The U.S. Justice Department has begun an investigation into price fixing on the sale of digital downloads. It appears that there's a question being asked as to whether major label groups like Warner, Universal, Sony BMG and EMI Music have worked together to set the wholesale prices of music downloaded from legitimate online stores like iTunes. That means the price set by these groups as they "sell" them to online stores.
The undercurrent to this story is the much talked about issue iTunes wanting to stand firm on their current price of 99 cents per song for all songs, and the RIAA groups wanting to charge a varying price depending on the song. If they want to raise the price that online stores pay to aquire the song, that would ultimately lead the online stores to start raising prices or start losing money.
In September of 2006, Steve Jobs of Apple called the RIAA groups greedy for wanting to raise the prices of downloads, and stood firm on the iTunes policy of 99 cents a song.
Justice Department spokeswoman Gina Talamona said "The Antitrust Division is looking at the possibility of anti-competitive practices in the music download industry," but declined to elaborate at this point. At this point, none of the groups involved are commenting publicly at all.
What does seem to be a burning issue is that paid downloads are becoming bigger than the next big thing. iTunes just recently announced its one billionth download, and even though we hear a lot from the RIAA about the cost of downloads not being high enough, the profit on a song is good, as there are less production, packaging, and distribution costs involved. This is all happening as paid downloads haven't even reached a mainstream or mass adoption rate yet.