FTC probes 5 firms for phone-song sales

Found on Asahi on Saturday, 28 August 2004
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The Fair Trade Commission on Thursday searched the offices of Japan's five major record companies and other firms suspected of monopolizing sales of hit songs as ring tones for mobile phones.

Among the 10 record companies under investigation are Sony Music Entertainment (Japan) Inc., Avex Inc., Victor Entertainment Inc., Toshiba EMI Ltd. and Universal Music K.K.

The companies are suspected of colluding to restrict sales of recordings by their contracted artists as ring tones to one company-Label Mobile-an act that could violate the Anti-Monopoly Law.

Electronic instrumental melodies derived from popular songs are often used as ring tones. While composers and lyricists earn royalties on such cover versions, the record companies do not.

But when a clip from the original hit recording including the vocals is used as a ring tone, record companies can control who has the right to distribute it. The companies also earn income for the use of the music.

Poor music industry needs more money. High pricing seems to be a pretty common way to make money, seeing that MS also gets sued again in California for predatory pricing. A quote from that lawsuits sums it up: "It's anticompetitive, it's predatory, and it denies consumers, and in this case taxpayers, the benefits of innovation that a free marketplace should provide".