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Antitrust Investigation Into Music Companies' Online Efforts
Thanks to Dan Gillmor for the head's up concerning the investigation by the DoJ into MusicNet and pressplay. These are the two big services being put together by Universal Music Group, Sony Music Entertainment, Warner Music, EMI Group and BMG. This follows on from an investigation launched by the EU this past June. This is prelim work but we'll see what happens.
From the article:
One record company executive fumed, "For the past five years, this industry has been endlessly investigated by the government. They find nothing. And it costs us a fortune." The executive, speaking on condition of anonymity, added, "It's a handy whipping boy."
Now they know how Napster felt, being under investigation, and a convenient scapegoat. They also have evidence, including a past lost price fixing case.
Also, the European Union is investingating the Big 5 labels for acting as a cartel. More details here.
One of the few things (former)govenor Whitman of New Jersey did right while she was in office was raise the speed limit on the New Jersey Turnpike. It used to be 55 miles an hour and people would do 80 miles an hour. The cops couldn't stop it because sooooo many people would drive like that. Then she announced a 65 mile an hour (much more reasonable) speed limit on the road with a warning "If you speed you will get a ticket." Now it's surprising to see someone doing more than 70.
By making the law more resonable in "exchange" for more responsible behavior on that road she lowered the average speed (a deadly) 10 or so miles an hour.
If I could buy .mp3/.ogg (no copy protection) song downloads at 50 cents a piece not only would I not download free versions, I might not be so quick to turn the other cheek when I see someone blasting down the road at a hundred and twenty.
In the mean time the flow of traffic is eighty.
Novel theory: Modern Man evolved from psychopath
The predicted outcome doesn't justify the means at all. Illegal activity is illegal activity.
If I were to attempt to rob a bank but failed, would I be charged with a crime? Yes, attempted robbery. I'm at a loss for why so many people ignore criminal/illegal behavior when it is commited by a company, corporation, conglomeration or group of companies? No one wants to tollerate crime on a low level... when was the last time you heard, "well, he just raped the one girl... he's not worth going after..."? But what people are saying is "well, so what if it's in violation of the law, it will fail anyway so don't bother..." That's B.S. Either change the law or change the behavior.
I think you're missing the point.
Sure, the goods you mention tend to have the same price. But that is not necessarily the work of cartels. It's just that since the manifacturing cost and the perceived value are homogeneous among those goods. Do you care that a CD from a certain artist has been released by company A or company B? Or that the gas in your car comes from company X or Y? Unless you're in some boycott campaign, probably it won't. So since the manifacturing costs are the same, and the distribution costs are the same, the pricess will tend to be the same.
Where the thing sounds fishy is when all companies CHANGE (usually raise) prices together (which is usually the issue with oil companies)those same companies all claim way-above-the-average profit margins (which would be the issue with musci companies).
What I want to say is that probably there are cartels at work, but the homogeneous cost of CDs might very well be caused by other factors.
hopefully, none.
the music industry has a ton of lawyers. those lawyers know that if they did that, there'd be hell to pay: it's called bad-faith negotiating, and it costs MILLIONS OF DOLLARS IN COURT. a punitive damage award would be likely.
besides, the $750K is supposed to be an advance on the licensing fees. read the article.
note where it says "commit to" not "pony up."
my old sig used to be funny, but then slashcode ate it and now it's not funny anymore
what gets me is that the record labels have a front of trying to protect their artists (read: their profit margin) while they're actually screwing those just starting out. they need to look at mp3s like the radio... exposure! however, since consumers are controlling exactly what they're exposed to with mp3s, unlike radio, they don't like it.
"Why is all this crap here?" -- 4-year-old Brandon
Any military post exchange will help you figure out the real cost of a CD. They are required to sell everything with exactly a 5% murkup over wholesale cost. Since they order in incredible volume, Prices are close to actual manufacturing/distribution/royalty cost. Classical music, with it's inherant lack of copywrite, costs about $3.50 a cd. Popular music cost $9.95 to $11.35 per CD. You can check which retailers are engaging in predatory pricing by comparing what you know they purchased an item for with what their actual price is. Walmart is predetory in the organizer (you know that rubbermaid crap) department. Miller's Outpost is predatory on Levi's 501s. Home depot is predatory on cheap almost tools like flashlights cordless screwdriver bits. Everyone walks away from these places thinking "Such cool stuff so cheap". They stop shopping at their local hardware/clothing/five & dime. When the local places fold, Prices at these giant retailers almost exactly double within a few weeks. Point being, CDs should all sell for just under 4 bucks but the distribution is a world wide monopoly. We all loved how easy it was to walk into tower/warehouse/glossy mall music store instead of rummaging through your local cluttered record shop and now the indepedent record shops are by and large extinct. Same for books, computers, food, and damn near everything else we buy. The record companies did not do this to us. We did it to ourselves. They played by the rules by and large. We followed like sheep because they saved us time. We need the time because one 40 hour a week job does not support a family. A 40 hour a week job doesn't support a family because we purchase double price commodities on pay for it twice credit. Sheep Baaaa Baaaa Baaaa
If voting were effective, it would be illegal by now.
Or better yet, how about breaking up those McDonald's combo meals into component parts where the total price of the components doesn't exceed the price of the meal? I never eat those fries. Or how about your cable company letting you save some dough by subscribing to only the channels you want without having to buy them in big packaged lumps?
The answer to all three questions is that companies can charge more by lumping in stuff you don't necessarily want, and selling it as a package. Most listeners only buy CDs for a couple of tracks (yes, there are many exceptions, but not enough to defeat the purpose.) The "CD model" allows record companies to charge significantly more than they could ever expect consumers to pay for singles, simply by including this extra material.
Record companies won't move to a burn-in-store or per-track model unless something forces them to. The revenue loss would trigger price increases, which would further aggravate the loss, and so on. Disaster.
I'm rather surprised that it took the record companies this long to roll out a "legitimate Napster." However, I am afraid that MusicNet and pressplay will still bear the signs of the greedy corporate whores that are the members of the RIAA. Come on, they're asking for $750,000 just to enter negotitions for a liscense? That really is just pure, unadultured greed.
And I can already see the down side to this wave of legitimate file sharing services. They'll charge too much for digital songs that are of a lower quality than the actual CD. Because the rates are so high for music that is of an inferior quality, people won't pay it, and will keep downloading files from Aimster, Bearshare, Morpheous, etc.. Musicnet and pressplay will lose money and go out of business allowing the RIAA to say "See! These P2P services really are hurting our music sales! Stop them now." And then a whole new round of lawsuits will begin with the real victims being us the consumers. Sometimes I hate corporate America.
If Murphy's Law can go wrong, it will.
Well, some of this _is_ happening. :). The purpose was to allow customers to swipe the CD label at a listening station and be able to listen samples for all the CD tracks.
A friend of mine was involved in a massive MP3-ization of the entire catalgoue of a big shop (to Linux servers, no less - and no, I'm not whoring, it's actually true
Burn in store, I don't think it'll ever happen, given the current (technological) trends: a burned copy can't carry the watermarking and macrovision and whatnot.
The point is that music labels are very set in their ways, and changing those ways would be a big leap into the unknown, with certain disadvantages and only marginal possible benefits (for the labels, of course).
Also, take into account that given the current price composition schemes, the biggest part of the pie goes to the distributor (only about 30% of the price goes to the label, about 50% to the distributor - those figures are for the books market, but AFAICS they apply to the music market too) and no label wants to piss off a distributor: it's a certain way to trouble.
Ever notice that every major news outlet is owned by a media monolith that happens to own one of those major music publishing companies? CNN and CBS News especially, but ABC News, Fox News, SkyTV in Europe... Not to mention the newspapers and magazines. (MSNBC/NBC News isn't, but Microsoft needs to suck up to the music industry.) If you think the liberally biased press goes after Bush now, just imagine what would happen if his administration started investigating other divisions of their own parent companies. We would see an entire presidential administration crucified in the name of "free speech."
== Paul Rickard, Editor of The Microsoft Boycott Campaign ====
They fix CD prices so as not to undercut each other and to all make max profit. They crack down on all new forms of music sharing as soon as they come out. They force online radio stations into court, so now air-wave music stations have to pay double fees so they can also play online. And now, after they attempt to destroy all forms of online music, they create their own... and just to keep out others, "MusicNet allegedly requires companies to commit to advance payments of as much as $750,000 before entering into licensing talks."
And they wonder why the DoJ has been investigating them for years.
Developers: We can use your help.
I find it rather strange that even though there are alteast a few large record companies, all CD's cost about the same. A new "full-prize" cd is cost almost the same regardless of where I buy it, regardless of what record company released it.
Looks much alike the petrol industry, same products, same price. That's not good for the customers.
The online CD shops are often a little cheaper, but then you have to pay for the freight anyway. Nothing won there unless you buy a huge amount of CD's.
Probable impossibilities are to be preferred to improbable possibilities.
Aristotele