U.S. Department of Justice Investigates Possible Price-Fixing by Apple on Music Downloads

U.S. Department of Justice Investigates Possible Price-Fixing by Apple on Music Downloads
The U.S. Department of Justice has launched an initial inquiry into possible price-fixing in the digital marketplace by none other than Apple. Yes, the folks behind iTunes have been accused of pressuring record labels against participating in a competitor's digital music sale promotion, according to Billboard. The allegations claim Apple strong-armed record labels to not be part of Amazon's Daily Deal program, which sells digital albums for as low as $3.99 on certain days.

The Department of Justice has already contacted a number of major labels, as well as some digital music services, according to Billboard. The department is trying to determine whether Apple's role in the digital music marketplace could affect pricing on music downloads.

Apple traditionally sells new albums on iTunes for around $10, but Amazon has offered key new releases in the $4 to $6 range. According to industry sources, any attempt by Apple to discourage labels from working with Amazon in such programs could be considered price-fixing.

Amazon's Daily Deal program sometimes included selling select albums a day before their official release dates, something which got Apple's panties in a bundle last summer.

"The conversation with Justice has nothing to do with Amazon getting [music] early. It has everything to do with whether iTunes is trying to control pricing," an unnamed source told Billboard.

Apple's iTunes held 26.7 percent of the U.S. market share for music sales last year, which translates into roughly 65 percent of online sales. But when it comes to straight music downloads, Apple holds a staggering 93 percent market share.

Some industry insiders believe that the Department of Justice's inquiries into Apple's digital music practices could turn into a full-scale monopoly investigation similar to the one done on Microsoft in the late '90s or the Federal Trade Commission's look into music industry price-fixing in the mid- to late '90s.