Music Industry Pays $67M Fine For Price Fixing

Krelnik writes "Reuters is reporting that the music industry is paying a $67.4 Million settlement to end a lawsuit where they were accused of artificially inflating CD prices at retail. Yeah, P2P is causing their problems. Sure, sure it is. Here's the story at Reuters UK."

Comments

The other boot has yet to fall...

[Mammothrept]

The lawsuit that the recording companies settled is only not the whole story. The Attorneys General of a bunch of states sued them in civil court because they violated anti-trust law (allegedly). The Attorneys General, or the Federal Government could also have filed criminal charges against the record companies but they chose to file a civil lawsuit, presumably because it is much easier to win. In criminal proceedings, the defendant has to be proven guilty 'beyond a reasonable doubt.' To prevail in civil court, the standard is 'more likely than not.' It is the difference between being 51% sure they are guilty and being 99% sure.

While the record companies refused to admit fault with words, they did it with dollars. You don't settle a lawsuit for that much money unless you are pretty sure that you will be found liable at trial. If they were really settling for the 'nuisance value' of the lawsuits, the amount would have been much lower. Think of this settlement as plea bargaining for guilty corporations--"We won't fight the the punishment as long as we don't have to say 'we're guilty' out loud."

The other shoe, or boot, that is waiting to fall is private class action litigation. If someone robs you, the government can prosecute or sue them. But as a victim, you also have a right to sue. (Alas, you don't have a right to start a criminal prosecution--under US law--but you can, like the family of O.J.'s wife, sue in civil court.)

There was at least one private class action lawsuit filed against these record companies for price fixing in 1996. The last I saw (1997), it was still kicking around the courts. In dollar terms, private class action suits can easily exceed the damages they'll pay to settle the government's case.

The other damage the industry faces is that this settlement, while not technically an admission of guilt, is tantamount to it in the court of public opinion. The industry has been shown to be bigger pirates than Napster--they've been ripping off ALL of their customers.

It Pays to Read the Article

[guttentag]

Former FTC chairman Robert Pitofsky said at the time that consumers had been overcharged by $480 million since 1997 and that CD prices would soon drop by as much as $5 a CD as a result.

In other words, over the course of three years the industry forced consumers to pay nearly half a billion dollars more than they would have if real competition had existed in the market. Now we know where they find the money to give reviewers CD players that are glued shut.

Re:No it doesent

[Alsee]

wholesale prices were not affected by the MAP program

If you believe that a retail price war wouldn't have put any pressure on wholesale prices you're smoking crack.

Lower retail prices would mean higher retail sales. Can't make a retail sale without buying it wholesale first. If retail prices don't put any pressure on wholesale prices then the RIAA should have ENCOURAGED a pricewar.

-