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Major Record Labels Cleared in Internet Investigation Print E-mail
Wednesday, 24 December 2003
Back when Napster was turning the music world upside down in the late 90’s and the concept of downloadable music was in it’s infancy, major record labels were frantically trying to jockey for position in a game that none of them had ever played before. Their initial reaction was to try to shut down any and all illegal venues of music distribution on the Internet. Their next step was to create their own online music serves to distribute content legally over the Internet. Sony Music Entertainment and Universal Music Group created a service called “pressplay” and Warner music group, EMI Music and BMG Music with the assistance of streaming-media company Real Networks formed MusicNet.

The Justice Department launched a probe in mid-2001 to investigate whether or not the major record labels were stifling competition by giving their own online ventures preferential licensing terms to the disadvantage of independent competitors and to find out if the labels were attempting to thwart the digital distribution of music to protect their existing CD business. The findings of the investigation were that pressplay and MusicNet had established safeguards to prevent executives from sharing confidential information, and that the licensing terms the labels granted third parties varied significantly.

During the investigation, the world of online music changed dramatically as things began to sort themselves out, proving that the labels were not conspiring to keep competitors from licensing their copy written material. Apple successfully launched their iTunes online music store. The current pay per download version of Napster was resurrected by Roxio using the user base and infrastructure from the now defunct pressplay. Consumers can also purchase and download songs legally from sites such as Walmart.com and Buymusic.com with many more online music stores coming to the marketplace soon.

Source: San Jose Mercury News

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