Department of Justice probing music download prices

[Steve]

It looks like the Department of Justice is worried that the big record labels may try to artificially raise the costs of music downloads, ensuring a tidy profit. Six years ago, five companies were found to be bumping up CD album prices, so the worry is, will it happen again?

In the past, companies charged between $12 and $15 on average per album, even though consumers complained that an album contains only two or three songs they wanted to buy. In the age of digital downloads, online stores like Apple Computer Inc.'s iTunes music service charge a flat rate of 99 cents per song, allowing consumers to just buy the songs they want, eating into the label's sales.

Labels would like to be able to charge "variable pricing," which would allow them to collect more for the higher-demand songs, Leigh said, but online stores don't want to raise their prices, and are resisting that pressure. Currently, for a 99-cent song, 72 cents goes to the label, and 8 cents to the publisher, leaving Apple's per-song profit margin at 19 cents per song, he said.

[Washington Post]

[spazman]

Wow the music industry ripping off the consumer, never