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The internet was supposed to free the marketplace, but in the music industry the opposite applies, writes Alex Malik.RECENT reports say that US authorities have started an investigation into the online music industry, looking into "possible anti-competitive practices".This issue resonates in Australia, where consumers may be paying almost three times more for digital music downloads than they should be.In 1998, the parallel-import amendments to the Copyright Act 1968 were enacted, allowing retailers to import compact discs and sell them provided that they were legitimately manufactured overseas under licence. Record companies opposed these changes, claiming they would destroy the local recording industry.The record companies lost the argument, and in 2001 the Federal Court found that Warner Music, Universal Music and a number of executives had misused their market power by engaging in exclusive deals to prevent parallel imports of CDs.Music CD consumers have two options: they can purchase locally made CDs or they can buy cheaper ones imported legally by Australian retailers. While Australian record companies have complained about these "$10 CD stores", these outlets are not breaking the law.Record companies harbour animosity against parallel importers, refusing to help them if they have any queries regarding the legitimacy of overseas-sourced products, for example. The basis of the animosity is that when an imported CD is purchased in Australia the profit is recorded by the affiliate in the place of manufacture, rather than here.Parallel imports are unavailable in the Australian digital market, however. Australian consumers cannot purchase downloads from iTunes or Wal-Mart in the US, which are often cheaper than downloads available here, without a US-issued credit card.And restrictive licensing conditions imposed by copyright owners also limit the sale of digital downloads across international borders. For both reasons Australian consumers miss out. And retailers cannot buy downloads from overseas and resell them here, even if it is worthwhile for them to do so.In a recent analysis, the prices of Australian-made CDs of artists such as Bon Jovi, REM and Robbie Williams were compared to those of legal parallel imports. It was found that the local product was as much as 300 per cent more expensive.If these savings were available in the digital market, consumers would be paying as little as 67 cents for a digital download, instead of the $1.69 to $1.89 a track they pay at present. Similarly, consumers could be paying as little as $6.91 per digitally downloaded album, instead of the present $17 to $20