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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."
they've been fixing prices for how long? and it took till now for a suit like this to win.. let's hope it's not the last.
MABASPLOOM!
I've been hearing about this issue for years, literally! One wonders, however, about the timing of this decision. The music industry is not seen in the best of light right now, and I wonder if they belive this will improve sales. Or maybe I am just paranoid.
I know that seems like an awful lot of money, but does it even approach the amount the industry gained through its unfair practices?
Try not. Do or do not, there is no try.
-- Dr. Spock, stardate 2822-3.
I wonder when the RIAA and music industry as a whole will realize that P2P isn't hurting their sales at all... I personally bought a CD recently BECAUSE of file sharing. It was hard to decide on doing, but music enjoyment won out. I am just glad that it they are finally on the otherside of the case.
Erutangis ym si siht.
Finally, someone figured out that:
1) Cost to profuce cd's is probably less than $1/CD including case and linear notes, excluding production costs.
2)The cost of CD's, with everyone making substantial profit could be $3.50
3)The only way for the prices to be so artificially high was for price fixing.
I know I would buy more music if it came at a reasonable price.
Maybe someone in the software industry will realize that: more people will buy this if we only charge $20 for it!
Help I'm a rock.
I would expect their next move would be to work a bit faster with MS, and get DRM pushed out there. While looking through Windows Update, I noticed Windows MediaPlayer v7.1 has DRM - and you can't uncheck the box for it. If you want Media Player 7.1+, you have no choice but to install the DRM portion along with it, or not install the player at all. Perhaps MP v7.1 is non-reversable - once you install it, you can't downgrade. I dont know if that is the case, but I'm not particularly in the mood to be a guinea pig, at the moment.
Someone you trust is one of us.
so where do I pick up my compensation check for getting screwed over for all these years?
GoatPigSheep, the 3 most important food groups
...where?
The music industry has been ripping us off (no news there) to the tune of $5 per CD.
The have to pay up $67 mil + $75 mil to non-profit, etc.
Who the hell gets that $67 mil? I want my cut!
~50 CD's over the last few years....where is my $250?
This lawsuit looks like it was brought before P2P and before Napster was big. If CDs were priced fairly to begin with I wonder whether file sharing would be AS big. No doubt file sharing would be big but its growth might have been slower and easier to contain. IMHO the RIAA dug (and is digging) its own grave.
sig
This would at first blush seem perfectly reasonable, until one notices that one United States dollar buys about $1.58 Canadian. That's right--CD's are typically about 50% more costly as soon as you go from Windsor to Detroit.
Granted, I've noted a similar pricing trend with some other goods--groceries come to mind. But for non-perishables, the price disjoint is quite stunning.
Is it price fixing? Or plain old-fashioned gouging? All I know is that for a ten-cent piece of plastic, that's quite a markup. Charge what the market will bear, and hope nobody notices that the neighbours are getting a 30+% discount. Does anybody know if there are any retailers taking advantage of this price difference? Buy Canadian, sell American, pocket the difference. (Whatever you do, don't write a post containing the phrase "3. Profit!!!")
~Idarubicin
I guarantee that the settlement for P2P is going to be over 100 million.
P2P actually saved the consumer money during the price fixing and we are going to end up paying for it in the long run.
If the price goes too high, then sales decrease. This is kind of a self-regulating process that doesn't require a referee or lawyers or judges.
In a competitive market, if you put your price to high, you loose almost all your customers to the competition, which has the lowest possible price. For example, if Dell set their prices just a bit higher, they would loose a lot of their business to Gateway and others.
The allegation here is that the market is not competitive, and that the music industry jointly sets a high ('artifical') price. They had used an advertising scheme to prevent stores from selling below a certain price.
If this is true, then there is a need for lawyers and judges. What I don't understand is why no new records companies emerged, selling CDs at lower prices. They could have made a killing.
Tor
Idiot.
The RIAA did not make a cent off the price fixing, as that had no effect on wholesale prices. What the RIAA was doing was to say to the chain stores, "you can't advertise the new Britney CD at less than a certain amount over wholesale". Why was this done? To prevent the Wal-Marts and Best Buys of the world from monopolizing CD retailing and using their distribution might against the RIAA. It's in the RIAA's interest to keep as many non-chain and small chain stores around as possible, as it prevents WalMart from holding CDs for ransom (as in, "we won't buy the CD for our stores unless you sell it to us for $2 less than normal wholesale").
The $480 million that consumers overpaid went to CD retailers, not the RIAA.
If they reduce prices, it's likely that sales will increase. (still ~$18 at a record store & ~$12 at the electronic/appliance chains (Best Buy, Circuit City, ...)).
Now if they wait until the the p2p-bills are pushed through, they're open to say the anti-p2p bills increased sales.
So when they're committing "evil" acts against the consumer, we treat them as a single evil entity, and hate them as such. When they start doing "good", we break it down so as to dilute the issue?
