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Attorney General Investigates Music Price Fixing

Posted by ryuzaki0 on from the when-you-get-done-there-go-talk-to-the-oil-companies dept.

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.'"

17 of 257 comments (clear)

  1. Parent exposes duplicate link, but anyway... by Wayne_Knight · · Score: 5, Interesting
    Is this surprising?

    Everyone is greedy to a point. Some are just able to carry their greed to the point of complete selfishness and totally ignore the high percentage of people who have a hard time just keeping a roof over their heads.

    What the heck will it take? Evolution of the human species? I always think back to those old Star Trek episodes where they land on some planet where the inhabitants laugh kindly at Earth's culture because they have learned to live without greed, take care of everyone, and actually enjoy sex rather than codify it.

    I don't know why I want to write this... mod at your leisure. But before you bite my head off, I want to make sure all the future commenters out there read this very key quote:
    "Music companies make more money when they sell a song on iTunes than when they sell a CD," Mr Jobs said last year. "If they want to raise prices, it's because they're greedy. If the price goes up, people turn back to piracy - and everybody loses."
    Hopefully that will keep those crazy anti-Apple fanboys at bay.
    1. Re:Parent exposes duplicate link, but anyway... by SubcomandanteTorta · · Score: 3, Interesting

      BACK to piracy? Jesus, he must be living in a reality field all on his own. Gotta keep up the appearances for the record execs, I guess. It's like trying to unexplode the first nuclear bomb. He'd have better luck building a time machine and assassinating Hitler. Or trying to re-imprison Yog Sothoth back in the Pentagon before he escaped to Iraq and helped open the Seventh Gate. As long as music is commercialized in its present form, there are people who want more than they can afford, there will be piracy, theft, whatever we are calling it now. It doesn't matter how much it costs.

    2. Re:Parent exposes duplicate link, but anyway... by Nicolasd · · Score: 2, Interesting

      You're kinda right... Except some people (like me) who don't listen to music that much are pretty happy with using exclusively the ITMS. When I found out about it I stopped downloading illegal music as I think the pricing is ok... If the pricing goes up I'll go back to limewire and the rest...

    3. Re:Parent exposes duplicate link, but anyway... by Overly+Critical+Guy · · Score: 2, Interesting

      What are you suggesting, total socialism? I think "greed" is really the over-used moniker jealous anti-capitalists have given to personal success.

      It's become a cliche to hear someone criticize human nature and say we need to "evolve" to some sort of ideal social position they have in their head. It's not going to happen--we're the way we are now specifically because of evolution. Survival of the fittest breeds creatures that learn to take care of themselves to increase the chances of spreading their genes.

      Referencing old Star Trek episodes certainly doesn't do much to bolster the idea behind your post.

      --
      "Sufferin' succotash."
  2. Music industry answer: by SmallFurryCreature · · Score: 2, Interesting

    Keeping the prices high? Are you kidding? If you think 0.99 per song is high you ain't seen nothing yet baby. As soon as we can get people to stop using iTunes and a MS based system instead with no Steve Jobs to protect consumers, and his bottomline, we will really be ramping up the price!

    --

    MMO Quests are like orgasms:

    You may solo them, I prefer them in a group.

  3. can the record labels justify the expense? by spacepimp · · Score: 3, Interesting

    I've been curious why it costs more to buy an entire album via download, than it does to buy the cd... IIRC it cost the lables more to make a tape, than to produce a cd, and the prices for cd were greater than tapes. Now without having to produce a pyhsical tangible disc or tape, the costs are higher still, witrhout packaging and liner notes, and printing costs. smells like price gouging to me.

  4. Re:Dupe :-( by pomo+monster · · Score: 2, Interesting

    It needs anonymous posting, and it needs a nested view sorted by score. Still, good enough. Goodbye Slashdot!

  5. CDs by tooth · · Score: 5, Interesting

    I don't care about price fixing of music downloads. Look at price fixing of physical CDs instead. How can a music CD cost the same as a movie DVD? And while they're at it, make them use the true CDROM standard, without drm hacks.

    1. Re:CDs by stunt_penguin · · Score: 4, Interesting

      "How can a music CD cost the same as a movie DVD?"

      I also find it strange that a music CD can cost pretty much the same- a movie will cost tens (maybe hundreds) of millions of euros to produce, but retails for about 26 if you're lucky, and a new album costs much, much less to produce (oh, say 2 million if you're an absolutely huge band and spend like 2 years on it) and costs nearly 20 or so to buy.

      That said, the cinema run pays for most of the costs of movie production, though not as often as you'd think, and by the time something makes it to HMV they're just making profit on something that a lot have people have paid 9 to see once, without taking a copy home, and with some idiot texting someone on the phone 5 seats to your left. At the same time, I still love going to the cinema and ( I went last night ) and don't begrudge a good movie a good profit.
       

