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Pressplay and MusicNet, the two online music services backed by the major record labels, aren’t even in operation yet, but government antitrust investigators are already worried about potential harm to independent competitors. The Justice Department’s antitrust division is asking the five major labels for information about the ventures as part of a review of the two services, a person familiar with the investigation confirmed on Monday. Pressplay is backed by Sony and Vivendi Universal, and MusicNet was formed by AOL Time Warner, EMI Group and Bertelsmann. Pressplay and MusicNet declined to comment. The Justice Department was not immediately available for comment. News of the probe was reported over the weekend by the San Jose Mercury News and on Monday by The Wall Street Journal. The scrutiny comes after unaffiliated online music services complained that the two services backed by the labels were unwilling to negotiate with them over access to the big companies’ vast song libraries. The complaints also prompted two members of Congress last Friday to propose legislation requiring the labels to license online music rights to unaffiliated sites on similar terms to those granted to Pressplay and MusicNet. Rep. Rick Boucher, D-Va., one of the sponsors, said last week that he feared that the two sites would refuse to deal with any smaller competitors and create a “duopoly” for online music. And in June, antitrust regulators in the European Union opened a probe into the same issues of possible concern to the Justice Department. Since the demise of the free Napster service — due to a lawsuit filed by the big record companies — Internet-savvy music fans have been awaiting promised legal offerings from the record labels and others. But not much is available yet as all of the services work out tedious technical and legal arrangements to ensure that songs can’t be pirated and that copyright owners are compensated. The record labels won’t unveil their services until autumn, and none of the independent Web services has access to much of the popular music that made Napster an Internet sensation. In the meantime, some music fans have turned to free file-swapping services that resemble the old version of Napter, such as Gnutella and Aimster. The Justice Department’s probe does not necessarily mean that the agency will take any action against Pressplay and MusicNet. Antitrust law prohibits competing companies from banding together to raise prices or quash other competitors, but joint ventures are permitted when consumers benefit. Ventures similar to the labels’ online services have also faced scrutiny. The Justice Department is also investigating the online ticket-booking site of the major airlines, Orbitz, and the Federal Trade Commission last year reviewed but took no action against Covisint, an Internet-based auto-parts market backed by the Big Three automakers. Related Articles from The Industry Standard: Will Music Execs Work This Week? DOJ to Probe Music Sites Code Red Rides Again Copyright � 2001 The Industry Standard

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