Speculation continues regarding that investigation into online music pricing seemingly being launched by New York State Attorney General Eliot Spitzer.
As previously reported, both major labels and digital music companies have reported that Spitzer's office has subpoenaed information from them regarding their download deals. Despite record labels publicly dissing the deals being offered by iTunes et al - in particular the insistence by Apple on a one-price-fits-all system - rumour suggests it is the record labels that Spitzer believes are acting unfairly in this space. Having surveyed a number of senior execs, Billboard reckon that the issue that the Attorney General is going to focus on is so-called "most favoured nation" clauses.
These are clauses that enable a record company to ensure none of its competitors are getting a better deal than they are - either by forcing a download platform to share information about its other label agreements, or by tying their deal to others - ie 'we'll accept an agreed cut of revenues, but if you offer another record company a better deal, we want that deal too'. These kind of clauses, some argue, is basically "defacto collusion" on the part of the labels.
Chatter about the clauses has grown since venture capitalist Sean Ryan, a former Listen.com and RealNetworks/Rhapsody executive, wrote about them on his blog - arguing that such clauses meant labels didn't have to collude in order to achieve the results of collusion. He wrote: "I used to refer to it as the 'Lazy Business Development' clause since it effectively saves labels from actually negotiating the terms - they just claim MFN and do an audit once a year if they think a competitor is getting better terms".
However, some label insiders deny they are acting unfairly, with Billboard quoting one exec as saying: "[Spitzer's] really got it totally wrong. That it's a monolithic price is totally false. I know (different labels) charge different prices."