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Attorney General Investigates Music Price Fixing
An anonymous reader writes "The Guardian is reporting that the US Attorney General has launched an investigation into whether or not record labels are engaged in price fixing of music downloads. From the article: 'The department of justice inquiry centers on the activities of the four largest record labels: EMI, Sony BMG, Universal and Warner Music. Subpoenas are believed to have been issued to all parties, with federal officials understood to be focusing on whether the companies have been colluding to keep the price of downloads artificially high.'"
...they have to pay a $50 fine and publish a press release including the words "We are vewwy, vewwy sowwy." Rinse, repeat 10 years later...
Once upon a time, there were two farmers. One farmer sold apples and other sold pears. Now, if you know anything about these two fruits, it's that they are very similar. Each farmer only grew that one crop on his land because the soil and weather conditions didn't allow for the raising of the other fruit crop. At the market, though, customers could buy either one easily. In fact, the prices were within cents of each other.
"There must be some kind of collusion," the customer thought to himself, "some kind of price fixing that is artificially keeping the prices of these apples and pears high." So he sued them both and the pear farmer went bankrupt fighting the suit in court. The apple farmer managed to settle out of court with the customer, but not without incurring a substantial cost to himself.
Then pears went off the market and the price of apples went sky-high. "A-ha!" said the customer, "I was right all along. The farmers must have kept the prices relatively equal in order to maximize their profits. Now that there is no reason for the apple farmer to keep the prices even with pears, he has raised it substantially!" The customer was satisfied with himself for having been clever enough to discover the nefarious plot.
The apple farmer, back on his farm, sat at the drawing table and muttered to himself about his terrible luck. "I am losing a lot of business to these high prices. If only I weren't forced to raise them so high to fight that worthless lawsuit. If only... If only..." "The pear farmer and I don't even sell the same produce..."
Sorry guys, but leeching off the works of others is old hat - time to find really, genuinely good acts, or put up "for Sale" signs.
Physics is nothing like religion. If it was, we'd have an easier time trying to raise money!
They are 10 years late and investigating the wrong medium. I don't see anything wrong with 99 cents per song, my issues were the $21 for a CD with one decent song.
I always think of how it can cost 99 cents to download a full song from iTunes, which is a reasonable price considering a music CD costs at most that much on average, but then a ringtone of the same song, a 15 second or so clip, costs 3 dollars to download from the service provider of the phone. I should at least get the whole song on my phone for that much moola.
I'm not really sure how relavent the old style labels are to the modern music industry. Strip away the hype and the fact remains
The problem isn't the cost of the medium (i.e. manufacture), it's transport, storage, handling, etc.
Those are the expensive bits, as it is with most manufactured products nowadays.
And since with music (as opposed to, say, a vacuum cleaner) you can actually do without the physical part and the associated overheads, it does indeed make sense to lower the price accordingly when you just transfer the data.
This is equally valid for the sales (or "licensing") of software downloaded online.
May contain traces of nut.
Made from the freshest electrons.
Price fixing has been a hallmark of the music industry for fifty years. Let's look at CD's.
It costs any record company, on average, about $0.25 to get one CD into a retail store. This includes:
Normally, manufacturers strive to keep their cost per unit at or below 12.5% of the retail price. The distributor then buys the unit at 30% to 40% of retail. The retailer buys the unit at 60% of retail. The customer buys the unit at (you guessed it) full retail price.
Let's see how the typical $16 CD retail price breaks down:
But Wait!!! Most record companies are their own distributors. More profit for them.
We see now that $0.25 (real cost) is about 1/8 of the production cost calculated here. Following the model, one CD should cost about $2.00.
Which is still more than most of the trite crap produced these days is worth. Music isn't a cash cow, it's a cash herd.
...wait a second, I thought that you could fix prices all you wanted to on non-essential products. Wasn't The Sherman Anti-Trust act addressing critical comodities, such as food, fuel and similar vital products that are important to the economy?
I think the RIAA is inhuman scum as much as the next slashdot basement troll, but who really cares if they collude to set the price for old Tiffany songs at $8 or $16? I don't need them to live, so they can form a big evil cartel and charge ONE HUDRED BILLUN DOLLARS if they want to.
HA! I just wasted some of your bandwidth with a frivolous sig!
Where was this investigation a decade ago when it was price fixing and racketeering of the music printing and distribution business that resulted in $18 CDs as the cost of doing business and bringing the product to market declined?
It's funny too because all the clean-up this investigation could possibly lead to won't save the labels of the RIAA. They long ago crossed the line, laughed, and STILL refuse to acknowledge their misdeeds. It's a good thing consumers aren't suffering their tyranny anymore.
"I always think of how it can cost 99 cents to download a full song from iTunes... but then a ringtone... costs 3 dollars"
That's because p2p networks still keeps prices on downloads down.
Pricing on copyrighted material isnt set relative to costs, it's set relative to available capital for purchases. If the consumers get more money, then the prices will rise, regardless of actual costs. The only 'competition' there is is illicit copying.
The DOJ suing the labels for 'collusion to keep prices up' is rather ironic and just shows how far from reality the concept of IP has gone.
