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.

Comments

Ironic

[Blue Aardvark House]

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.

B.S.

[sllort]

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.

P2p file sharing..

[Odinson]

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.

Expect a result in several years

[Dr_Cheeks]

Remember how long it took them to get an anti-trust investigation through against Microsoft. Oh, wait, sorry; I forgot that they're still arguing about it.

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.

If only...

[Bonker]

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.

NO suprise here... but there are a few other...

[hillct]

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.

here's another side

[vocaljess]

if you think being a consumer sucks right now (and it does...) try being a struggling musician. i have a good friend who is a fantastic singer/songwriter on a smaller label who loves hearing that fans got his music free off the internet, because it means more people are listening to him... and when they come to a concert they usually buy the cd from him directly. he makes more money on the road than he does from cd sales, and that's the way he likes it. now with the demolition of napster, which while having its faults was the easiest service for joe schmoe to use, not as many new people have good access to lesser known artists.

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.

Military Post Exchange.

[Perdo]

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

Re:Legitimate File Sharing

[demigod]

Sometimes I hate corporate America.

Don't be stupid, you should hate corporate America all the time.

You must not have had to work for them yet.

Re:The Coward disagrees...

[jonathan_ingram]

Actually, they would be better off lowering the prices and making legal purchase less of a hassle

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).

Legitimate File Sharing

[RESPAWN]

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.

Re:The Coward disagrees...

[kinkie]

Well, some of this _is_ happening.
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 :). 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.
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.

Bill Introduced in Congress

[Ratteau]

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.

And now this

[truthsearch]

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.

Bush Admin Should Sock it to Entertainment Indust.

[YIAAL]

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?

Finally

[boaworm]

The CD companies has been complaining for years about how .mp3 ruins their profits. Poor them. They just have to raise CD prices in order to retake the lost revenue that napster stole from them.
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.