Posted on 01/08/2003 7:51:26 AM PST by fritter
CD Price Fixing Last week I talked about USB Interfaces. This week I report on a lawsuit brought by 28 states against five of the largest record labels in the world.
Ok, let's say you sell widgets, and you charge $30 per unit. People love your widgets so much that they'll pay the $30 because they cost the same at most stores. But you've been doing something very naughty - you've been rewarding the stores that agree to sell your product at the price you've fixed. FOR SHAME.... Not only is that dishonest, but it's morally reprehensible to make your customers pay an artificially fixed price.
It's Not a Fantasy
Well, there's a real-life version of this story going on and we're all involved, everyone who's ever bought a CD since 1995. It seems that record companies have been subsidizing the advertising of stores that agree to sell the CDs at a price fixed by the record company. They even have a name for it, it's called Minimum Advertised Pricing (MAP). The record companies named in the lawsuit are:
Time Warner Inc.'s Warner Brothers Music Group Sony Corp.'s Sony Music Entertainment Seagram Co.'s Universal Music Group BMG, the music unit of Bertelsmann AG EMI Group Plc. Also named in the suit are Tower Records, Musicland and Trans World Entertainment group. You've probably bought records at Tower and Musicland but Trans World is a large player as well; it operates 967 stores nationwide and if you think they're hurting, check out their financial health.
Bilking the Public
New York State Attorney General Eliot Spitzer said that the price fixing represented a few dollars per CD and the total damage to consumers is estimated to be over $470 million dollars. How's that for an industry that says it's being ruined by Napster. I'd hardly call CD orders over 1 billion for the first time in history ruinous. In fact, orders are up over last years figures which were 960 million. According to Soundscan, in 1996 sales were flat at 600 million and now in 2000 you have Britney Spears, 'N Sync and Eminem breaking sales records for new CDs. All the while, Hilary Rosen and the RIAA are crying because of the "damage" that downloads are doing to the industry. HOGWASH! Napster is the best advertising the record companies could ever have, time will prove this. People will always tape and download to try and circumvent having to pay for product, that's human nature. Years ago the record industry was beating a different horse called home taping. Home taping hasn't killed the record industry, 1 billion in orders proves that. "What about the writer!" cries Rosen and the RIAA. Well the RIAA has been at odds with these same writers over the "work for hire" issue, finally reaching agreement only today (8/9/00) after rocky negotiations. This all makes me ill. Not 6 months ago I was agreeing with Rosen, now that the facts have been revealed I'm sickened by their tactics and motives. What do you think? Chime in on the forum thread on this topic... let your voice be heard.
Link: http://www.webfin.com/en/news/news.html/?id=29479
Which is precisely why I have absolutely no problem with anyone who downloads music files even though it is technically "stealing."
I can see why it is wrong when the government does it, as it regularly does with its subsidies. But the manufacturer may ask for whatever price they want for their product; why may they not require their agents to do the same?
There are at least two possible business models here. In one of them, A sells to B, B owns the product, and then B may charge C whatever he wants. In the other, B acts as A's outlet or agent, sells to C at the price A specifies, passes the money to A, and gets a cut. Why is one of these models morally superior to the other?
To the extent that the precise details of the deals between the record companies and the record stores violate a law, they are of course wrong; but then you should still be wlling to defend that law.
Your justification for illegal downloading fails because it hurts different people from the ones you think are engaging in illegal price-fixing. In particular, the recording artist won't get any royalty if you illegally download a copy of his CD rather than buy it. Further, I doubt you are checking that the particular record companies which publish the CD you are copying are the ones engaging in illegal price-fixing.
As some of you may be aware, the music industry and several states AG settled allegations that the major music companies conspired to fix the price of music CDs between 1995 and 2000. If you bought music CDs between 1995-2000, you are eligible to receive between $5 and $20 as part of the settlement. The official website for the settlement is here:
http://www.musiccdsettlement.com
A story about the settlement and the (so far) abysmal response on the part of the public is available at:
http://www.siliconvalley.com/mld/siliconvalley/news/editorial/4889636.htm
The record industry is no different than OPEC. OPEC could not exist under U.S. law, and neither should the record industry in its current form.
Each copyrighted CD is an INDIVIDUAL product which is legally monopolized. "Price-fixing" refers to DIFFERENT marketers of the SAME product -- these manufacturers are making all different products, some of which are more expensive than others. It's the same situation as with books -- each title is distinct from every other, they are not substitutes (though I will grant that nowadays many of the titles within each "category" sound so similar they might as well be the same for most people).
I just filed my claim -- since I did indeed purchase (dozens of) CDs from retailers between 1995 and 2000.
The CDs from every record company have a wide range of prices, and they're all different, so how can you tell that "price-fixing" is going on? Only by some sort of "comparable worth" argument, which would NEVER pass muster with the current Supreme Court just as it wouldn't in the case of "equal pay" lawsuits.
That doesn't mean I feel guilty about filing for my share of the settlement. They want to give me and their other customers a rebate for greater public goodwill, that's fine with me.
I understand the technicalities of a "monopoly by definition" when it comes to copyrights, but I could also argue that copying music is technically not "theft" because the owner of the material that is stolen still retains it.
What is ironic is that many of these record companies are themselves complicit in the very same copyright violations that they are complaining about. Sony, for example, has a record division that is allegedly affected by lost CD sales due to "copyright infringement," and yet the consumer products division of Sony manufactures and sells MP3 players whose original sole purpose was the playing of MP3 files that had been downloaded from websites like Napster!
This is comparable to a publishing company selling paper, covers, and ink to a customer knowing full well that the customer intends to make illegal copies of the publisher's best-selling books, then complaining that the customer violated the copyrights!
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