Music Companies Convicted of Price Fixing Again

InspectorPraline writes "Providing more proof that the record industry is indeed a oligopoly, this article at the New York Times reports that two major record companies, Vivendi Universal and Warner Communications, have been convicted of price fixing by the FTC over a recording from 1998 of the Three Tenors. While Warner reached an agreement with the FTC about a year ago, Vivendi continues to deny wrongdoing and will, of course, appeal." The FTC's release is quite informative, describing the entire case.

Comments

I don't think the founding fathers would approve.

[Jonathan Swift]

When Thomas Jefferson put the idea of intellectual property into the Constitution of the United States, he did so because he realized that information leaks; once people learn something, they can reuse that knowledge. If there was no protection to intellectual property, people would not be encouraged to share knowledge with others. Writers would not write, inventors would not invent, artists would not . So in the US Constitution, it says:

Congress shall have the power [...] To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

The reason why this is important is spelled out in Jefferson's own writings:

If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of everyone, and the receiver cannot dispossess himself of it...He who receives an idea from me, receives instructions himself without lessening mine; as he who lights his taper at mine, receives light without darkening me. That ideas should be spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature ... Inventions then cannot, in nature, be a subject of property.
His assumptions are based on the fact that you can not control what people do with information that you give to them. If you hand someone a book, they can transcribe it. If you give someone a physical invention, they can disassemble it. But if you give them a new form of media, say, a song on a copy-protected CD, and they can no longer listen to it except on approved devices that they cannot copy from, why should the government provide the same protection to you? The record companies and movie studios want to have their cake and eat it too. They want traditional copyright protection, technological copyright protection, and a government guarantee of technological copyright protection. They want to deprive all those bearded Linux hippies their DeCSS, so they can't watch bootleg Buffy the Vanpire Slayer DVDs in their parents' basement. But if they have technological protection, then why should the government give them traditional protection? It was only there because information was hard to protect as property.

How far are we going to let the copyrighters go? We need to remind people that copyright, like most laws in the US, is a balance between two forces, and the scale should not be tipped too far to one side.

Re:Defending the Record Companies in some Ways

[fluxrad]

you really have no idea what goes into the making of an album/video/star, do you?

1. Most videos don't cost that much...maybe a couple hundred grand for some extremely famous bands, shooting in to the millions only for videos done by people like Michael Jackson who usually fund a lot of it themselves.

2. Most bands flop. This is the reason the record labels buy in bulk when they're searching for talent. For every Britney Spears, there are 10-20 "chick" singers you never heard of because they didn't sell shit. Of course, if you actually get to make a second album, most of the procedes are spent paying the label back for the first one. The record companies don't have that much influence on who becomes a star or not when all is said and done, they just have the ability to put it on the shelves and see who buys what. You need to start looking at companies like BMG, Geffen, and Sony as nothing more than gigantic venture capital groups for musicians. Except the "interest" rate they charge for their benevolence is basically usury!

btw - please back off the stream of consciousness style of posting next time. it's hard on the eyes, you know.

How About These Examples?

[krmt]

I have an argument against price fixing. How about CD's that cost less to make?

Wilco's new "Yankee Hotel Foxtrot" album was recorded for some incredibly cheap sum, like a few thousand dollars. Yet it's sitting there with the same price tag at Best Buy as the huge manufactured pop albums. Add this to the fact that Wilco released the entire album on the internet themselves before the CD was released, and they've still already turned a profit on the thing.

Another example is the new Massive Attack DVD compilation of music videos. If you've seen this thing in stores, it's basically a clear plastic case with a boring looking DVD inside. That's it. No artwork or inserts. Nothing. The reason for this is that Massive wanted to keep the costs for the buyer as low as possible (they're giving profits to charity). You can go their website and download the artwork for yourself (you even have three choices of which artwork you want). But what happened when they talked to retailers? The retailers said that the DVD would be marked up to the same price as all the others on the shelves, even though it cost them a hell of a lot less to buy. The details are all on Massive Attack's site (I think in a newspost from 3d, although it might be in the forums).

Either way, there's a lot of price fixing and gouging going on, and no matter what steps are taken by the artists themselves, short of delivering the CD's directly to fans, they can't get the retail price down.

Re:How is this wrong?

[Trekologer]

How is this wrong?

Price collusion is illegal. Plain and simple. The recording companies got together and decided not to reduce some older CDs so that the newer one wouldn't be competing against them for price. That is illegal. This is something that the recording companies do all the time.

Re:Only for the 3 tenors world cup live concert cd

[innocent_white_lamb]

not sure how they enforced with the retailers;

It's my understanding that they enforce this through their co-op advertising programs. "If you sell your product at $x, then we will pay y% of your cost of advertising. If you discount your product, then we won't pay anything."

This can be a pretty big stick when you're working on a small margin and have a large advertising requirement.

At least, this is what I've read in the past...

Public Enemy et. al.

[cant_get_a_good_nick]

I can't steal from my old comment, Slashcode doesn't get that far back, the bastards, now I have to write with a few beers in me....

PE had a couple new tracks, and a lot of remixes, and they wnted to put it out. They called it Bring the Noise 2000, named after their track Bring the Noise which permanently changed the direction of hip-hop/rap. Def Jam (their label) didn't want to. So PE released it as MP3s on the net, the label gave them hella shit. I actually have a copy of that before they pulled it from the web (thank you GeoCities).

After this, PE left Def Jam (I think Def Scam was their wording) and put out an album called There's a Poison Going On, after they split from Def Jam/Columbia. They sold it from AtomicPop.com for $8 downloads, $10 if you bought the actual physical album, and that came with an autographed CD liner from Chuck D (I bought it to get the autograph). AtomicPop later imploded unfortunately, and I then see the exact same album at Virgin Megastore for $18.

Did Virgin give Chuck and Flava Flav an extra $10 per album? (They didn't sell autographed ones, so compare to $8-9 or so.) I doubt it. I'm pretty sure the price bump was just to get it in their normal, non-sale price structure, and give R. Branson a couple extra bucks. Many artists have fought with the industry to get a what they consider normal price. I think Tom Petty actually released an album named 8.99 (or something like it) to stop the labels from boosting the price past that. The way the labels structure it, groups get cash from touring, not from record/CD sales, so groups have little incentive to sell a lot.

Count how many elements a tape has:
You have two plastic half-shells, two reels each with a plastic piece to hold on to the tape, the tape itself which has the tape, an oxide layer deposited on it, and two leader segments added to it, the metal and spongy piece to force good tape-head contact, and possibly astenerws (though the cheaper tapes just snap on). Contrast this with CD, with only one part, nothing moving. And the CD costs more? Ummmmmm....