Slashdot Mirror
FTC Settles With Big CD Makers-Cheaper CDs Coming?
kid_wonder writes: "The FTC today announced that they had '... reached separate settlement agreements with Universal Music and Video Distribution, Sony Corp. of America, Time-Warner Inc., EMI Music Distribution and Bertelsmann Music Group (BMG), the five largest distributors of recorded music who sell approximately 85% of all compact discs (CDs) purchased in the United States to end their allegedly illegal advertising policies that affected prices for CDs.'
"
This doesn't actually mean prices for cd's are being lowered. What it means is resellers now have the right to have "sales" on cd's. It may take a while for consumers to benefit from price wars if all the resellers decide to keep prices high. Second thing that could happen is this could be good for large resellers but small business owners may suffer if they can't afford to match the prices of larger resellers who buy bigger quantities and have less overhead. It is potentially good for the customers but perhaps bad for small business
Oh my god It'S flatlined!
Quick! Call the Code Blue!
134340: I am not a number. I am a free planet!
CD prices are set at the price that the record companies think people will pay. Cost of production doesn't make a difference.
If you ask me, its no good buying a CD and then complaining about the price. Obviously you could afford it.
In quantities of only a couple of thousand you can get music or data CDs pressed and inserted into jewel cases (with multi-color printed sleeves) for around $1.
On a clear disk you can seek forever
Actually most, at least a year ago, hovered around the 3000 yen mark, or just under 30 bucks. Though I did find all three Beatles anthologys for 1800 yen once, that was during the economic problems so that was less than 15 bucks each at the time
The libertarian recourse in this sort of situation is typically that they should "start their own distribution company". Small, starving start up bands don't have these kinds of resources, if they did they would have done it all ready. This is one area where Libertarianism is terribly naive.
Because of the monopoly status of the RIAA musicians have only two choices. Either remain insignificant forever, or sell out to the recording industry.
Obasan
If a tree falls in the forest, and kills a mime, does anyone care?
There is competition, and it's on two fronts.
First, the consumer can choose not to deal with the retailers. Just as an example, specialized places like Century Media sell for $11 per CD for things on their label, and $12 on other labels. And of course, CDs from mp3.com is even cheaper and carries a much wider variety of genres. These also have a secondary advantage in that they have a lot more selection that Best Buy. I recall browsing through Best Buy several times, and for all the CDs they had, they just didn't .. well .. have anything.
The second front of competition is one that is still just emerging, thanks to technology and The Internet. The creators of music have the option of not dealing with the big media companies. Independent production is possible now without requiring too much capital, and The Internet is capable of competely obliterating the distribution problem. Musicians have a choice of whether to deal through the big labels and retailers, or going indy and selling other ways. Up to now, that choice has been quite lopsided. But that's changing fast, and it may soon be lopsided in the other direction.
Keep in mind that there's two sides to the MP3 explosion. It's not just about disrespecting IP (as mp3.com showed prior to their dumb idea of offering the my.mp3.com service). I don't see any reason why MP3s (or something like them, such as Ogg Vorbis files) cannot be sold, and they've already proven themselves for marketing and promotion outside of the megacorps' channels (MTV, radio, etc).
(BTW, although I consider myself pretty libertarian, I must admit that I'm sometimes stumped as to how the market can fix certain types of problems. I just think that the current music situation isn't one of those cases.)
---
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
Thats more than likely a case of the unit actually honoring the special music bit. Many high end CD players and most DVD players won't play CDRs because they are made on "computer CDRs" and not "Music or VCD". There is a difference... Sure its only a bit placed at the start of the disc *before* you get it and burn it, but many players check for it.F /...
---
Openstep/NeXTSTEP/Solaris/FreeBSD/Linux/ultrix/OS
--- I do not moderate.
For a lot of major video releases, the initial prices are set high so that movie rentals are boosted. The price of these releases tends to drop a month or two after the initial release.
It has nothing to do with DVDs, it has been common practice for quite some time with video cassettes as well.
The world is neither black nor white nor good nor evil, only many shades of CowboyNeal.
To coin a term used by someone else in the music industry. Although this FTC finding is more in line with a protectionist interest it still gets me mad that CD's today still go for $16.98 yet my Phantom Menace tape last month cost me $13.87. I believe that copying wouldn't be so prevalent if the prices were lower or we were paying for the Intellectual Property only and not for the media. (some remember VHS video tapes at $69.95 for a movie) Also, how come Metallica wants MP3 be financially liable for every person who copied a song (Millions of $$$) but the industry cannot be held liable for the $480 million that they have deprived the public of?
I got a pricelist from a local place that does CD duplication. $1.90 per CD including jewelbox, 4 page full-color insert, and shrinkwrapping. That's when buying 1000. I'm sure it costs significantly less as you increase the volume.
Link to pricelist
numb
It is amazing to me that the record industry has been able to fleece consumers for so many years. How long has it been cheaper to produce CDs than cassettes? Five years? Ten years?
When stamping CDs in bulk, the cost is next to nothing. I don't have any references off-hand, but I am positive that it is actually less expensive for the record companies to produce a CD than it is to produce a cassette.
So if the record companies can make a profit when cassettes are sold for $10, doesn't that mean that the extra $5 for a CD is pure profit? Doesn't that mean that the music companies have basically been sticking consumers $5 a pop for the millions of CDs that have been sold?
It's no wonder that the music industry so fears online music. One way or another, it is signalling the end of their consumer fleecing.
--- Biffster.org
"Bite my shiny metal ass."
Is anybody still selling CDs as loss leaders? Regardless the whole reason this policy was created was to protect small mom and pop music stores from large electronics chains such as Best Buy, etc. who were selling CDs at a loss in order to entice customers into the stores. Most of those retailers abandoned that practice after they grew their customer base sufficiently, and I doubt they'll be going back to it any time soon (i.e., this will probably have very little effect on the price of CDs, which are already very low anyway).
now i can buy alvin and the chipmunks greatest hits on cd without worrying about the price!
woohoo!
Be you Admins? nay, we are but lusers!
>...spare a thought for those of us in the u.k.
>who (sometimes) buy a cd for around 17 pounds
>(probably about 30 dollars).
Silly brit, the most mundane UK import costs
$30-50 in the USA.
-fb Everything not expressly forbidden is now mandatory.