To the attorney general: Yes, of course there is price fixing and collusion to keep the price up. It's in the damn code of law. Look under the heading 'digital millenium copyright act' in your own bookshelf and you'll find all the evidence you need. 'Keeping the prices up' was the whole point of it.
1) Cold hard cash will be transfered under "campaign contribution" from the mysterious Big Four to the US Attorney General.
2) Investigation will reveal nothing.
3) Profit!
Even if the attorney general did decide to take some action, it would undoubtedly be some slap-on-the-wrist fine or equally ineffective measure. Nobody seems to ever consider doing something that might be effective. In this case, the problem is at its root caused by the government-granted monopoly of copyright. No copyright, no problems! If the government is unhappy with the copyright monopolies they have created, why not strike the problem at its root and weaken the copyrights of those who abuse them?
This would work not just on music companies but on any business built on copyright; for example software businesses such as Microsoft. Instead of a fine, simply slash the duration of copyright on the company's assets, or even release some portion of them to the public domain immediately. This would not only serve as a deterrent to future abuses; it would actually reduce their *ability* to commit abuses in the present, and it would measurably benefit the public as well.
main(c,r){for(r=32;r;) printf(++c>31?c=!r--,"\n":c<r?" ":~c&r?" `":" #");}
You have that backwards. The other services are charging 79 cents in an attempt to steal market share from iTMS. Apple has mind share, market share, the iPod, iTunes on Mac and Windows, and an integrated service. Everyone else is lowballing price to compete.
Any sect, cult, or religion will legislate its creed into law if it acquires the political power to do so.
The price of mainstream DRM-less downloaded music is still infinity.
(The various attorney generals should just stay out of it at this point; they're a few dacades late to the game. There were two monopolies and they're both getting broken. Distribution, of course, was broken about five years ago with the widespread availability of broadband. The second, airplay, is in the process of being broken with the advent of satellite radio. It'll further get broken when/if they finally come out with EVDO Internet radios.)
A few reasons.
I'm not 'flaming', or trying to be a prick in any way. It just seems that most Digg users don't understand why we aren't deserting Slashdot in droves for their site. You asked, I answered.
You are so preoccupied with this boogy-man ("greed") that you've overlooked the root of the issue.
Has the music industry achieved financial success through voluntary means only, or have they exploited the coercive powers of government as their means to financial success?
I think we all know the answer. Let's deal with an actual, identifiable problem, which is government and its intervention in the media business. "Greed" cannot be dealt with objectively; it is a matter of personal opinion. The difference between coercion and voluntary association, on the other hand, is objective by human nature.
Whatever, they don't have to bribe the DJs. They just talk to one guy at Clear Channel, and suddenly hundreds (thousands?) of DJs across the country are told they must play this single once every three hours.
Warning: Apple/Nintendo fangirl. Likes her electronics cute & cuddly. May be rabid.
1) The sales they have are $6-7 including shipping
2) BMG has at least gotten into the 1990's. They email their monthly choice and I decline on their web site. Still not free, but cheaper than sending letters back and forth
3) Their choice is better than a department/5-10, but not as good as a real record store.
4) I understand the business model, but if they can sell CD's out the door for $6-7 (right now the sale is $6 shipped), that suggests they could easily sell CD's retail for $10. I think if these guys dropped prices to under $10 retail, we wouldn't be having many discussions on piracy. But at $18? Yikes. That's an investment. The band better be really really really good to get $20 ($18 plus tax).
You were mistaken. Which is odd, since memory shouldn't be a problem for you
Let's cut to the chase, shall we?
The "product" costs $2.50 to get out of the factory to the distributor. That sounds reasonable, I'll buy those prices.
I don't buy two more doublings from there to the stores. If there's 300% profit between the distributor and the public, then someone's going to come in and buy from the distributor and ship directly to their stores, and sell them for $5.00.
If you can't do that, because none of the distributors will sell direct to retail, then guess what... that's price fixing.
Great! Now I squirted milk out of my nose! It is entirely thanks to MS that we have such inexpensive hardware
That made me choke on my sandwich! There used to be this comapny named Compaq which reverse engineered the IBM BIOS and created a clone market. MS merely rode on this boom.
Microsft marketing wins again!
I can throw myself at the ground, and miss.
Huh? It's called a 'smokescreen'. Investigate a certain business for price fixing, find nothing wrong, everything goes on business as usual. Happens up here in Canada every time the government 'investigates' the gas companies for price fixing.
Don't just stand there, get that other dog!
Genes can code for societal behavior, too. If I help 3 of my close relatives breed, I have just passed on my genes even if I don't breed myself. Look at ants and bees. Most of them never breed. If genes only code for selfish behavior, how'd that happen?
Cooperative societies are more successfull than purely competative ones. According to recent economic research, most people value fairness and justice over personal gain. This is because cooperation is a more efficient strategy. Placing a high value on personal selfishness and greed is counter-productive. It encourages people who by nature might be cooperative to be selfish, harming all of society.
You can try to get the rest of us to agree with your "greed is good" theory, but most people won't. We like cooperation. We value justice and fairness over greed and selfishness. We think people who are selfish and greedy suck, and we see no reason to cooperate with people like that and give them the benefits of our cooperative society. Greedy people should go live by themselves and be entirely self sufficent without being a drain on the rest of us.
The 19th century called, it wants its failed theory of social darwinism back.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton