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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.
I have bought plenty of CDs after listening to MP3s - indeed, when I left university and my free fast internet access, I didn't buy any CDs for 6 months.
:)
That's because you were broke and looking for work.
-Billco, Fnarg.com
Look at this. Another large organization whose wealth is entirely based on copyright royalties is subject to an antitrust investigation.
It's long been argued that the amendments to copyright made in recent years are, in themselves, monopolizing. Copyright is, by definition, a limited monopoly. Expanding it makes it less limited.
Should we be surprised when the holders of these statutory monopolies abuse their powers? Of course not. Fair use is there in part to circumscribe monopoly power. When it's eroded, the monopoly is extended.
In other words: The correct attitude is not to applaud the efforts of the DoJ and EU antitrust divisions, but rather to stop passing legislation that makes these kinds of antitrust actions necessary. Let the market sort it out.
Government created copyright. It's not natural, the way that owning a fork is natural. It should be willing to step up and take responsibility for the artificial distortions of the market that copyright creates, and try to finesse it so that copyright distorts the market in a desirable way without making reference to rights-based talk. ("I have a right to control copiers of my works. I have a right to forbid Russians from reading this document." There is no difference between these two: they're just declaratory statements with no justification.)
my old sig used to be funny, but then slashcode ate it and now it's not funny anymore
from the article "Congress continues to prod the recording industry. As recently as Friday, a pair of legislators introduced bills that would rewrite music licensing and copyright laws to promote competition among online music-service distributors and make it easier to buy and sell digital songs."
Does anyone have any information on this bill? The DMCA was meant to make things easier as well, and somehow it had the opposite effect.
Actually, burn-in-store gives you the opportunity to uniquely tag the CD, and tie it to the person who bought it. When it shows up on KaZaA or wherever, you know exactly who put it there.
eat shit and die, Bambi!
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.''
The facts speak differently:
"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," said FTC Chairman Robert Pitofsky. - from the decision against BMG, Sony, et al for collusion and price fixing, two years ago.
Liar, liar, pants on fire.
Nice analogy but I'm afraid you can't quite apply your arguments to the music industry. To the unwashed masses, there is no difference between the products of Sony Music, BMG or Arista. They probably don't even know who their favorite artist or band is signed to. This is quite different when said consumer is a true music enthusiast, who often favor a few small productions houses with more specialized acts (and usually less commercial fluff).
Here in Quebec, Moonshine recordings is generally reputed as the best indie house/techno producer/promoter/distributor. Same goes for XL in Germany. Being smaller organisations than the monstrous Sony and its ilk, they have to choose their products wisely because they don't have much backbone to absorb the financial shock of a flopped release.
Music houses have names, but does the pump station tell you where your gas is coming from ? They don't know, and most likely their own distributor would have to think about it for a day or two before answering that question. Gas is gas. Perhaps the price fixing cartel scheme is similar in both industries, but only one market is truly homogenous.
-Billco, Fnarg.com
Do you think a web site for only independent unknown artists and bands would succeed? I know I'd love to go there. Having separate web sites for each artist and band is not as good because it's so hard to find them in the noise. I have certain tastes in music, so of course I'd want to have it organized by genre and other themes. It needs to all be legal stuff (get written agreements by the songwriters, performers, recording producers, etc) so it can stay running. Use ads to support it as much as possible and if a fee has to be charged, keep it as small as possible. If it's well organized and low cost, I'd rather use that than mess with P2P swapping. The trouble with the big labels is they just plain don't know how to do that (so people go do P2P instead). The music needs to be in OGG, MP3, and RAW formats (and yes, I'd prefer downloading the raw format).
now we need to go OSS in diesel cars
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.
Nobody much likes the RIAA or the big five anymore. Not the exploited artists, not the ripped off consumers, and especially not Slashdotters. Heck, we don't even *need* them anymore. So let the DoJ and EU grill them for a few years. Good for them! While the big five are busy defending themselves, as with Microsoft, we will be free to work on replacing them.
Some ideas: recording is no longer an esoteric thing that you need a rich multinational company to provide. Last I heard, all you need is a Mac, about $800, a soundproofed corner of your basement, and some sound skills. That puts recording in the range of a home business, which could provide affordable recording services to local bands (at least some of which are probably as or more talented than what shows up on CDs today). If the recording person either has web skills themselves or can partner with a local web design firm, that would make it very convenient for the bands to not only get their songs recorded, but to get them online. There are existing ecommerce services for shareware that could easily adapt themselves for selling music (a download is a download) and again would make the pricing reasonable. By providing lower prices and more reasonable terms (no time limits, ability to burn onto CD for personal use, etc.), this fledgeling recording industry could easily come to outsell the RIAA sites and eventually replace them. This would be a much better deal for artists and consumers alike.
Come on, Tok Wira, these sharks have gotta pay!
New Kirk calling Mothra, we need you today!
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.''
Hmmm, I think you could replace record with software and government with BSA and it'd still be factually correct.
So I wonder how it feels to be on the other side of the fence this time?
Even worse: I work for the government! :) Now all I have to do is attempt to make some political contacts so that I might have a chance at helping to recitify the situation.
If Murphy's Law can go wrong, it will.
The combined might of these companies is even greater than that of the Redmond steamroller, and they're only in the preliminary stages. It's going to take years before this gets settled (even if it does go to court).
So let's not get our hopes up just yet.
Actually I think the current networks they're starting up don't even allow ths..
I thought the pricing was around 19.95 a month for 30 or so songs.
No burnt cd's, no copying, no portable play
Portable play is supposed to be added at a later date..
Oh yeah and I think they're time limited listens as well..
So I'd bet this is going to be a catastrophic failure.. Which they'll probably blame on file sharing or whatnot..
The DOJ were as rabid about pursuing anti-trust allegations as they were about prosecuting file-traders and honest hackers...
I'd love to see Hillary Rosen picked up outside her house and jailed for a month without bail being set.
The next Slashdot story will be ready soon, but subscribers can beat the rush and slashdot the links early!
And the prosecution team is led by... Shawn Fanning ;D
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
First MS and now this. Dubya will just slash the DOJ budget again.
He can't have his biggest contributors prosecuted during his tenure, not can he?
-Legion
Seems to me that the region coding system which seems to be required on DVD players is there for nothing more than price fixing. So where's the investigation of the DVD Consortium?
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
There are a few other outfits that should be included in this investigation, as discussed in this article (somewhat dated now) about how the MPAA was trying to screw lyricists out of royalties using the same argument that Napster used.
--Got Lists? | Top 95 Star Wars Line
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.
Assistant: I'm sorry sir, but do you have your "burn in store" membership card, or do you remember your membership number? Cash Payer: Nope, sorry Assistant: In that case I have to sell you the whole CD for full price, is that alright, sir? Cash Payer: Nope. Bye. If it was substantially cheaper (zero per-sale 'distribution' costs for a start, and no inlay cards etc.), then I'd sign up and they can stick any other data describing the transaction that they like in the CD, as long as it doesn't interfere with my ability to get the music off the disc using any device of my chosing whenever I want. THL.
Keeping
Yeah. I realize that the $750k is meant as an entry barrier, but the simple fact that they even feel the need for an entry barrier points to their greed. Not to mention that $750,000 seems rather high for an entry barrier. But, I'm not in the music industry, so maybe that is a normal sum for an "entry barrier payment."
If Murphy's Law can go wrong, it will.
Don't be stupid, you should hate corporate America all the time.
You must not have had to work for them yet.
"The last thing I want to do is deal with a bunch of people who want something."
Major Major
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.
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. Actually, with watermarking it could be to the record labels advantage. The watermark each CD sold with a unique serial number embedded into the music. Once an MP3 is rip'd from this CD, the record label would be able to determine whose copy an MP3 came from.
The Economics of Website Security
These are the two big services being put together by Universal Music Group, Sony Music Entertainment, Warner Music, EMI Group and BMG.
Seeing as these labels account for a good 80+% of music available in record stores, what more "investigation" do we need? Seems pretty clear cut to me...
Exactly. It annoys me no end that they charge more for CDs than for tapes, despite CDs costing less than tapes to produce. When consumer groups here (in the UK) complained about this, instead of reducing the price of CDs, they increased the price of tapes.
When are the record companies going to recognise that .MP3s and CDs are complementary, rather than being in direct competition? I have bought plenty of CDs after listening to MP3s - indeed, when I left university and my free fast internet access, I didn't buy any CDs for 6 months.
Sometimes I wish our copyright systems were purged, and we went back to plagiarism and copying, like England in Shakespeare's day (and Taiwan today).
-- Help Digitise the Public Domain at DP.
>Digital Music
I love the way more and more companies are dropping the Digital buzzword into _everything_ Since when has music been non-digital? CDs and DATs have been around for 20 years.
I think, as with DVD, the new 'digital' word means 'we can control what you do with it'. The entertainment industry knows that CDs and Videos cannot be copy-protected (Macrovision), but DVDs, and 'digital' music (i.e tethered downloads) can. The whole idea of these online music services is to lower the cost (it's cheaper to sell data over the internet than press CDs) and raise the price to as high as they can get away with.
The point is, no dumb idiot is going to _pay_ for an inferior-to-cd-quality song, that has alsorts of dumb copy restrictions on it and will only work on their proprietary format (MS: we want to wean people off mp3 and onto wma for superior digital rights management lol). And especially when they can get it free off Gnutella etc..
That is, of course except for the dumb people that they can persuade that their way is better by saying 'ohhh its digital' and sh*t like that, just like with DVD. Oh, and maybe as a bonus (oh whoppie doo) they'll but some extra crap on the files like real-time lyrics and bios. (sounds even more like DVD as we go along)
The entertainment industry's marketing people are clueless.
-tfga
This comment does not represent the views or opinions of the user.
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.
Details are pretty murky, but it looks like both services will emphasize streaming, and will also offer "tethered downloads" which expire once you stop paying subscription fees. These downloads will only be playable on portable players that support whatever DRM scheme the services use. The services will have fairly complete backcatalogs but may hold back some current singles.
Also, some go to labels like Caroline (et al), which seem friendlier to more established acts.
One Can Never Own Enough Musical Instruments...
I don't see the big deal here. Let the online music services be anti-competitive, they are not going to last anyway, if they launch the way the record companies are planning them to.
I'm not going to pay the same price for a song that is lesser quality than a CD so I can sit and wait for it to download. And the best part about it, is that I can only listen to it on my PC. Now thats great, I'll buy all this music and I won't be able to use it in my car or home stereo, so what good does it do me.
Even if I get a copy protected CD at least I can put the CD in my car/pc/stereo, or oh no! bring it to a friends house.
The record companies will have a rude awakening if they do not listen to the consumers wants when designing these new services.
I suspect I'm not alone here.
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.
There is an article on yahoo today called the The Music Online Competition Act (MOTA). Introduced by Chris Cannon (R-Utah), and our friend Rick Boucher (D-Va), it seems to take into account these 2 services. It states basically, that any song the record labels licence to these services, but be made available to licence to any third party online music distribution service that wants it. Boucher explains that he wants to avoid a distribution monopoly.
The article is here.
I particularly like the line about the RIAA's reaction: Not surprisingly, the RIAA bashed the bill, saying it favors government regulation over market forces. The irony here is so thick here, it doesnt require any more comment.
The ivory tower has never had to reach so h
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 ====
There are two possibal ways to get gas in Minnesota: The Amico pipe line (from St Louis if I remember right) or the Kocke refinery. Check out your area and you will find a similear situation.
"They just have to raise CD prices in order to retake the lost revenue..."
Actually, they would be better off lowering the prices and making legal purchase less of a hassle.
Also, how about allowing 'listen in store'? People hate buying a CD to find only one track doesn't suck.
Better still, how about allowing 'burn in store'? Let people find the tracks they like, combine them onto one disc, and pay only for what _they_ (not some record company exec that hasn't listen to music in decades) think has real value.
Oh, and it'd be damn nice if more of that dough found its way back to the artists who actually made the music, too.
--
The Coward
I am sick and tired of constant government prosecution of businesses because the DOJ is jealous because they are successful. The government is getting bigger and bigger and we need to do something before it takes away all our rights. Corporate America is cutting jobs left and right not because of an economic slowdown but because of intense government regulation and high taxes. The dot-com revolution was started because there was no Internet tax. Look at how many jobs were created. Same is true with Microsoft. Bill practically started the pc revolution. Sure there OS products sucked really bad and crashed but he funded Compaq and made sure he had the ability to license dos and free us from the IBM monopoly. It was that and not government interaction that did this.
I am afraid that the government is trying to stop progress with mp3 file sharing. How long did it take to for the doj to first open a probe into IE/win98? Infact there is a 50-week waiting period right now! It will never be settled. In the mean time CPRM devices will appear everywhere while we wait for the government and by the time its settled wma will become standard with unhackable CPRM hardware with id's that will bust you to the FBI if tampered due to the DMCA. Wake up everyone and email your senator and congressmen. Not in favor of government interaction but speak against it. I would rather have a corporate censored world then a government censored one.
http://saveie6.com/
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.
Here are the facts: 1. They fix prices. 2. They screw their artists. 3. (Almost certainly) they cheat on taxes. (With their byzantine accounting system, it's hard to imagaine they wouldn't). 4. They're thugs, who are now very unpopular with young voters who Bush wants to win over, and with older voters who already like Bush. 5. They're Democrats who give Bush grief whenever they can. Why on earth wouldn't the Justice Department go after them?
InstaPundit! Ahead of the Curve Since 30 Minutes Ago
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
1. The Bush administration has no problem with energy cartels fixing prices, as only one example. They are also against anti-trust laws.
2. Republicans screw artists every chance they get. They hate artists because artists generally ask inconvenient questions and make them look like the uptight squares they are. Ask the National Endowment for the Arts if you don't believe me.
3. Republicans hate taxes and use every loophole they can to avoid paying them while busily trying to create new ones for themselves and their friends.
4. Both major political parties are comprised of thugs.
5. Actually, captains of the entertainment industry are neo-liberals who support the same fascist corporate agenda as the Republicans, with the one caveat that they believe the best way to present fascism to the public is with a friendly smile instead of an explicit jackboot to the groin.
Proteus7
Not that far off-topic. In both cases you're paying for the marketing and the packaging.
I see even classic Slashdot is now pretty much unusable on dial up anymore.