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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.
By now, no one is surpised by price fixing and record companies. Even my 60 year old mother, who buys about 12 CD's in a year, made a comment to me about how the cost of making CD's goes down, but the cost to consumers does not.
I just don't see how the FTC can not bring the hammer down on these companies. It is just plain obvious that they price fix.
Linux O Muerte!
I often wonder: Who doesn't appeal a decision that doesn't go their way? I mean, an appeal is basically the same thing as a childrens "Do Over" with more adult pretention...
I'm not sure of the exact price that it takes to put together a music video, but i imagine its in the millions, now the artists themselves sure as hell don't pay these costs.
Actually, a lot of them do. why do you think groups like TLC were broke after so many hit songs. They got a little more than $1.00 per CD sold but they had to pay all of the expenses for videos, and their tours. The artists are still getting the shaft. And don't give me that crap about "The record company only get's one diamond for every 100 pieces of rock"...last time I checked, diamond producers were very very wealthy, and so are record labels. If the recording industry wasn't making an ass load of money, it wouldn't be the recording industry....it would the recording company because no one would want to do it.
Realese som good music instead of brainwashing people with BSB and Britney Bimbo and maybe we ll feel that the music is worth paying for. As of today most isnt worth the plastiv its printed on. Note, thats not the artists fault. Pink is a good example of that!
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Your sig about MTV says it all doesnt it? The music industry has taken a good healthy music collective and made it into a money milking cow. MTV was good but all it ever plays now is either corporate sponsored release promos (they call it hresh or something) or crappy mainstream (corporate owned) elevator crap.
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The average price of a CD is $19. That's right, $19. And some Phish CD's were $26. Sale items marked $17. And there is no difference whether the CD you're looking for is 14 years old or 14 days. Nineteen Bucks.
They need to gargle sulphur in hell while their children are eaten by Rhinos. Long live musci sharing.
Yes, I understand that record shop employees need to eat, but that doesn't mean that this should be happening. If the record only costs a couple thousand to make, then it can be sold overall at a lower price in order to recoup the expenses. You can still tack on the same cost for shipping and retail profit, and still have a lower cost because the entire manufacturing process is cheaper.
This is how other products work. Lower manufacturing costs lead to lower retail cost. In both examples, there is some kind of price fixing going on.
I never explicitly said that it was the record companies colluding, but it appears that it's the whole chain. Remember, the middleman is who gets hurt the most by people downloading music, and the middleman in this case is the record store. The fact is that both these examples demonstrate that something is going wrong and that collusion and price fixing is taking place.
Somehow I doubt that when Massive Attack's new album comes out, if they try to do the same thing, that the SRP will be any lower than the other CD's on the shelf, and as a result, neither will the actual price. So, once again, the consumers and the artists get the shaft.
"I may not have morals, but I have standards."
I can almost read the words right out of Lawerence lessig's books. But Im afraid your dismal prophecy is not going to come true. If we(and by that I mean the general public) are abandoning the media of the prepackaged CD...then what makes you think anyone would sit idly by and have the music industry OWN their PC, even in an incremental way? It wont happen, and the VCR ended up not being the end of the world either. Perhaps you need to learn how the electronics of the whole thing works before you make such statements...or at least make someone elses statements...in the end its still PEOPLE who make the designs for these products, and PEOPLE will just make other 'devices' if they dont like the ones they are presented with
It's not that simple. Do you understand the difference between total costs and marginal costs ? Let me explain in more detail:
Suppose that selling CDs have the following costs:
The costs of selling tapes are:
Notice that the overlap here is considerable-- in particular, by the time you pay the costs for selling CDs, you've paid nearly all the costs for tapes.. So, supposing that you have a profitable CD business up and running. Then to add a supplementary tape business, you don't need to pay the total costs of the tape operation. You only need to pay for the marginal costs (in other words, you don't need to pay to record the music opr promote the band, because you did that when you set up the CD operation).
So it's entirely plausible that the expected revenue from selling tapes exceeds the marginal costs of adding a tape operation to a CD operation (which is what the record companies pay), but doe NOT exceed the total cost of running the tape operation.
If the price of the media is unimportant, why are CDs MORE expensive than tapes?
The assumption that the price of the media determines the selling price is false. Tapes are cheap because no-one would buy them if they were more expensive (because they offer less utility to the buyer)
Of course, they got greedy, and never lowered the price.
You've done no estimates of prices vs inflation, so you're not in any position to even make that claim. My guess is that prices are approximately flat, and the reason is that the bulk of the costs are directly correlated with the price of living.
I can get CDs for ~$5.00. And you know what? The record clubs MAKE MONEY selling them at that price!
You're a smart buyer -- good for you. The fact that you can get them cheaply through this venue shows that the high prices are not a result of the record companies greed, but rather, that of an inefficient distribution model. By spending your money on someone with a low overhead distribution model than traditional retail outlets, you get a better deal.