I know that the instant reaction is "hooray", and ultimately this will result in lower proces at places like Best Buy (remember when they used to sell new releases for $9.99?).
But this isn't necessarily the case of record companies gouging consumers, so much as record companies "protecting" stores.
Every store buys their CDs for pretty much the same wholesale price (maybe $11), and the MSRP is $15-20. But Best Buy was a new kid on the block and was will ing to lose a dollar on every CD to get you in the store, hoping you'd pick up a CD player or a video game while you're there.
Now this sounds like a good deal until you realize that a Record Store can't sell their music for less than what they paid, and essentially have no chance of competing with a megastore that can treat music as a loss leader. So record stores have been closing, and our musical choices at Best Buy are (needless to say) more along the lines of Britney Spears than Indy Imports.
Granted, this is pretty much the same issue as brick-and-mortar places will face in regards to online retailers offering significant discounts, even willing to lose money to build business the same way best Buy did the first few years.
But economics doesn't go away just because CDs are cheaper for a few years. What happens when everyone but Best Buy (or CDNow or whoever) has gotten out of the CD business? When all the local record stores have closed, and Best Buy decides to start charging $15/CD again? You're screwed, because there's no more record stores. Best Buy can survive a war of attrition a lot longer, and once they win they have no requirement to keep the proces low.
Not that this will necessarily happen (in fact i consider it unlikely simply because online retailers will always be available for CDs at the lowest retail cost).
But it isn't an imaginary fear that the record stores have -- look at the stores that have closed in the wake of the Wal-Martization of america...
Recursive: Adj. See Recursive.
Actually the prices of DVD movies, to me at least, are fairly reasonable when compared to music CDs. I usually pay about $19.95 for a DVD movie and $14.99 for the music CD. Concidering that the DVD is a chuck full of data compared to the music CD, the DVD is a better value. About my only concern about DVDs is the potential to force me to buy advertising along with the movie I want. Even though I work for a magazine and a TV network, I am pretty much tired of seeing advertising being rammed down my throat at every turn. My freaking apples from the bodega have dot com ads on them!!!
Strange women lying in ponds distributing swords is no basis for a system of government.
You gotta wonder how these companies can reach a settlement, but they claim not to have broken the law, and don't have to repay anything. Sucks for consumers.
They like that Weezer song that goes, "If you want to destroy my sweater ..."
$480 million? I think thats WAY low.
That amounts to only $2 per american (if we all bought 1 CD) - which brings the prices back down to oh, $18/CD. Which is still outrageous. Like someone else said - $10 is highway robbery. More like $5 is fair.
I just remembered this old Metallica song. . .
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
...spare a thought for those of us in the u.k. who (sometimes) buy a cd for around 17 pounds (probably about 30 dollars).
Cant think why mp3 sites are so popular...
It took me a few seconds to realize that Swindle and Leary are the last names of two commissioners on the FTC! FTC doesn't like swindlers, and they're leary (leery) of any minimum advertised price policies.
And the men who hold high places must be the ones who start
To mold a new reality... closer to the heart
I don't need an excuse to download mp3s. . .i have a reason. To me, mp3s are a form of protest. . .but not a protest against something as silly as the high prices of CDs. CD prices are ridiculously high, but that's not why i sometimes use napster to download those few songs i've been itching to hear. . .it's because i don't think the recording industry is worthy of my support (money). The RIAA, the lawyers, and the industry execs are all leeches who suck on the talent of the artists and who insist on trying to squeeze as much money as possible out of an antiquated distribution model.
And no, this isn't about disrespecting the artists. Even though i don't think it's a right (as many music industry lawyers would have youbelieve), I think that musicians should be able to be compensated for their work. This is one reason why i buy as many independantly released lps and cds as i can afford. This is not only because indies generally put out (in my opinion) better music, but because they actually treat thier artists well. If you want proof of how majors shit on thier artists, read this.
So please, before you post another reactionary rant, think about the fact that there are actually people out there using napster who are not whiny, spoiled little kids and who have put more thought into the implications of thier use of mp3s than the fact that if they download rather than buying, they'll have more of mommy and daddy's money left over to buy pot.
If the resulting lower prices reduced pirating, increased cd sales and made these companies more money.
134340: I am not a number. I am a free planet!
You see, its OK for the recording industry to screw consumers, but it's not OK for consumers to trade music over the internet because it costs the recording industry too many lost sales. Whatever.
-D
I was in a band. Our bass player started a record label and zine. We sold our cd's for $8 a piece. We did undercut the big names. Dischord undercuts the big names all the time, and has been for about 10 years. The major labels make ridiculous amounts of money, but they also waste it on Backstreet Boys lifesize cardboard stands and Britney Spears breast implants etc. It doesn't LOOK like they have a huge profit margin because they put it against the costs of every stupid penny they waste on advertising and lawyers that sue Napster and mp3.com.
As for soda; it's the restaurants (and movie theaters) that have the gigantic profit margin there.
Of course there is no free market for entertainment content.
I'm amazed at all these naive posts on /. saying they don't "know" what's CD printing cost. Just do a search on "printing CDs" and you would find that in a qty of 1000 you can have them printed for $0.90 a piece, with a box and a paper insert, DVDs - same for $2.00.
So, what is reasonable sale price for them - I would say with over 400% profit - $5 is very reasonable. So, all you RIAA agents vining about "Napster Kids" asking for $5 pricing - shut up and enjoy this illegal (in terms of antitrust) situation while it lasts. And if you sell DVDs at $5 - then you'll have to "starve" on a 150% profit...
The fact that CDs and DVDs are not selling at $5 proves that there is NO such thing as a free market for these goods and services. Learn to live with that all you libertarian buddies :-) And $2 profit per CD is more then enough to feed the artist, as well as run the studio and other supporting services.
Vassili Leonov
Maybe these companies should charge less for their CD's and fire some of their lawyers, fire NetPD and drop some of their stupid lawsuits.
kwsNI
This agreement has more to do with allowing mass merchandisers to advertise their low, loss leader prices without losing ad dollars from the majors. So in certain ways it's a blow to stores that deal exclusively in music. They sell only music, and make their money at this, while stores like Best Buy really just want to sell you a new Microwave.
Most of the music I listen to is on small independent labels (Fat Wreck, Honest Don's, Lookout, Mutant Pop). These cds sell for $9-$12, and often that includes shipping. You would think that MASS PRODUCED cds would have much lower prices.
But they don't, and I think this settlement gives us a glimpse as to why.
The big distribution companies would hurt, but they have taken in a fair bit of cash already, and I like the idea of being able to pay half the price for a CD and give the artist three times what the would get had I bought music at a store.
-DB
[ a directive occured while processing this error ]
Open your eyes! This is a government-initiated plot to kill Napster et al. -- if THEY can initiate a CD price war, music downloads will decrease as purchases become easier. With the MP3 fans placated, there will be far less popular support for Gnutella and Freenet! Used only by a small population of privacy-lovers and computer-intelligensia, these powerful tools for anonymity and privacy abandoned will be easy pickings for the Jackbooted Thugs! Then they'll come for /., and then for my precious bodily fluids!
Friends, we must RESIST this manipulative plot! Don't be bought with the promise of cheap music! Rise up and DEMAND your right to be overcharged for CDs!
-----
Go ahead, blame me... I voted for Nader!
Can you cite actual proof for those figures? I'm not being crabby, it's just that everybody throws them around. As far as I know, the profit margins for these companies is in line with other businesses. If they really have such extraordinarily profitable business models, though, why don't more people enter the market? Just wondering.
The FTC estimates that U.S. consumers may have paid as much as $480 million more than they should have for CDs and other music because of these policies over the last three years.
No wonder the RIAA hates
That is a huge rip off man..
"`Ford, you're turning into a penguin. Stop it.'" -THHGTTG
You may be forgetting about some unsanctioned mind altering substances.
134340: I am not a number. I am a free planet!
CD Prices aren't high - look at Columbia House I have bought hundreds of CDs from them at 11 for a penny! I think I've spent a total of about .20 for my entire collection of over 200 CDs! - but it does get harder and harder to think up fake names - maybe i should try Slash Post (the first) or OOG OS CAVEMAN
UK folks have nothing on Japanese CD prices, where one disk can easily set you back 4300 yen (40 bucks or so). Ever tried importing one of these babies? Get ready to shell out $50 per disk.
--------
meta4
dw2-dont-spam-me-@opencontent.org
http://davidwiley.com/
I bought my player in 1983. At that time disks were typically C$19 in the big cities and C$21 in the small town where I lived. The price dropped to about C$17 / C$19 a couple of years later, then swiftly rose to the mid twenties (say C$26). I guess this is where you came in.
The price very gradually dropped from that peak towards 20. I stopped buying much music about 5 years ago. Someone from my city has already said that typical prices are now mid teens.
I also found it odd that some small bands sell there CDs at 10$ a pop for a small cd run, vs 18 dollars for a mass produced cd.
Blank CDR's are somewhere under $2. A recorder for them is US$100. A band member's time is worth $7/hr and he doesn't even have to sit there watching the progress bar chug for the hour. I would be very surprised if the stamped disk is more than 50 cents in 1000 lot runs (not counting printing, case, or case printing.) I'd be surprised if the media were more than 20 cents in the very large runs. Your $18 is paying for the artist's lifestyle, the massive ad campaign, and for DMCA lawyers to harass websites.
But in smaller towns and cities the independants have taken a pounding. When I was a teenager in Newcastle there were over 10 independant stores in the city, there seemed to be about 3 or 4 left the last time I went back, and they weren't all that much cheaper than the majors (HMV, Virgin). They've all been squeezed out of existence.
Going into an HMV in the local mall, I found most of the albumns were priced at around £18. This is $28.80. I nearly passed out!
Sales Tax (VAT) in England is 17.5% (not nearly the highest in Europe) so that would make up about £3.15 of the £18 total. Yup that $5.04 tax, so the CD costs $23.80 before Tax. Sales Tax in NYC is 8.25% and CDs cost $13..14, so that's $1.55 in tax.
So a good comparison is:
$12.45 in the US versus $23.80 in the UK.
Thats 91% more in the UK.
When asked why this is, the major distributors have frequently explained that its because "fuel prices are higher". Yes, they really do have that little respect for us.
Lord Pixel - The cat who walks through walls
Lord Pixel - The cat who walks through walls
A little bigger on the inside than out
I have a friend that owns a cafe that serves Coca-Cola fountain products. He says that his cost for a 16oz soda, including the paper cup that says Coke, is less than 16.
I also hate restaurants (usually smaller local places not huge franchises) that say "Free Refills on Large Drinks Only." WTF?
Bringing it back around to CDs, do bands like Metallica, BackDoor Boys, Britney, etc. really need to earn hundreds of millions of dollars? How rich is rich enough? There is a point where you can pretty much afford anything you want. Metallica owns their own jet for Christ's sake. Who do they think they are? Steve Jobs?
MacSlash: News for Mac Geeks
*shrug*
Or start mostly local, DON'T go in for RIAA contracts yet, and distribute particular tracks of their choice for free, digitally. THEN if they're good enough to attract a fan base, negotiate from a stronger position, if they really want to sell CDs en masse. Under current law, that's legal.
Only the dead have seen the end of war.
What situations like these make obvious is that corporations wish to reap the cost benefits of a "Global Economy" by obtaining resources at the low price possible. When I say resources, I mean everything: Cost of Facilities, labor, raw materials, etc. At the same time, corporations are lobbying (and successfully, at that) for laws that restrict where we can buy our media, how we can view it, and where we can view it.
It's a double standard in the worst way, and it's all in the name of God Money.
In the case of the music industry, they think they can get what they what by throwing money into overcoming any obstical that threatens their insane amount of profits, and then further gouge consumers to make up the difference. The problem is, it's almost always worked. They've gotten almost everything they want; the DMCA is the most recent example.
In my opinion, the situation WILL change. However, it's gonna be one hell of a battle: The music industry have rather large war chests that have been filled by gouging us for all these year.
o/~ "They stab it with their steely knives, but they just can't kill the beast." o/~
--
Intelligence is definitely a recessive trait.
I have a better theory for you. This is imunization from consumer class action AND getting the Feds off their backs. If the FTC found them guilty it would expose them to the ligation of the millions of consumers who got fleeced. Imagine if they had to pay even some of that money back to consumers in some kind of mass settlement.
Hmmm kinda sounds like what a company in Redmond might experience.
Gee, so if prices drop down to $10 US, what excuse will all the Napster kiddies use? I know, they'll just insert the new price and make the same argument! "Dude, CD's are way overpriced at $10 bucks. I'd buy them if they were priced at $5, they way they should be." Moderate away
I know a little of topic.... What will the record companys do about the Kingston dubplate cutter?. I know i'll be cuttin some of my mp3 collection to vinyl. Will we see the dinsour record companys try to kill this wonderful invention ?
Do Not Read Burgatronics... It's Evil
Well, my brother has played on a variety of Sony and MoJazz albums, and his ska band just turned down a Sony contract because they wouldn't see any money from the disks until they sold approx. 75,000.
I know a lot of musicians, particularly, jazz ones, who lost money selling 50,000 CDs.
Not sure if that falls under "proof", but that's where my numbers/info come from.
Carefree highway, let me slip away on you.
These distributors are making the same mistake as Apple by charging $11 per CD. Apple enjoyed fat profit margins finishing out the 80s and it very nearly killed them.
If CDs cost the consumer, say, $3 or less, the industry would simply explode, and make a small lucky group even more astronomically wealthy. Let's say it cost $1 for a CD. People would buy them like Coca Cola at a vending machine; I'd buy a few CDs all the time and just throw out or give away those that were duds, which in the long run is a hell of a lot more profitable for the distributors, because they'd be moving an avalanche of product.
The first distributor to get their CD prices instantly down to $2 at retail will win big.
/. peeve #274: The word is neither "walla" nor "whala", it's voila. Phonics is a tool of the devil.
This post leads me to a question: Why is the cheapest medium (CD's) the most expensive, even in indie recording (compared to vinyl and tapes). In my mind, EP vinyl, the cheapest way to buy music (around here) is probably the hardest and most expensive to produce, followed by tapes. Is this true? Why do people release music on vinyl for cheaper than CDs or tapes? thanks...
$480 million in 3 years. Here is CNN's article, which informs us that these companies cost us around $480 million over the last 3 years. When the industry starts playing fair again every CD should be $2-5 cheaper. This is ridiculous. And my local paper said the FTC doesn't plan to pursue fines. So we all lost out. And they wonder why we turn to napster, while they are constantly screwing us with illegal business practices? I'm through, from now on I buy only used CD's, or use napster.
I just finished taking intermediate micro, and one thing that I came away with is that libertarians spend way too much time explaining away how public goods will be provided, and all the efficiency arguments, and way too little time on antitrust.
Anti-trust is probably the biggest weakness on the economic side of libertarian theory. The biggest weakness overall is probably what do you do with children? I mean, babies are supposed to be pretty much property, but adults are supposed to be free to do whatever they want. So can a 16 year old refuse to go to church?
The first thing to say about anti-trust is that it isn't as big a problem as people think it is. Sure, we're getting overcharged for CDs, but most of that is just a transfer from consumers to record companies, but money never actually disappears from the economy, so the stockholders in record companies have more money to spend. This is becoming more obvious to people now than in the past, because people are starting to realize that big companies aren't own by rich megalomaniacs (they just run them), but by retirement funds, mutual funds, and that guy down the hall who doesn't have any kids to support.
But there is an actual loss caused by incorrect incentives for the number of CDs produced. You buy less CDs because they're too expensive. It's hard to estimate what this is. A figure mmy econ professor gave was that these Dead-Weight Losses add up to about 1% of the economy, according to a study in the 1950s. There are a lot of reasons this is so small. One is that most things you buy aren't controlled by an oligopoly. Another is that the number of CDs sold at oligopoly prices isn't that much different than the number under a competetive industry.
The one that probably offers the most hope to libertarians is that it's very hard to keep a cartel going. OPEC is around 10 members, and they have trouble keeping everyone in line (remember, OPEC is "legal"). In the music industry, it's probably fairly easy for the producers to keep the price a little above the competetive price, because there isn't much incentive to try to sell more CDs by lowering the price from $17 to $15 when your total cost with all the middlemen is $13, since you wouldn't necessarily sell twice as many CDs at the lower cost. But if the cost is $13, and the cartel price is $25, you've got a lot of room to make some money. Drop the price to $20 and you can make $7/CD on a higher number of CDs. So the higher the price is, the harder it is to keep the cartel going.
The other libertarian argument is that a lot of cartels couldn't exist without favors from government. Some that I can think of specific to record companies would be:
1. Government will go to a lot of trouble to prosecute copyright violations, and the violater will be severely punished. The punishment is out of line with the damage.
2. The government will prohibit sale of stuff that might impact the record companies income, like taxing recordable media, or DCMA enforcement against Apex (regionless DVD player).
3. Copyright is a government granted monopoly. Perhaps copyright could be modified to require everyone (including the copyright holder) to license the work in question at the going rate, and then revenues go back to the copyright holder.
One that isn't specific to record companies is that the government allows for companies to commit criminal acts with no liability for the management. This tends to encourage very large corporations. It might be necessary to keep the capital markets working, but there might be other ways to do it.
I'm actually an anarchist, and think that the existence of government is itself immoral, but I think there's a lot of room for improvement even without doing away with government. Some of the above may be unconsciously stolen from David Friedman's Law's Order, on the economic analysis of law. It's available online at http://www.best.com/~ddfr/
--Kevin
That's an interesting point. However, I think it's fair to point out that people seem more than willing to pay the prices that have been set for CDs, even if they do grumble a little bit from time to time. CD sales continue to increase, despite MP3 and other forms of digital music.
I people were really that unhappy with the price of CDs, they wouldn't buy them; they are certainly not a necessity, like food or electricity (which is also arguable). Even though libertarians in general might not be in favor of price collusion or unfair trade practices, they also believe that the federal government has no granted power to step in and do anything about it unless there is a genuine interstate commerce issue.
People talk like the entertainment industry is the spawn of satan. I don't like them any more than most, but I see that what they are controlling is a pure luxury item. Sure, I would like it better if music recording and playback technology were cheaper and more open, but, I don't have to buy it! That I do seems a validation of the supply and demand system.
As a side note, libertarians have a fundamental respect for personal liberty and personal property, including intellectual property (for which there is a constitutional mandate of protection). This respect would be extremely important to a society with little government control or intervention. Maybe copyright terms are a little too long, though. We could also use a better definition of fair use and a clarification of what buying music entitles one to.
-phil
We're wanted men. I have the death sentence in 12 systems!
