Wired on Friday: For years, the major labels were berated for not being sufficiently sprightly in offering digital downloads of their bestselling tunes. Now those companies have started offering their tracks online, they are suffering the ignominy of criminal investigation. And by none other than New York's attorney general, Eliot Spitzer, whose staff announced over Christmas that they have been looking into price-fixing in the online music market. Can the music industry get an even break?

Spitzer's office issued subpoenas over the holiday to EMI, Sony BMG, Universal Music and Warner Music, all concerning their handling of digital music sales. It is believed the writs concern the four major music companies' negotiations with online music shops like Apple's iTunes Music Store.

Apple insisted at the launch of its iTunes Music Store that every single track in its music store would sell for a flat fee of 99 cents in the US (€0.99 in Ireland).

Initially, the music labels agreed to this flat-pricing, but are now intent on changing the deal when the contracts come up for renegotiation this year. They want Apple to charge more for popular songs and charge less for older tracks.

There's nothing, in itself, wrong with price differentiation - it can bring many advantages to customers and producers. Spitzer's intervention appears to concern exactly how the labels are intending to fight for that agreement.

Companies can charge different prices to retailers, but attempts by producers to fix the price industry-wide for consumers by conspiring against retailers is against US - and New York - law. The labels can raise their own wholesale prices, but they can't tell Apple what to do at retail.

US antitrust law is largely concerned with consumer rights. In Europe we tend to see such investigations in terms of monopolies. In the US, monopolies are permitted as long as they benefit (or at least do not harm) the consumer. Viewed through European eyes, there are clearly all kinds of monopolies at work in this debate. Deciding whether they are good or bad for the consumer is another matter.

Music companies are aggregated bags of monopolies; they own bundles of exclusive rights to their artists. Warner Bros has a monopoly on Madonna; Sony BMG on Bruce Springsteen. On a larger scale, they are also oligarchs.

In attempting to keep hold of their own odd form of near monopoly, those content companies have helped create another: one that does not share their interests.

One of the reasons the music industry held off from selling songs online was that they were unhappy with the threat of their end-customers copying and sharing digital files between each other.

Companies like Napster reported again and again that on approaching the major labels, they were firmly rejected - until the labels were happy that they could provide some technological solution to widespread copying. Rather than picking the best retailer in the early P2P market, they refused to work with any.

Apple's iTunes was one of the first to break the impasse. Apart from Steve Job's own heft in Hollywood, the iTunes Music Store uses Apple's Digital Rights Management (DRM) system, called FairPlay, in which Jobs promised at least some protection for the labels from rampant internet copying.

Unfortunately for the music labels, by making a pact with Apple, they created a near-monopolistic monkey for their own backs.

In order to work as a copy-restriction system, Apple's FairPlay is deliberately made to be incompatible with almost anything but Apple's own products. That's how DRM works. If it wasn't, then Apple wouldn't be able to guarantee to the labels that their precious music wasn't being misused.

Of course, Apple could license their technology to other technology producers. But why should they? Apple makes a sliver of a profit at iTunes, but makes up for it by its sizeable mark-up on its music-playing iPods: and iPods' unique compatibility with the iTunes music store is an excellent incentive for its customers. Apple is no more likely to license FairPlay to its competitors than Warner Bros might let EMI market Madonna's songs.

For the labels, it gets worse. When they try to offer their music through online music services other than Apple, they naturally want to use just as restrictive copy controls as FairPlay. Except if they use any other DRM, their music won't play on the FairPlay-only iPods. Apple, it seems, has the labels doubly locked in.

So why is Spitzer investigating the labels, and not Apple? Spitzer's brief, at least politically, is to protect consumers, not other industries. The music industry makes its own deals, and if it made a bad one with Apple, it has plenty of legal tools at its disposal. Sony BMG, for instance, refused to offer its artists for iTunes' Japanese store.

Spitzer's office says that its investigation is only preliminary. And judging from the tight spot that the labels find themselves in, it sounds like price differentiation in Apple's store will happen when Apple wants it - which is exactly how the law says retailers should be able to treat wholesalers.

For now, there's not much for the labels to do but grumble publicly about pricing, as Warner's head Edgar Bronfman jnr has in the past. And wonder if there is any way they can get around the monopoly on music players that Apple has now managed.

There is one way forward for the labels: a file format that runs on both iPods and its competitors that they could offer to any online music retailer. It also has several other advantages to iTunes music: you can play it on platforms like Linux, you can back it up and you can share it with your friends.

Unfortunately for the music industry, that format is MP3, and the reason why it's so convenient is because it has no DRM on it at all.

Truly, the music industry won't get a break until it realises that it is its own strident demands for digital rights management as a deal breaker that make them susceptible to these company-towns of content.