Online music under US investigation

The US Justice Department has begun antitrust investigations into the online music business.

The move follows hot on the heels of the US legislative action, confirmed on Friday, to ensure online music does not become dominated by the "big five" music companies.

The Music Online Competition Act was introduced last week by two members of the US House of Representatives, Rick Boucher, D-Va., and Chris Cannon, R-Utah.

The Act aims to ensure that the two upcoming online subscription services, MusicNet and Pressplay, which are now under investigation, do not dominate the marketplace.

MusicNet is funded by Warner Music Group, Bertelsmann AG and EMI, while Pressplay is owned by Sony and Vivendi Universal.

US regulators running the investigation will be examining the record giants' use of copyright and licensing practices regarding their control of online music distribution.

The new Act will ensure that if the two online services cross-license their catalogues to each other, they must offer the exact same terms to competing online music distributors and Webcasters.

Boucher said his bill would prevent the two services from forming a "duopoly" for controlling 80 per cent of the market for online music distribution.

"What we're seeking to do is make sure competition does arise in music distribution," he said.

The Recording Industry Association of America (RIAA), which represents the major companies, immediately criticised the Act, saying there was no need for legislation in the nascent industry.

"Many in the industry will fight this bill aggressively because we know that the marketplace is already moving in the right direction, and that consumers will be served well by both the current and coming plans for online music services," said RIAA president, Hillary Rosen.

The legislation was greeted favourably by The Digital Media Association, which counts Napster among its members.

"The Music Online Competition Act will ensure that consumers have internet access to legal high-quality music, that creators get paid rapidly, and that competition - rather than lawsuits - will drive this marketplace forward," said the association's executive director, Jonathan Potter.