But people are not buying CDs, instead they swap MP3s on Napster. Why do you think Napster is so popular?
What do the record companies do? Lower prices? No. They send their lawyers to stop Napster...
...richie - It is a good day to code.
To increase sales you need to set your price at a more competitive level. mp3's are free. Therefore CD prices should cost less than an MP3
...can I now sue these record companies for "losses" incurred by purchasing their illegally priced CDs?
--
Terrorists can attack freedom, but only Congress can destroy it.
I could also afford a $5 cup of coffee, but that doesn't mean it's not grossly (and unfairly) over priced - ESPECIALLY if that price is being fixed by the coffee bean growers. Sure, I can afford to buy a cd at $17, but I could probably afford 2 cd's at $10 a piece. Think of how big your cd collection is, and then think that, for the amount of money you spent, it should be almost twice as big. Sounds like a good reason to complain to me.
It's so obvious why the recording industry settled this case. Taking it to court would have raised the profile of the case, and eventually some journalist who thinks for himself would have asked the inevitable question: Is the mp3 issue the biggest problem facing the entertainment industry, or is the real story that the entertainment industry takes every opportunity to act in unison, to the detriment of the consumer.
I argue that we ought to be looking at a lot more than CD prices here. What about the price of movie tickets? What about the cost and features of your local cable television monopoly^H^H^H^H^H^H^H^H service? What about the retail cost of (ahem) Microsoft Windows and business applications for the PC when they are not bundled into a PC at purchase?
There are dozens of examples of consumer goods and services where no effective competition exists, at least in the industrialized countries. I am not as much of a populist as it might seem from what I've said. But, the least these multi-national companies could do is to let the retailers compete on the price.
--
Dave Aiello
-- Dave Aiello
Last night, on All Things Considered they had a really wonderful story about the thing. Check it out (ya need Real Audio).
Basicly, the record companies pay for the ads that the stores run, but they will only pay for the ad if the store does not advertise a price below what the record company wants it to be sold at. Well, call it price fixing or whatever, but payola is payola.
The story also goes into MP3s and how people are really fed up with paying $17 for a crap CD with one good song on it.
Are you sure about that?
RIAA reports units shipped:
1997 753.1 Million
1998 847.0 Million
1999 938.9 Million
True, these are number of units shipped (not bought), but still, demand doesn't seem to be dropping off... I don't think they'd increase shipments by 12% if the demand wasn't there... Even more funny... there's a reported "cash value" of these CD's there too...
1997 $9,915.1 Million
1998 $11,416.0 Million
1999 $12,816.3 Million
And even funnier still, taking the "cash value" per unit...
1997 $13.17
1998 $13.48
1999 $13.65
Not a pretty trend, huh?
--You will rephrase your request for me to go to hell. Goto statements are not acceptable programming constructs
ok... i'll bite on this troll
THe cost to manufactur a cd is significantly less than it is to manufacture a tape, let alone a good old vinyl LP (mmm... I love vinyl).
THey use the same master recordings, so there isnt any increase in marginal cost, the cost to produce each additional unit.
so then the question becomes why on earth do CD's cost $4-6 more than they're cassette counterparts?
In the late 80's the records companies phased out vinyl in favor of cd's. Supposedly, there was a higher production cost for CD's at this time, and the recording industry being the nice guys that they are, they passed the increase onto us, and promised to lower CD prices once the production costs fell...
Well, production costs fell, but the CD prices didnt... go figure...
and as for lowering sales... well... the recording industry had an 8% increase last year... one of their best years ever. So there is no evidence that there was a negative effect from MP3's...
The Recording industry should learn from the software industry on this one...
A friend of mine's father is a VP at MickeySoft, and the unofficial stance at MS is that low-level non-commercial "pirating" i.e. you giving your friend a copy of Windows or whatever, actually is beneficial to MS in the long run.
As in - you're gonna end up buying SOMETHING from them eventually....
Now the large scale bootleg software that is SOLD... there is a problem with that...
... hi bingo
With the introduction of the CD the average price jumped 35-50% even though the total cost of producing,distributing and selling a CD is 3-5% lower than the old 12" vinyls...
And we are supposed to cry over pirates...
Is it just US imports that are expensive in the UK, or is it all cds? If it's all cds, then whose fault is it really? UK imports purchased in the US also cost an arm and a leg, usually from $30 on up. Pretty much any Euro imported cds are priced similarly. It would seem like both sides are getting screwed on the imports, and this case seems unlikely to affect that.
It's not enough to bash in heads, you've got to bash in minds. - Captain Hammer
I only checked one company, if you go here you'll see that for $3485 you get 5000 pressed cd's (no jewel case or sleeves). That's about $0.70 a piece. Considering how pathetic artist royalties are, this means a ridiculous profit margin for record companies (or whomever). The only thing I know of with a greater profit margin is soda (profit: about $0.95 on the dollar!), but at least in most restaurants they give you free refills.
It's probably a good idea to buy directly from the artist whenever possible. This can often cut the price of an album down to the 5-10 dollar range, depending on the artist. Even when the artist does charge near to what the retail stores do, you know the extra money is going to the artist.
This may not be possible for some artists, especially those with contracts which forbid any distribution of their music not authorized by their label. That always seemed like a bum deal for the artists anyway...
Anyway, how much of what you pay for a KRS-ONE CD goes toward Britney Spears' next video?
"Life has improved immeasurably since I have been forced to stop taking it seriously." - Hunter S. Thompson
SlashMirror: Where to put files for fellow /.'ers
SlashMirror: Where to put files for fellow /.'ers
Since cost is closer to $1 to $1.50 (done) wholesale is a *lot* less than $11. Remember in order for a CD retail to say in business they *must* make $5 per on average, per disk. This puts wholesale closer to $4 (which I've seen).
Has the class action suit been filed yet. Will Metallica be named as a co-dependant? Surely Metallica new that their recording company was doing illegal things.
No... chart-topping music CDs will never be free (as in beer), nor will they be free, (as in speech).
They may, however, be free (as in love)... or free (as in Willy)... or free (as in fifth CD with the purchase of four).
Fortunately, right now, they seem to be free. As in, plundered.
"Beware he who would deny you access to information, for in his heart he deems himself your master."
Around here, at a certain new/used record store, I can get used CDs starting at 25 cents -- hundereds of them. Also 50 cents, $1, $2.50 and $5 price points if they think the CDs in question will go for that price.
