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Music Industry Pays $67M Fine For Price Fixing

Posted by ryuzaki0 on from the innocent-whistling dept.

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."

17 of 511 comments (clear)

  1. Great timing. by neoform · · Score: 4, Interesting

    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.

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    MABASPLOOM!
  2. Out of curiosity... by Sheetrock · · Score: 5, Interesting

    I know that seems like an awful lot of money, but does it even approach the amount the industry gained through its unfair practices?

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  3. It had to happen by prichardson · · Score: 3, Interesting

    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.
  4. RIAA's next move? by ABetterMan · · Score: 5, Interesting

    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.

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    Someone you trust is one of us.
    1. Re:RIAA's next move? by littlerubberfeet · · Score: 5, Interesting

      You could get a mac. I have had absolutly no problems with itunes.....AND you can digitize from an analogue input. So output on a standard CD player, then digitize........

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    2. Re:RIAA's next move? by alfredo · · Score: 4, Interesting

      Apple is the content creators platform of choice. These artist do not want anything on their computers that will inhibit the creation of content.

      Apple will hold out to the bitter end. Jobs said on CNN that DRM will not work, there will always be a way to crack it.

      --
      photosMy Photostream
  5. this is good news by GoatPigSheep · · Score: 5, Interesting

    so where do I pick up my compensation check for getting screwed over for all these years?

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    GoatPigSheep, the 3 most important food groups
  6. And the money goes... by YrWrstNtmr · · Score: 5, Interesting

    ...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?

  7. Curiously enough... by Idarubicin · · Score: 5, Interesting
    ...I have noticed that the same CD's for sale in my native Canada selling for $18.95 are priced at about the same dollar amount south of the border.

    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!!!")

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    ~Idarubicin
    1. Re:Curiously enough... by coupland · · Score: 5, Interesting

      Actually I'm Canadian too and found that in Canada, the U.S., and the U.K., for a basic meal you can expect to pay about $10 CAD, $10 USD or 10 GBP respectively. Considering there are about 2.5 Canadian dollars to the British pound you see that in Britain a meal "costs" about 2.5 times as much. But this is mostly elementary since their pay cheques (not checks!) are also paid in British pounds so there's no discrepancy unless you're a tourist. It's not really a matter of price gouging, simply of exchange rates and inflation.

      What's more interesting is that a CD typically costs $20 to purchase yet a cassette tape costs around $10. Yet the cassette costs much more to make! (Cassettes are recorded, CDs are pressed on a high capacity assemply line.) This means that recording companies can turn a profit at $10 with higher cost of materials, so why the $%^@ do they charge us $20? This is the price fixing.

    2. Re:Curiously enough... by HaggiZ · · Score: 3, Interesting

      I actually posted a story on this a fortnight ago. The local national radio station here (Australia: JJJ) run a story on the 19th of last month from memory outlining how the Australian Wholesale Music Distribution industry was achieving record highs in sales, but ARIA (the Australian RIAA) is trying to keep quiet about it. They are supporting the RIAA with the P2P crack down, when profits are soaring.

      Essentially early-mid 90's the Australian music industry had to smarten it's game because with our high level of sales tax on CDs, strong conversion rate, and the internet allowing easy access to the highly competitive American market place CDs could now be imported at a significant discount to purchasing locally. So local runs of CDs included bonus tracks, extra material, whatever they could to make them more inticing to buy than the overseas counterparts.

      Now the sales tax has been replaced with a lower GST, our dollar isn't as strong against the US, and purchasing internationally is no longer a very economic decision for Australians. However, the distribution channels have maintained their previous practices. Locally produced CDs still contain more material than the US releases, but with a weaker dollar it's now usually cheaper for US citizens to import into America from Australia. It's meant Australian sales are at an all time high, and US sales appear to have slumped. In reality, the volume of sales probably hasn't changed at all, it's just where they are transacted has shifted.

      Well, I found it interesting at least

      --
      Glenn
      The Smrt way to trade CFDs on the ASX
    3. Re:Curiously enough... by The+Wing+Lover · · Score: 3, Interesting

      Sure, but salaries are also quite a bit higher in the USA than in Canada (almost to the point of being the same dollar amount in US dollars as a Canadian would get in Canadian dollars for a similar job). And taxes are lower. Given someone in a similar job to you, the USD $18.95 probably "hurts" them about as much as your CAD $18.95 "hurts" you.

      I've always thought that they should have named the Canadian currency the "Zglortblag" or something totally different from "dollar", so people wouldn't compare two totally different currencies just because they happen to have the same name. After all, are things 100 times as expensive in Japan because it takes 100 yen to buy a dollar?

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      - In Capitalist America, law violates YOU!

  8. Re:hrm by garcia · · Score: 3, Interesting

    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.

  9. Re:$480M vs $67M by leviramsey · · Score: 5, Interesting

    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.

  10. Wow. That gotta hurt! by trezor · · Score: 4, Interesting
    • consumers had been overcharged by $480 million

    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?

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  11. Re:No surprise here.... by Dudio · · Score: 3, Interesting

    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.

  12. Re:NOT AT ALL by Gonarat · · Score: 4, Interesting

    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.


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