Way to make clear the obvious bias within the Slashdot community. Face it, classifying the RIAA as a single entity comes with the intent of promoting them less as a fair oligopoly than some nefarious modular monopoly. We're so quick to drop the title when it's less convenient to a given perspective.
As for the matter of overcharging (not in regard to the parent post, so much as those above), define "overcharge". No made-up (ie assumed) statistics or assumed libertarian audience. We've already heard it time and time again. If you're going to quote the FCC, quote with context.
The defining "overcharging" is as cut-and-dry as defining "poverty". Are they overcharging when they charge an unreasonable sum relative to production costs? When they soak the artists to maximize their own profit? But isn't overcharging best demonstrated by consumer trends? I doubt people're buying fewer albums due to high costs than as a result of industry music simply sucking.... and that's a bit non-sequituous in the greater overcharging issue.
That kinda makes $67 million a fortune or what? Why didn't they fine them at least $500 million? If the fine is lower than the overcharging, seriously, why should they care?
Not Buzzword 2.0 compliant. Please speak english.
When they say that "The companies also agreed to distribute $75.7 million worth of CDs to public entities and nonprofit organizations in all 50 states.
Is that 75.5 Million at the "artificially inflated" price or the price they should have been. Also, who gets to decide which CD's they send? They should have been made to $75.7 million worth of BLANK cd's..
-- -- Warning. Do not stare directly at the sun.
Ok, this is pretty sketchy, but this study seems to show that CD sales are highly price elastic in Macedonia (yeah, I know, but this is the best I could find in 10 seconds of Googling). The page is excruciatingly slow to load, so here's the relevant data (prices in denars):
Price Quantity
>250 71
250 103
200 159
180 243
120 360
100 463
80 690
Of course, there are a bunch of things that could explain this (unpopular CDs priced higher to account for the lack of economies of scale, price increases as inventory dwindles, etc.) but it's kinda interesting anyway.
> Previously, the companies said that MAP was needed to protect independent music retailers from rising competition from discount chains such as Wal-Mart, Circuit City and Best Buy. They had slashed CD prices, below cost in some cases, in the hope that once consumers were in their stores they would buy other, more expensive products.
CDs below cost? I have yet to see Best Buy selling music CDs for less than $0.74.
Actually Hollywood has been doing a better job of pricing DVDs than the RIAA has been with music. I have been able to pick up LOTR, Harry Potter, and Monsters Inc. (yes, I have a kid) all for (well) under $20.00 -- and Monsters Inc. was $14.88 (DVD OR VHS Tape) at Wallyworld (Wal*mart). I was also able to get War Games for under $10.00.
New Music CDs are $13 to $15 and old CDs run just as much! No wonder the RIAA's sales are down -- My 11 year old Daughter would rather spend her $15 on a DVD instead of a CD -- she gets more out of the DVD and she had grown bored with Britney and the boy bands. The only way the RIAA is going to get more of her (and her peer's) money is better music and lower prices. DVDs, PS2, and Gameboy Adavance is beating Music out in the battle for the pre-teen dollar.
Beware of Sleestak
There seems to be a startling similarity in the business models of tabloids and the RIAA. Both break the law to make money and hope that the resulting fine is less than what htey made by breaking it. Tabloids lie and create fake stories about actors, musicians and the like, and then get hit with libel suits. Quite often the payouts they make on these cases is much less then what they made by running the false story. The RIAA breaks the law by price fixing, make $240MM and are fined $67MM. Sound similar?
So they say pricefixing went on from 95 - '00, and is now over.
But average CD prices in 2001 were higher than they were in 2000 (from $14.02 per CD to $14.63, according to the RIAA's *own numbers*). Surely if the pricefixing was that extensive, and ended in 2000, then the average CD price in 2001 would have fallen?
Anyone? Anyone?
Bueller?
So you're saying that affordability is the reason why people pirate songs? I've seen plenty people who make more than minimum wage and have lots of disposable income pirate CDs. Pirating has little to do with price and more to do with ease and convenience. Its easier to hope on limewire and look for a song I just heard on the radio and download it - then mix it into a party mix. Sure, some people are just cheap and do it because they don't want to spend the money - but given the fact that these days its starting to get harder and harder to actually use the content in the way that consumers want to I expect piracy is more likely going to increase rather than decrease. I liken it to computer game market. There are plenty of people who buy legitimate copies of games only to have some moronic CD copy protection software stop them from using it. The first thing these people do is look for a mechanism to get past the copy protection.
I know if I were on the board of directors, I'd be asking for the head of the person who cost me this fine
... the bottom line.
No, you wouldn't. You'd be pushing to give him/her a bonus, because the amount of illegal additional profit was $480 million and the fine only $67 million. And you'd make sure the message gets round in your company that thinking up scams like this will result in BONUSES, because the net result was to add more than $400 million to the bottom line over a 5-year period. Never forget that the bottom line is
Of course some part of the illegal profit probably went towards bribing a judge or some people in the DOJ to approve this settlement, but that would be a negligible cost. Couple of million, something like that.