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DOJ probes online music
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August 6, 2001: 3:57 p.m. ET
Feds open antitrust investigation into online music business
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NEW YORK (CNNfn) - The U.S. Justice Department is investigating possible anticompetitive problems in the online music business involving two new ventures backed by major record labels, according to a published report Monday.
Use of copyright rules and licensing practices to control online music distribution are the focus of the government's probe into Microsoft Corp. (MSFT: Research, Estimates)-backed Pressplay and AOL Time Warner Inc. (AOL: down $0.75 to $46.13, Research, Estimates) backed MusicNet, the Wall Street Journal reported.
Pressplay is jointly owned by Sony Corp. (SNE: Research, Estimates) and Vivendi Universal SA (V: Research, Estimates). AOL Time Warner (AOL: Research, Estimates), parent of CNNfn, owns MusicNet along with EMI Group PLC and Bertelsmann AG and RealNetworks Inc. (RNWK: Research, Estimates), and is based on RealNetworks technology.
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Justice Department said to look into antitrust issues for new ventures. | |
The two ventures are the labels' first move into digital distribution, a technology that could potentially reshape the industry.
The investigation is only the latest in a string of antitrust issues that have surfaced as the music industry consolidates, according to the paper. A lawyer familiar with the U.S. investigation told the Journal that it's not unusual for joint ventures among competitors to attract antitrust scrutiny.
Last week, Rep. Rick Boucher, D.-Va., and Rep. Chris Cannon, R-Utah, introduced a bill seeking to force record labels to license their online music to others in a similar fashion to their own digital distributors. Web companies and other online music distributors complained in recent congressional hearings that the labels have proceeded slowly with efforts to license music for their services.
MusicNet and PressPlay, both set for launch in the fall, already are under investigation by European regulators.
MusicNet and PressPlay expect to charge consumers a monthly fee for access to "streamed" music -- which may be listened to online but not copied -- and for downloading music from the companies' catalogs, the Journal said.
PressPlay, Sony Music, Vivendi, Microsoft and MusicNet all have declined to comment on the case, but CNNfn confirms that one of the five companies has "been in contact" with the Justice Department. 
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