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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."
Err...what on god's green earth do British courts have to say about a Hong Kong enterprise?
Cole's Law: Thinly sliced cabbage
Well done to the BPI for giving those who download music for free yet more reason to not feel guilty. Truly a great day for record companies..
Blaming GW Bush for the Iraq war is like blaming Ronald McDonald for the poor quality of food.
The nature of what's happened is bad, but it also makes sense. Being in Hong Kong, CD-WOW doesn't strictly have to play by the UK's rules and can, in theory, charge whatever they want for the media they are selling. It's the basis of free enterprise, which Hong Kong is sometimes good about. (And to the consternation of the MPAA, sometimes all too good about.)
So, CD-WOW could, in theory, ignore BPI. BPI, in turn, can make life very very difficult for them through the use of repeated lawsuits (which may fail, but will cost money to defend against), through harassment of people buying their services, and through the use of the same tactics the RIAA employs here against people who don't obtain music how they want you to obtain it.
It's difficult to fight a legal battle, even one you can win, against an opponent who has the resources of the government to draw on. CD-WOW is probably just protecting their interests by rolling with the punches. Hopefully it'll hurt their sales less than fighting with BPI would hurt their bottom line.
How about they LOWER their prices to COMPETE with CD-WOW? Isn't that what economics teaches us? WTF PEOPLE!
If the cost of shipping around the world doesn't offset the price charged, then I see no reason why any organization should be allowed to demand a price change. Surely the cost of shipping that CD isn't small. Under the "globalization" of the economy, if you can't produce it locally for a reasonable price, people will import it.
Why is it that only corporations are supposed to benefit from globalization?
Sig under construction since 1998.
When your product is available on a global basis through illicit channels at near-zero cost, and innovative retailers try to bring their prices down in order to attempt to win back legitimate customers, force them to raise prices artificially and drive customers away.
Way to go, BPI!
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I just love the "free market" ideologues who suddenly want government intervention when someone manages to effectively compete with them. They have no problem shipping jobs to India to get the best prices, but dammit consumers shouldn't be allowed to SHOP in India to get the best prices! They should be forced to pay our prices and conform to our marketing plans so we can make more money!
this is getting old and so are you
blog
Don't worry. Because, as we all know, the Free Market will always end up providing the best solution for everybody, where consumers can choose the best product at the best price and everything sorts itself out, magically, until we're all rich and free and happy. Or something.
Honestly, though; first DVD regionalisation, then this. Yeah, maybe the free market would be a good idea, if it actually existed.
What people refer to as the "free market" currently is better described as a global welfare state for fat guys in suits.
evil math within Nature's Cubic Creation!
We're not acknowledging that we were in the wrong, but simply that the risk-reward ratio of spending months in court wasn't right for us.
And there you have it, the real thought behind every business decision.
--
In London? Need a Physics Tutor?
American Weblog in London
If I understand what phaze3000 is saying, why the hell should people feel that downloading music for free is wrong when the legal system allows a large institution like BPI/**AA to *force* (read "bully") legit cd retailers into anti-competitive price rises. Anyone agree ?
$ strings FTP.EXE | grep Copyright
@(#) Copyright (c) 1983 The Regents of the University of California.
There are lots of morons in suits that think this bit of news is a good thing. However, the smart ones will think just about the same as the /. crowd. This is a huge admission of weakness by the UK music industry. Sure its easy to crush some dotcom, but they've just raised a huge flag that will attract attention from those not so easily intimidated. The legal basis for the threatened action against CD-Wow is thin at best. Amazon or someone else who can afford the legal bickering can now swoop in and do exactly what CD-Wow is backing off of.
This is, IMHO, another example of the record company's desperation. Cooler heads would have ignored CD-Wow. Realistically, how much could an HK based dotcom change the UK market? Not much in my estimation. But by taking this action, the BPI suggests to retailers that they might be able to get a leg up by importing CDs. The BPI just fucked its members. I hope they are enjoying their "victory" today. A few more like this will kill them.
This is what gets my blood boiling about corporations today.
"Well, this guy in India/China/Mexico is willing to work for less than you. Can't compete with those wages? Oh, too bad!"
Compare to:
"Well, this CD costs much less in India/China/Mexico. We can't compete with those prices. STOP! THIEF! SUE! BLOODY MURDER!!!!"
"The market alone cannot provide sufficient constraints on corporation's penchant to cause harm." -- Joel Bakan
In 1995, the music industry decided to combat price wars in CD sales by setting MAP (minimum advertised prices). Within 6 months, CD sales flattened and began to fall, a did not recover until Napster, MP3 players, etc, revived the industry. The music industry attempts to control the consumer like no other industry, and as a result has missed out on the growth that similar industries have seen, such as Movies and video games. They pay for placement on the radio, pay for placement on store shelves, pay to create videos that they likely pay to have MTV play (all 10 that get played in a 24 hour period). And then they bitch that it cost too much money to create, and thats why they are losing money selling 50 cents worth of metalized plastic for $20.
You are in a maze of twisted little posts, all alike.
Yay, I'm supposed to work for less money so I can be competitive with guys living in India, China and other third world countries. It's good for business, I'm told.
But if I try to turn the tables and expand my purchasing power and buy from those same countries I'm not allowed to because its not good for business.
What the *fuck*? Why they hell can't I "compete" globally where it benefits me? Why is only business and its fat-cat corporate honchos allowed to exploit global discounts, but the rest of are forced to pay sky-high local prices but get paid third-world wages?
I have just sent an email to CD Wow to tell them that they have lost my custom until they reverse this decision and tell the BPI where to get off. Let them know what you think, there's a feedback form on their website.
A latent existence
but in the US, wouldn't the authorities soon be all over you for conspiring to fix prices if you did that sort of thing?
