplace and to protect their present positions in the promotion and distribution of prerecorded music in physical form,” said R. Hewitt Pate, assistant attorney general in charge of the DOJ’s Antitrust Division.

The news shocked nobody, as MusicNet has become largely irrelevant in recent months and Pressplay literally nonexistent. Pressplay was acquired by Roxio earlier this year, which shut down the service and integrated its technology into the new, legal version of Napster that it launched in October.

MusicNet still exists but is now available only to America Online subscribers. With its multiple restrictions on how subscribers can transfer music, however, it’s likely to be supplanted by Apple’s iTunes, which enables restriction-free downloads for 99¢ and was recently integrated into AOL’s music section.

Third-party cooperation

The DOJ noted in its findings that the variation in licenses offered by the labels to iTunes, Napster and other competitors proved the labels were acting competitively. Some analysts, however, said that the government investigation might have spurred the labels to cooperate more with third-party digital music vendors.

“It probably did encourage their desire to enable these third parties,” said Rob Enderle, principal analyst at the Enderle group. “The labels surely also realized that if they were limited to their own stores, they’d have problems moving their music.”

With the rapid growth of the digital music space, however, in which market leader iTunes has already sold 25 million songs this year, the labels, which take about 70% of every sale, are finally starting to prosper online. It’s the music stores, which face stiff competition and a price point that will fall to 88¢ when Wal-Mart launches its offering in the spring, that are feeling the pinch.

More Scene

  • Eric Wareheim, 'The Simpsons' E.P. Matt

    Beefsteak Gathers Comedy Bigwigs for Meat and Mayhem

    The masterminds behind Beefsteak, a debauched tribute to the meaty arts that raises thousands for the Los Angeles Food Bank, switch things up each year so that guests are never bored. Organized by comedy players including Eric Wareheim, “The Simpsons” executive producer Matt Selman, and ABC Studios VP of comedy Cort Cass with Redbird chef Neal [...]

  • Alfonso Cuaron71st Annual Writers Guild Awards,

    Alfonso Cuarón on Academy's 'Inevitable' Reversal on Televised Oscar Categories

    Alfonso Cuarón isn’t exactly surprised that the Academy reversed its decision and will now air all the Oscar categories during the live show on Sunday. Feb. 24. Calling the decision “inevitable,”Cuarón tells Variety that he thinks the Academy should take things even further. “Let’s stop calling them technical categories!” he told Variety on Sunday night [...]

  • SAN FRANCISCO, CA - February 16

    San Francisco Symphony Ushers in Chinese New Year With Glitzy Gala

    As legend has it: among the Chinese Zodiac’s 12 animals, the pig comes last because it was the final one to arrive to a party thrown by the Jade Emperor — lazy sauntering being a characteristic trait of the animal. The folktale was perhaps less fitting this past Saturday evening, as the San Francisco Symphony [...]

  • Marianne Rendon, Matt Smith, Ondi Timoner

    Robert Mapplethorpe Biopic Team Talks 'Fast and Furious' Filming

    Thursday night’s New York premiere of the Matt Smith-led biopic “Mapplethorpe” took place at Cinépolis Chelsea, just steps from the Chelsea Hotel where the late photographer Robert Mapplethorpe once lived — but director Ondi Timoner had no sense of that legacy when she first encountered him in a very different context. “When I was ten [...]

  • Producer Mel Jones poses at the

    'Dear White People' Producer Talks Hollywood's 'Black Tax'

    “Dear White People” and “Leimert Park” executive producer Mel Jones is extremely familiar with growing up and watching “white men in all types of roles and never [seeing] ourselves as a part of those narratives.” Now, there may be some more opportunities for writers of color to tell their own stories, but, she notes, there [...]

More From Our Brands

Access exclusive content