The fact of the matter is that CD's produced my major labels will always be incredibly overpriced. It's intrinsic in the business model of multinational media corporations.
A CD costs around a dollar to produce, including mastering, production, and printing/packaging. This price goes down farther when you start manufacturing in volumes like a Sony or BMG produces.
Corporate labels gouge customers and the product they offer often ranges from lackluster to poor. Why bother when you can get a better product from an independant label for less? I would liken it to open source software. Why buy crap from BMG/Microsoft when you can obtain a better, cheaper product from a Touch & Go/Red Hat?
And you can't argue that good independant music is hard to find. Look in a locally owned music store instead of a Coconuts or Tower. And the Southern Records consortium distros lots of great indie labels.
Basically, there's no reason to settle for crappy, overpriced CDs.
</RANT>
. We've got computers, we're tapping phone lines, you know that ain't allowed - Talking Heads, "Life During Wartime"
How long have you been working for the music industry?
134340: I am not a number. I am a free planet!
Does the entertainment industry (in the USofA) have any sort of statuatory exemption from antitrust regulation, similar to that held by major league baseball? As a non-lawyer, it seems to me that many things the recording industry does (DVD "regions" comes to mind, as does SCMS) are gross violations of antitrust regulations and potentially vulnerable to class-action lawsuits on behalf of _all_ consumers. Am I missing or misinterpreting something here?
sPh
If you check out 'Behind the Music' on VH1 for a lot of bands, including TLC, you will find out that they make pretty much dirt from CD sales. TLC made $.50 per CD, divided among the 3 group members. And they had to pay all of their own production costs. So they sold 5 million CDs and were broke.
Kintanon
Check out JoshJitsu.info for Brazilian Ji
libertarians explain away.
Well, in any business you have "barriers to entry." The barriers to entry in the lemonade-shop business are low. The barriers to entry in the aircraft-carrier-production business are high.
The barriers for CD distribution are not necessarily high, so anyone who has, say, half a million bucks could probably do it. However, with this as in all other businesses, government intervention (taxation, interstate commerce regulation, et al) raises the barriers to entry. Since the music industry is notoriously sue-happy, you would have to be very careful about entering any facet of it without a substantial legal defense fund. In the ideal libertarian world, you and I could start a distribution service and enjoy unfettered access to the retail channels.
The libertarian response to the MP3 problem, as it is to many things, is a "can't beat them, join them" response. In a libertarian world, music companies who wanted to compete with MP3 would create a reasonable, fair, low-cost MP3 system. In the Democrat/socialist view of things, the companies run to the government/legal system and beg for protection, and they'll get it, just like China will get their most-favored status no matter what! (with the exception of importing firearms, of course. It's okay to have a kid shackled to a sewing machine, but not to have inexpensive firearms available to Americans.)
Carefree highway, let me slip away on you.
Remember back in the early 90's when Circuit City, Best Buy, and other such stores had CDs solely as loss leaders? They would sell disks for prices sometimes as low as $10 just to get customers in the door. When the cost price of a disc (from distributors) is usually $10.50 - $11.50, small, independant stores just cannot compete. What we need to do is start shopping smaller outlets. Don't blindly concern yourself with price alone, else before you know it we all will only be able to buy what Mr. Corporate Music Outlet deems to be our favorate song this week.
And Big Music is wondering why pirating MP3's is so popular. Sheesh! Wake up and smell the consumer disgust! They're disgusted with the whole system. I'd love to download only the music I want, and pay $1 for each song DIRECTLY TO THE ARTIST.
There are too many middlemen who are getting too rich, while the artists get sucked into unfair contracts. Let them sell CD-burners, MP3 devices, and music download services instead, and see if they can survive REAL competition. This is where the future lies.
True, but with the rise of sales, the record industry will have a difficult time proving harm in their various mp3-related lawsuits. Granted, it might not be a requirement in every case, but if it is, i'm not sure how they would offer proof of harm. Same goes for the MPAA in their DeCSS lawsuit. I hope the injunction against the defendants is overturned due to the fact that there is simply no evidence of "irreparable harm" to the movie industry.
It's not enough to bash in heads, you've got to bash in minds. - Captain Hammer
While the initial reaction to this news for a consumer is "Yippie, cheaper CD's!" The end result of this ruling is that the retail CD market will become dominated by a few major players (read- Big Corporations). I worked in the music retail/wholesale for 5 years and the profit margin at that level is small compared to other business'. When Best Buy et al were using loss-leader tactics it was just killing everybody in the business.
Save a couple bucks on your Cd's and say hello to limited choice and corporate domination.
Jonathan Moran
Oink, Oink!!
I have a small indie record company. I make CDs for $1.50 with full color booklets, tray cards, etc. that look and sound as good as major releases. I also sell through MP3.com (click above to see an example) for $6.99; they handle credit cards, shipping, and manufactruing and give me half. All I do is upload songs and graphics files. If that's not proof that retail CDs are ridiculously overpriced, I don't know what is.
InstaPundit! Ahead of the Curve Since 30 Minutes Ago
For the longest time now I've been buying used cd's in my area. I remember there was a time a while ago when the recording industry tried to prohibit the sale of used cd's. This ended up backfiring. I hope that napster will force the price of cd's down to where the used ones are now. They are just to damn expensive. I'm just glad I live in an area where there are 5 that I can think of used cd store's and probably plenty more. It's also alot like mp3s you get to find alot of good old discontinued stuff. Plus the stuff costs alot closer to what it's supposed to cost, $5-9.
It has been statistically shown that helmets increase the risk of head injury.
I said in the Metallica story that CDs are too expensive. You would figure that since the medium is so cheap, they would be about the same price at tapes used to be. Prices jacked up all over. What the hell do they think they are pulling? Really think everone is going to pay thousands of their salary for a few crappy CD's?
Eh...
...since the rise of piracy and mp3s, record sales HAVE gone up, even without lowering the price. That's one of the major arguments in favor of free music...it doesn't really seem to be hurting anybody's sales at the moment. The lowering of CD prices will only continue the trend, IMHO.
The Divine Creatrix in a Mortal Shell that stays Crunchy in Milk
The House Between - Original Sci-Fi Series
Why we use Napster or Gnutella to get our music...
(MP3 would be a lot less popular if companies would sell me the records I want. Is it really illegal if there's no other *convenient* way to get the music?)