The World Wide Web is dying. Soon, we shall have only the Internet.
It doesn't take a college education or anything more than the old saw of "two wrongs don't make a right" to shoot down the obvious flaw in your reasoning.
Two wrongs can most certainly make a right.
If someone is attempting to kill you and your family (a wrong), you are certainly justified in killing them (a second wrong), resulting in the survival of you and your family (a right).
In this case, the recording companies have been screwing artists and engaging in anti-competative trade practices like the one outlined in this article (a plethora of wrongs). If file swappers can put the recording companies out of business by illegally downloading music (another wrong), then a new mechanism for artists to reach their fans will have to emerge. It is very unlikely such a mechanism will be any worse for the artist than what currently exists, and a strong liklihood it will in fact be much better (this would be a "right").
All of that having been said, I really wish people didn't trade files illegally. P2P technology is IMHO critical to the future of the internet in terms of scalability. The internet itself is fundamentally P2P in its design, and when it comes to downloading Linux ISOs, or legitimate, free media (home movies, machinima animations, popular slashdot stories) having a P2P infrastructure in place will be invaluable. Every illegal download puts amunition in the guns of those who would ban such technologies and change the Internet from a fundamentally P2P medium, where we are all equally empowered to server content as well as consume it, to a top down glorified shopping network/cable channel.
And that is a disservice to all of us who value our freedom of expression.
So, ironically, while I disagree with your reasoning, I share your desire for this illegal file trading to stop, so that the rest of us don't have our rights and ability to trade files legally crippled and perhaps one day even revoked altogether ("trusted computing," "palladiium", super-DMCA, SCO-Law, etc. ad nauseum).
The Future of Human Evolution: Autonomy
The thing that got me, when importing some CDs from Tower Records in the US, before I realised I would get slapped with an import tax bill, is that they add the duty to the price of the items, and then add the VAT to the items + duty price. A tax on the duty tax! Incredible.
I have to agree that this tax-on-tax business is commonplace among governments and completely unjustifiable.
I suspect that in the long run that people in the UK will use e-mail to make person-to-person contacts with people (strangers in the sense that they have no contacts except an e-mail on an individual subject) in the 'colonies'.
People will upload lists of music that they are interested in. Someone who is planning a trip to the UK and the area where the person may live might either buy the actual CDs in their local country or copy the music i onto CD-Rs. Then the two parties can arrange to meet in person at a pub, coffeehouse, or whatever and exchange product for a pre-agreed price.
Before the internet this type of exchange could be done and had been done now-and-then but it was difficult to arrange the details.
It's not much, but it's an idea of how to approach the problem of music distribution across borders when the global music corporations aren't interested in developing the market that is there. They ignore the market by charging absurdly high prices when the potential customers can see how the markets and prices are in other places.
Thank you,
Ok...so, companies/corporations don't like it when 'globalization' bites them in the ass, eh? Its perfectly ok for them to move jobs from higher paying countries to lower paying ones...leaving the previous workers high at dry..
But, let someone start selling products (CD's) from the cheaper parts of the world....and they don't like that?? They shouldn't be able to have it 'both ways'...
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
Do these people never learn from history? Haven't they noticed that fixed exchange rates/prices and draconian attempts to control those goods (like the Soviet Union had or the US War on Drugs (WOD)) always create black markets that try to bring prices to the actually demand price? It's abundantly clear that absolutely no one in Music Industry management has ever taken a single economics course! If they did nothing seeped in. Perhaps that's a forbidden subject.
WOD price goal: set price of drugs to infinity to eliminate demand/use; civil rights are largely irrelevant compared to moral and social control of "incorrent and dangerous" goods (moral monopoly)
Blackmarket response: offer drugs supply and price at increasingly lower prices to meet demand
Soviet price goal: control economic system for ideological purity and assure party control of country: both use 10-year plans on production without appropriate feedback basic as actual economic demand is largely irrelevant compared to ideology/party control (political monopoly)
Blackmarket response: offer illegal foreign currency that can buy goods or goods themselves that are actually wanted/needed
RIAA price goal: set price to maximize profits; music quality and customer satisfaction are largely irrelevant (market monopoly). Microsoft, SCO and similar also qualify on goals and tactics.
Blackmarket response: offer music, for free by file sharing, or at a reasonable market price, which people actually want; if an arbitrager can get RIAA price > offered price > free, someone would try; perhaps Apple Music Store is an example, where price includes opportunity cost savings due to choice of individual song vs. buying the whole album.
In other words, you can see the kind of historic friends and company the RIAA keeps - the goals and methods are essentially identical. No wonder everyone hates them. No wonder the pattern of failure and doom pervades all three.
It might cost 50 cents to manufacture, but it certainly didn't cost 50 cents to record, to market, to have the artwork produced, to pay everybody.
Sadly, it probably did. There have been real numbers published that included all that and the poster is not far off. As another poster pointed out, the cost of pressing the actual CD was probably a few cents, and that's being pretty conservative. Even in very small runs you can hit your $0.50 mark for pressing CDs, but the RIAA CDs get pressed in runs of millions, so the cost is much much less and the money spent on promotion is divided that much more.
So by that logic, any CD that is not being actively marketed should be sold at manufacturing cost.
Does it work like that? Hell no. If anything, the price of a new CD is lower than one that is a year old, because all they are interested in is pumping the sales numbers and moving on. CD prices are simply set because they are the only game in town. Record companies are f'n stupid for not embracing the "digital file" model and keeping control of the market. They still are not embracing it, even though there is a 100% proven market for it. What is even more ignorant is that they offer backdoor support by manufacturing MP3 players while suing those who download MP3s.
My beliefs do not require that you agree with them.