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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...
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.
labels -are- useful in some/many aspects. They do hunt for talent, provide resources for recording, orchestrate tours and publicity, and provide financial backing of upstart groups.
A group of talented individuals can certainly gather their own resources and make their own connections and get their own loans, but the odds of a bank financing a fledgeling music group or being able to get a booking at a big venue or get you airtime on a hundred stations by making one phonecall are pretty slim. Admittedly, the labels have connections and can get things done more easily and if the label is willing to back the singer, then the people that deal with the studio and band will trust their judgement.
An artist can certainly get their music recorded in a garage or even a studio if theyve got a few bucks, and release it on the net- but try getting your song available on iTunes. There are songs from real, popular bands that aren't on iTunes, why should I be able to find a song by Joe Schmoe's Band? Getting a booking for a little band is tough too. You pretty much have to have someone whose heard your music recommend/suggest you, which makes a chicken and egg deal for a new group. Labels get your foot in the door because they trust you.
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.
How about a new parable that actually fits?
Once upon a time there were a couple record companies. Through the years, their product was the creation, publishing, and distribution of music on various analog media. As technology progressed, they were able to condense even more songs into a smaller product, at an even lower cost to themselves.
One day, a new technology came along that allowed customers to take songs and give them amongst each other, for free. This new technology allowed instantaneous and essentially free distribution. At first the companies attempted to stop customers by making their activities and technologies illegal. Slowly, however, they began to consider adopting this new method of distribution themselves.
But instead of reducing their prices to reflect the change in cost to deliver the product to market, these companies decided to increase their costs, in the name of profitability and growth and investors. When customers saw that the companies were overcharging them, they began to deliberately turn away, continuing to take the product, but without paying for it. In turn, the companies decided to increase their prices further, to make a greater profit off of the shrinking market. But the more they increased the cost, the fewer customers they seemed to have...
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.
Now if you want to write a real analogy
*The 2 farmers would be members of the FPAA (fruit producers association of america)
*They would be actively working together through the FPAA to sue their users who make illegal copies through planting seeds
*They would be suing people for planting with no real proof they actually planted
*They would have a long history of losing antitrust cases dating back to the 60s
*The FPAA would actively be working to strongarm stores to sell their fruit at higher prices.
*The FPAA would have a long history of screwing over their fruit producers (artists)
In this case is antitrust worth looking into? Hell fucking yes.
I still have more fans than freaks. WTF is wrong with you people?
"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?" `":" #");}
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.
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.
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