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RIAA Sequentially Repeating Edison's Mistakes?
An anonymous reader writes "George Ziemann has written the latest installment in his 'history repeats itself' series of articles regarding the record industry and the tactics utilized by their lobby, the RIAA. This time Ziemann focuses on the recent RIAA lawsuits against individuals who file-trade, and the search-and-seize missions against independent music stores. Slashdot posted his first two articles back in June."
The RIAA screws the artists.
They steal their songs, they pay them a tiny fraction of what they make from them, and they exercise creative control through the use of unfair contracts.
The RIAA screws the retailers.
This is self evident, but in case you're not observant, the CD costs the record store around 85% as much as they sell it for. They dump products on the market in the forms of "deals" in order to bump up CD sales and manipulate music charts.
The RIAA screws the public.
We buy overpriced CDs for which we have no actual legal rights. Another industry would have been hit for price fixing, but since technically the RIAA isn't a company, they technically aren't a monopoly. We get treated like criminals for violating the monopoly they technically don't have.
And we're ripping THEM off? God forbid the world evolves and this 19th century shit they're trying to pull doesn't fly anymore. 110 years ago you'd have been trying to stop Ford from building his first car, so as not to put the horse people out of business.
What's happening right now is a direct result of their exploitive business practices. People are done whining about it, and they're making their displeasure felt in the only way that counts. Now the whiners are on the other side of the fence, and we're happy to tell you all the same thing you told us: Deal with it, because there's not a fucking thing you can do about it.
Just my opinion.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
I own an independent record store, my margins are in the vicinity of 100%, and I've been increasing my product line by nearly double every 2-3 weeks just by buying two CDs for every one I sell.
Of course, I don't sell Sting or Britney Spears or any of that garbage. I send those customers to Circuit City or Borders.
I move product that you can't find in stores, and you can't even get easily on the Internet. My two big Internet competitors are Interpunk and Angry, Young, and Poor. They sell the CDs for $12-$13. I sell them for $15. We both buy them for $6-$8.
I also sell T-shirts, punk pins, patches, and hats. About a 100% margin there. I move music the same way the big labels do: I play a new CD over and over and over again in my store. I carry peripheral items as well, to attract a crowd. I offer compensation for customers who bring in their friends.
I sponsor events at local shows with local bands, and sell my merch there. I give a percentage to the local band, usually more than what the venue offers them for playing. I sell the bands' music directly on consignment, and keep just 15-20%.
And guess what? I make a profit. A pretty good one. Sure, you never heard of 99% of the bands, but does it matter when I am turning over my inventory every 45-90 days? I don't sit on a CD for more than 90 days, and if I do, I move it at cost and replace it with a different one.
Let the big guys control the big bands -- there's no profit in those guys for an independent store like me. I don't have any MP3s in the store. I don't have any CD-Rs. I don't even have a CD-Recorder in my PC at the store. I block Kazaa and other apps so my employees can't get me trapped.
This is a huge conspiracy that the RIAA is walking all over guys like me -- they're not. I find a market and I dominate it and I make money.
Would I make more if I sold Sting and Bush and Avril Lavigne? Maybe. But then I'd have to work by their rules, and I won't. So I accept the fact that I can't make 7 figures a year, but I'm on track to make 6. And if I open a few more stores (with great customer service, an awesome ability to promote new bands, and a friendly atmosphere that never feels like the mall) I'll only multiply my take.
Face it -- if you think you're in a bind, controlled by a monopoly, you don't realize the big issue: you have choice on what you carry.
I can make a buck. Go try it. You can, too.
Remember how the RIAA was found guilty of price-fixing on CDs and settled?
This is a direct consequence of the settlement.
The RIAA maintained the effective price-fix by instituting a minimum advertised price rule. Stores could sell CDs for whatever price they wanted, but if the price they were advertising was above a certain threshold, the RIAA would pay for the advertising. This had the effect of keeping Wal-Mart and Best Buy from achieving a near-monopoly position in retailing (and thus being able to dictate to the RIAA in matters of content and pricing). Wal-Mart and Best Buy were planning to sell CDs at cost to lead to increased sales per square foot of the store (and generate foot traffic) and their plans would depend on being able to advertise $9 CDs (from a very limited selection; only the stuff that was new and exceptionally popular would be carried).
In order to prevent the big box retailers from taking over the retail market, the RIAA cut their legs out by giving stores that were willing to charge full price (and take a guaranteed profit) free advertising. This in turn kept the small stores and music specific chains in business.
Then Wal-Mart and Best Buy sued for price-fixing and won. The result since then has been even more more blandness in the recording business; with Wal-Mart and Best Buy accounting for greater and greater shares of the retail market, they will only carry CDs that will sell a lot of copies very quickly. Artists who only go consistently gold are getting pushed out because the retailers aren't interested.
Actually, if I were in their shoes, I would not do the same. I would make my product more attractive to my most profitable demographic: the teenager. The average teenager wants to listen to "kewl" music, to instant message, and to talk to their friends on their new mobile phone.
So make the music CD computer compatible. Embrace the new technology, rather than stifle it. Make the kids want to spend the $15 or whatever it is on a new CD, rather than download the CD from kazaa - make it worth their while to do so. Add value to the tracks.
How do they do this, you ask? Here's a few suggestions:
Rather than trying to "protect our artists' IP", the record companies should be trying to attract the buyers back that they are losing to p2p.
Rather than shipping deliberately broken CDs, they should be shipping CDs that are enhanced not just in name, but in content, so downloading mp3s and a CD cover is not enough to have the whole experience.
Maybe I'm old-fashioned, but I don't think you can sell more product by alienating your customers. You sell more by having a good product at the right price.