- A.P.
--
"One World, one Web, one Program" - Microsoft promotional ad
"Remember when the U.S. had a drug problem, and then we declared a War On Drugs, and now you can't buy drugs anymore?"
1) A lot of parties want desperately to make sure intermachine communication never becomes "protected". For example, making it a crime to snoop network traffic between personal (as in "not at work") computers. Traditionally, "pirates" made money selling bootlegs. It is a modern phenomena that freely traded software and music (no profit motive) has become a crime. After all, the radio stations pay a pittance (and they earn PROFITS) for the right to distribute music to millions of people. Trading all music freely, and boycotting CDs, is a great way to bring this issue to the forefront -- "Does the government, or any other entity, have the right to control the information passed between two privately owned personal computers?" I say no -- if they suspect a crime, they need a warrant, etc. This decision, one way or the other, will have to come about some day.
2) Western tradition has many instances of "The People" getting fed up with racketeering capitalistic monopolies and taking the law in their own hands. People like you say "Well, if someone rips you off, don't buy anything there--just turn your back". This action may be valid for you, but not necessarily for someone else. Our culture has a long history of hatred, violence and law-breaking in the name of freedom or just exhaustion from the "gutting" these (few?) renegade corporations do to us. I simply WILL NOT abide by the rules as laid down by the RIAA. In my opinion, they are a far more criminal organization than any person trading copyrighted CDs for free. By their actions, thay may set a precedent for legalized corporate intrusion to our personal computers -- machines with microphones, and sometimes cameras attached--that will take hundreds of years to roll back.
The goal, as I see it, is for intermachine communication, of a non-commercial nature, be as protected as speech. No intrusion, for any reason, without a warrant, on a case-by-case basis. Let Let Lars, Mustaine, Dre and the RIAA search door-to-door for all I care. They have to ask for permission to enter my house--at least through the door. They can get their fscking nose out of my network.
By the way, here's a great piece of art that sums up what the RIAA thinks of your freedoms.
Treatment, not tyranny. End the drug war and free our American POWs.
See my user info for links.
How many people think that this is just a quick fix by the record companies to get the feds off their back? Maybe cd prices will go down, but I can't see the prices going down any more than a dollar or two, but nowhere near where they should be.
In other words, this is probably just for show. Then when mp3 pirating continues, the monopolistic pricing excuse just won't be able to hold up.
I hear everyone complaining about how high CD prices are. Well, they wouldn't be so high if no one bought them. Sure, perhaps the average /. poster doesn't buy into all the hype and it's the ignorant consumers who are buying all the cds, but if that's the case, this drop in CD prices probably won't affect you much. I for one only buy CDs of small name bands from small record labels (I love Asian Man Records and CDs cost between 3$ and 8$).
You want cheaper CDs? Stop paying 15$+ for them.
I think CDs actually cost less to make than tapes (in large quantities).. I always wondered why they were so expensive... I underestood it when they came out (late 80's) because of limited capacity, but now?
I also found it odd that some small bands sell there CDs at 10$ a pop for a small cd run, vs 18 dollars for a mass produced cd. I couldn't figure out how the additional promotional/engineering/mixing cost would not be offset by the "mass production"
This explains it.. Illegal tactics al-la microsoft.
Just another example of the music buying community getting ripped off by the antitrust violating big labels. The bigs and a few artists have the RIAA, the brick & mortar retailers have the NARM, the non-platinum artists have BMI and other organizations. Where is representation for the music listener in the courts? Where is our seat at these trials, settlement talks and FTC antitrust investigations? How about washing the 480mm the FTC says consumer's over paid for CD's since 1996 against the 400,000 plus Beam-It user's unlimited usage of CD's they already paid for and stored on MP3.com? Additionally, any person that has purchased a CD in the PAST should be able to Beam proof of ownership to its MSP of CHOICE and get lifetime free access anytime anywhere provided by anyone. What else could be done with the 480mm? We all know that this amount is VERY conservative. It is time that there is representation for the listener. Lets sue the big labels as a way to back-off them off this Diamond/MPPP/Napster lawsuit detractor cycle. Coming soon to protect the listeners is http://www.480MillionReturned2CDbuyers.org Let the FULL music wars begin!
They didn't mention DVD's in the article, but it would seem that the arguments for cheaper CD's could also be applied to DVD's - I wonder if this descision does apply to DVD's, or if they have the same kinds of issues with a lockdown on advertising below a suggested price.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
If I was an American I would be screaming "CLASS ACTION SUIT!" against these compandies. But I am a Canadian, so can I just have another beer and a backbacon sandwich please?
Going on means going far
Going on means going far
Going far means returning
A simple solution. Buy CDs from used-music dealers. They're almost always locally owned, the staff is a hundred times more knowledgeable than the gimp at Best Buy, and the CDs cost less and sound the same. The lion's share of your purchase goes to the broke guy who sold all his CDs to the dealer, rather than to the record label. Now, who needs the money more?
J
I worked at Best Buy for a long time, and I left on a bad note. Best Buy sells more revenue in CD's daily than they do for 3/4 of the store. I remember the first day they had CD's. They made money on them then (about $4 each) and they make money on them now. Best Buy loses money on computers (so they can sell service) but the will not lose money on something without a service contract of some sort.
Spring is here. Don't believe me, look outside!
DVD's are starting to wander up to about $30 for really well-known new releases (like the Sixth Sense), which I think is a bit high.
I think even $20 is a bit much. Between dvdpricesearch and mobshop, I usually pay about $15 for a DVD. I do realize though that we probably have to pay a bit more for good transfers and interesting extras! I've been wondering if directors and stars do commentaries for free (doubtful!), or if they have to be payed a lot to do a commentary track. Perhaps they gain an increased percentage of sales.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
I admire that guy... when they asked him about staying with her despite his $2.5 million loss, he said, "I can replace the money, but I can't replace her"
The course of true love never did run smooth!
Carefree highway, let me slip away on you.
*: To get the four to six dollar estimate, I am considering a $0.50-$1.00 cost of manufacturing and then a much larger advertising and distribution budget.
tell me this: Why does a red hat CD cost $50-$120, depending on the version? Why does a Windows 2000 CD cost $300? And why does Netscapes Application Server run $35,000 for the CD? They all cost exactly as much as a music CD to produce, except some of them come in bigger boxes and have manuals... so add $.50 for the box, $1.00 for the manual, and that means that we should be seeing all software sold at Cheapbytes prices.
