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UK Music Industry Stomps on Imported CD Seller
MungoBBQ writes "The Independent is one among the many news sources reporting that BPI, the British equivalent of RIAA, has made a large online retailer of CDs, DVDs and games, comply with their demands to raise prices by 2 pounds per CD sold on their website. The retailer, CD-WOW, based in Hong-Kong, agreed to raise their prices offered to their UK customers to avoid legal battles. CD-WOW caters to many other European countries, where people have been enjoying their cheaper CD prices. However, it can now be assumed that other national recording industry organizations will make CD-WOW and other online retailers jack up their prices to 'better compare' with the local prices in each country."
CD-Wow's business model was to sell CDs to the UK market. A typical price for a chart CD in the UK is 15.. 12 if you shop around, 10 if you get one of the special offers from a discount shop such as (my favourite) Fopp.
CD-Wow was able to undercut these prices to (typically) 8, by importing from Hong Kong or mainland Europe, depending on the product.
The BPI have alleged that importing from outside the EU is illegal, and decided to prosecute CD-Wow.
CD-Wow decided to settle out of court, despite maintaining that they were in the right. This is not unusual: small companies can't afford months or years in court. Their agreement was to cease importing from Hong Kong, and only import from the EU.
My understanding is that their agreement with the BPI is *not* to hike prices by 2 -- their agreement is to only import from the EU, and CD-Wow have stated that this will increase their costs by 2, which will be passed on to the customer.
I think this could hurt CD-Wow quite badly. At 8, this was the cheapest place a Brit could get new CDs (i.e. recent releases). There's a bricks and mortar music shop on my local high street where I can buy the very latest releases for 10, and have luxuries like browsing the packaging, having the product immediately, eyeing up the hot shop assistant, etc.
Erm, sorry about that last bit.
The people you are railing against, by definition are not "free-market ideologues."
:-), I fight them by not buying their overpriced wares. I highly urge everyone to do the same. If it costs too much, don't buy it! But please, if you are unwilling to pay for it, don't download it and enjoy it without the copyright owners consent. Fair is fair. :-)
No, they are people who demand regulations that are most fovrouble to them in the short term, and allow them to "earn" money hand over fist without having to exert themselves or be efficient.
This is not and indictment of believers in allowing market forces to set prices for goods and labor, but rather an example of how counterproductive the distortion of markets can be.
I don't like the R.I.A.A. or analogous organizations outside the U.S., and as a free-market ideologue
What the agreement (that avoided a court case) stated was that CD-Wow would source products that they are selling in the EU from within the EU, not from elsewhere (eg, Asia).
Unfortunately, because manufacturers charge more for the EU versions of their CDs (or, to put it another way, because they aren't discounted as much as CDs intended for Asian consumers) this means that CD-Wow will have to pay more for its stock in future. To reflect that increased cost, CD-Wow is putting up the prices of its CDs by 2 pounds.
The reason for this is that (ridiculously) buying goods from cheaper sources outside the EU without the permission of the vendor is illegal. Other companies, such as Levi Strauss, have taken supermarkets and other discount retailers to court over grey (non-EU sourced) imports in the past, so CD-Wow would almost have certainly lost the court case that was avoided. Clearly, this is one law that EU consumers would love to see changed.
Other online vendors who the BPI believes are selling grey imports in the UK are also being considered for legal action. These include Amazon.co.uk (which is based in the UK) and Play.com (which is based in the Channel Islands).
Why the crackdown? Well, I'm sure the BPI is being pressurised by traditional retailers complaining about losing sales to etailers undercutting them at every opportunity. It's not a coincidence that since the likes of CD-Wow, Play.com, etc appeared the average cost of an album in the UK has dropped to 10 pounds. And it's also not a coincidence that cheaper CDs (on the high street and online) led to a 30 percent rise in UK album sales last year.
As a regular CD-Wow customer, I'm disappointed by the BPI's stance, the agreement and and the law that forced it, but I'll continue to shop at CD-Wow because, for the most part, they'll still be cheaper than many of the alternatives. Not only that, but they somehow manage to ship from Hong Kong to the UK faster than most their rivals shipping from one part of the UK to another! Their customer services are friendly and helpful too.
Hopefully the consumer-hostile legislation that led to this agreement will soon be repealed. When that day comes, I'm sure CD-Wow will drop its prices again.
"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg
No. The product that CD-Wow sells is legal. It's just that they can buy it in Hong Kong, ship it across the globe, and still manage to charge a lower price than most UK retailers. The record company's Hong Kong division gets the money, rather than the UK division.
Yes, in the US price fixing is illegal. But if you read the article, in the scope of this story, it isn't price fixing.
CD-WOW was buying their CDs from Asia, where they are cheaper, and then selling them in Europe. BPI objected to this on the grounds that CD-WOW was violating their copyrights by not buying the CDs from Europe. Rather than fight a long legal battle over copyright issues, CD-WOW decided it would be easier to simply buy the CDs sold to Europeans in Europe than to fight it out. The price increase is due to increased costs for CD-WOW, not due to BPI insisting on them raising prices.
Yes, we all know that there is price fixing involved in CD sales, and that is what this *really* is about, but the actual case that was going to go to court was one of copyright infringement. CD-WOW was selling CDs for 9 pounds. You'd have to sell a huge number of CDs at that price to pay for lawyers to defend you against music industry lawsuits.
BPI release statement on CDWOW!
and just in case you might start using your brain and realise the isn't a good thing:
Music Buyers Enjoy Lower Than Ever Prices
Their contact details are:
BPI
Riverside Building
County Hall
Westminster Bridge Road
London SE1 7JA
Tel: 020 7803 1300 (+44 instead of the leading 0 if you are outside the UK)
Fax: 020 7803 1310 (+44 instead of the leading 0 if you are outside the UK)
Email: general@bpi.co.uk
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