U.S. Widens Probe of Online Music Ventures

By | October 16, 2001 at 12:00 AM

The U.S. government has expanded its antitrust investigation of online music ventures backed by the recording industry, a trade group confirmed Monday.

A spokesman for the Recording Industry Association of America said the trade group had received a subpoena from the Justice Department seeking to determine the extent to which the industry sought to control distribution of music over the Internet.

“Yes, we did receive a CID,” or civil investigative demand, RIAA spokesman Jano Cabrera said.

A Justice Department representative did not immediately return phone calls.

The Justice Department launched an investigation last summer of two industry joint ventures, Pressplay and MusicNet.

Backed by the five major recording labels, the two ventures seek to provide a legal, industry-sanctioned alternative to rogue song-swapping services like Napster and Fasttrack. The two are scheduled to launch this fall.

A spokeswoman for MusicNet confirmed the service had been subpoenaed and said “we are cooperating.”

A spokesman for Pressplay confirmed that the company had received what he called “a request for information” and said they were not surprised by the request.

“We have been cooperating with this inquiry and will continue to do so,” spokesman Seth Oster said, calling the investigation “a matter of routine.”

The Justice Department is seeking to determine if the industry colluded illegally to set rates and terms for use of its music.

MusicNet is owned by AOL Time Warner Inc., Bertelsmann AG, EMI Group Plc and RealNetworks Inc.

Pressplay is owned by Sony Corp.’s Sony Music Entertainment Inc. and Vivendi Universal’s Universal Music Group, which uses technology from subsidiary MP3.com.

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