I mean, you're completely forgetting all the people involved in the CD... Go learn more about the record industry, or at least exactly what it takes to produce a CD, before you make up figures, please.
With this statement by the FTC, it seems that they are saying that MAP agreements are generally illegal.
MAP agreements are widespread in the electronics industry and are used by Apple. What does this mean for them.
As a Canadian who is going to be paying tax on recorable CDRs to offset the cost of people burning music CDs, I'd like to see the record companies give *US* money back to offset the $480 million they stole from us...
I think our current copyright laws contribute to the monopolistic practices of these companies. Basically, they have individual monopolies over the artists. And this is why the FTC's actions will be fruitless.
Essentially, if you want to buy a that new pop CD, you don't have a choice of who's CD you get. Meaning, you can't choose between producer A, and producer B.
And what's evn more strange is that feels perfectly normal! What if intellectual property laws were set up that does not allow an artist to give up their rights to music. Suddenly, there may be 5 different companies producing the new CD you're looking for. And with all this competition, prices go down, and people stop whining about piracy. Piracy is a result of price bloat!!! So instead of being reactive, we need to be proactive!
In my opinion, competition is good. Unfortunately, comporatism isn't into competition.
P.S. Did anyone catch the Tom Leykis show (talk radio) on Tuesday night concerning Metallica and Napster? Wondering where I can get a copy or maybe transcript of the show.
It would seem like the internet should have been hailed as the greatest BLESSING ever by the recording industry. It gives the big labels the opportunity to cut prices almost in half and split the revenues 50/50 with the artist by cutting out the store from the equation. Add in ownership of the means of producing the cds by the lables and you get a golden opportunity for the recording industry. But then again I guess they are run by old foggies with the money to pay $17 for a popular cd.
I'm just a dumb american, but I thought the disparity was due to the taxation system in the UK (possibly the VAT?)
which enjoys a higher profit margin than a music CD... except perhaps for software...
The sad thing is that, of the seven or eight bucks made by the music companies, only a dollar or so usually goes to the artist, and even that only after they pay their promotion fees et al. And then the poor artists are expected to turn around and serve as mouthpieces for the anti-MP3 folks!
Carefree highway, let me slip away on you.
If this is going to cause CD prices to drop for US customers this will further increase the (already significant) difference between CD prices in the UK and the US. It is already clear that the music distributors are taking advantage of strong import rules (as lobbied for by the music and film industry) to screw the British customer.
Even now, before this agreement you can expect to pay 50% more for a cd in the UK than in the US, does anyone know if this will affect prices across the board or will it (as I suspect) just serve to further increase the price difference between our countries? If this is the case what can we in the UK do to improve our situation, we are fed up with our own government supporting this kind of abuse of the British citizen.
Exactly the same situation exists for DVD (that is why I am strong support of the DeCss case) and for a while their was a strong import market until the police/ce (prompted by the government, who were themselves prompted by the US movie industry) raided all the distributors to enforce the region coding system.
At least in this monopoly we know where all the money is being spent - litigating against MP3, DeCSS, etc.!
On the bright side, if the record companies realize that the $12 (US) that they make on each $4 CD* is going to shrink to only a $4-6 margin, maybe one or two will embrace electronic distribution.
*: To get the four to six dollar estimate, I am considering a $0.50-$1.00 cost of manufacturing and then a much larger advertising and distribution budget.
Given one hour to live, the student replied: "I'd spend it with professor FP who can make an hour seem like a lifetime."
how did a band like Fugazi (and all other Dischord label bands) manage to sell all of their cd's for under $10.00? Also, will this effect the cost of cdr and cdrw media? This would make it even easier for bands to create their own product and, along with mp3's, completely undermine the idea of record company and radio control over what people listen to. Now if we could only get rid of mtv (sigh).
We could? Not if the major company requires retailers to agree not to deal with other distribution services, using their leverage and power as a monopoly leader to enforce the agreement. Eg. "You either deal only with us, or you don't deal with us at all." If the major company has a large enough place in the marketplace, no retailer will be able to abandon them completely and stay in business.
Obasan
If a tree falls in the forest, and kills a mime, does anyone care?
I don't care.
I like listening to music.
If I can listen to the music for free, I will. There's not much anyone can do about it.
I don't hate the MPAA. They're doing their job.
I don't hate Lars, he's doing his job.
I just like listening to music.
. at my signal -- unleash hell .
It's one thing to say that something should be done, it's another thing entirely to do it. But I wasn't saying that I did do that, I was merely suggesting that that could be a good way of doing things. It's sorta like saving up your money. It's easy to see that it's the right thing to do, but it's so tempting to spend the cash. Likewise, once you have the songs you want easily-accessible on your system, you don't like the idea of sending money away for it ;)
-DB
[ a directive occured while processing this error ]
It's worth noting, too, that the gross profit margin for Coca-Cola (KO) last quarter was under 9%.
The distributors who own the vast majority of popular music were collaborating to fix prices at a level higher than retailers wanted to charge and customers wanted to pay. This is the kind of situation I'd like to see libertarians explain away.
Seems easy enough to do. With any purchase you have three choices, buy the product you want at the asking price, buy a substitute, or don't buy anything.
There are substitutes. Plenty of small bands that sell their own CDs at $10 a pop. Some labels do sell their music cheaply as well. Heck, some bands release free music.
Customers today do have the option to buy cheaper music, but they aren't using it. Instead they're paying what's asked and grumbling.
The distributors who own the vast majority of popular music were collaborating to fix prices at a level higher than retailers wanted to charge and customers wanted to pay. This is the kind of situation I'd like to see libertarians explain away. Although I agree that many things are over-regulated, it seems like government intervention on antitrust grounds is in this case positive for the consumer and good for business (i.e., the retail businesses gain more than the distributors lose). A small group of companies were using their power to our detriment, while their wide-ranging IP rights made a selective boycott impractical. I can't see how market forces could have solved this one; it's hard to vote with your pocketbook when there's no competition.
I suppose one might argue (as many have) that the MP3 explosion did represent a popular response to the problem. But that too is outside the libertarian system which, if I recall, does respect IP...
- Michael Cohn
-----
Go ahead, blame me... I voted for Nader!