      --
      When the posters fear their moderators, there is tyranny; when the moderators fears the posters, there is liberty.
  6. Re:*Cough* by slashdot.org · · Score: 5, Interesting

    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 do see something wrong with $0.99/song. I happen to like to get the entire album. I don't thing I've ever paid $21 for a CD. Maybe $17 at the most. But on average I'd say $14.-

    So that bottoms out at about nearly the same price. What I don't understand is why the music industry believes that they can pocket all the money when selling a product that [1] is inferior in sound quality (unless iTunes sells lossless compression now, I've done a-b tests and I think most people will be able to hear the difference in quality on a high-end audio system) [2] is inferior in flexibility (original CDs didn't have any form of DRM) [3] is less complete (where's the booklet with lyrics?) [4] requires special software to purchase/playback and finally [5] costs them a LOT less to distribute.

    The last one is really the kicker. I _know_ what distribution and production of media costs, and it's pretty clear that the music industry is behaving like a bunch of greedy bastards. If they are lucky they'll get 50% of what you pay for a CD after the cost of distribution, production and storage. Yet when they sell stuff online they want to pick up 100% of what normally goes to third parties. In other words, if I pay $10 for a CD, about half (or more) goes to the cost of media (CD, case & booklet), distribution, storage and retail cost. All this is pretty much replaced by a simple website and server, which will cost peanuts on a per-download basis. So the music industry wants to absorb all of the $5 or whatever that was saved by going online.

    I guess that's fine with me. I won't download music illegaly. But I won't buy it either. If I _really_ want something, I'll get a CD. Give me reasonable prices for a reasonable product and we'll talk. Don't come bitching about sales going down and quit your fucking government manipulation.

    The bands that are taking things in their own hands and realizing that recording and distributing online is something they can finance themselves should be applauded and supported in any way possible.

  7. Re:The parable of the two farmers and the customer by larry+bagina · · Score: 2, Interesting

    You're right, it is worth looking into. Unfortunately, it was the federal gov't that set up farm protection schemes far worse than you're envisioning (like paying for the destruction of crops in order to keep prices artificially high).

    --
    Do you even lift?

    These aren't the 'roids you're looking for.

  8. Investigations.. by novus+ordo · · Score: 2, Interesting

    Anybody notice whenever something happens an investigation is started and you never hear about it again?

    --
    "You're everywhere. You're omnivorous."
    1. Re:Investigations.. by cnerd2025 · · Score: 2, Interesting

      It's not exactly a coincidence: the media has the shortest attention span there is. Legitimate stories are shunned in favor of the ridiculous. See, the media seems to think that we want to hear the most shocking stories, yada yada. The truth is--and all aspects of "entertainment" can listen to this--the truth is that the media and the entertainment industry are in a business that is not predictable, therefore is not inherently profitable. Hence, media and entertainment attempt to change that aspect, but when one tries to mold what is unmoldable, he ends up making an ass of himself. I was watching the Academy Awards tonight, and was quite satisfied with Jon Stewart, until the president of the Motion Picture Academy of Arts and Sciences came out and said some shit about how the old days of movie-going should be preserved. This sad devotion to tradition, soley for the sake of those in power, is ridiculous. The media covers the most "shocking" stories, but they happen to be ridiculous. Case in point: the Dubai "incident." An old proverb quips, "there are no new ideas in Hollywood," and it isn't alluding to the 5 basic stories ever told. As a matter of history, the best art and progress are made when careful and meticulous work are conjugated with creative and interesting methods of delivery. In the days when Hollywood execs are sticking their heads between their knees--for more reasons than one--those devoted to creativity and progress are taking the day. We would hear more about these investigations and findings from them if the news was actually news rather than pursuit of leads that didn't make the cut for the "National Enquirer." The media has the ability to investigate legitimacy, but it would rather play it "safe" and cover the "shocking." There is a supposition that (at least in the US) "people are idiots." I disagree. Movie sales were at a major low last year. Mainstream media is waning further as internet media and blogging become more dominant. Indie and underground artists are making their way in the stead of homogenous recycled garbage from Hollywood. This gives me hope: I think people realize they are being "played" and hence are voting with their pocket-books.

      I would also like to point out one thing: the modern political philosophy of special interests was originated in the New Deal, with legislation allowing for the formations of cartels. Today we are not in economic crisis and our system is much stronger than in the overindulgent 1920s. The world is explosively shrinking and it is the result of creativity, from Tim Berners-Lee to Shawn Fanning to Linus Torvalds, none of whom were "celebrities" before their creations. Today we are in the need of a new Progressive Era: not one in which government is the solution but one in which individuals and the increase in their freedoms are the solution. America and the West have moved out of their youth; now it is time for them both to stand up and become adults. This undertaking is a great one, but it can be accomplished. I hope that once again, like in the dreams and actions of America's founding fathers, people can truly stand for sacred ideals and pledge everything--lives, fortunes, and sacred honor--solely because of their beliefs in individual progress. Some of these men, including George Washington, believed that political parties were inherently a bad idea and led to corruption and spinelessness. I find myself agreeing with Mr. Washington more and more. People debate about the differences between Hilary and Dubya, but the simple fact is plain: there is no difference. Obviously one is "liberal" and the other "conservative," but honesty, what is the difference? Both favor big government, both have affairs with wealthy special interests, and both constantly limit the rights of Americans and Humans around the world. There is no difference. Hitler is only different from Moussilini in his attempted Genocide. Today our leaders are not Fascists or Nazis, but when will they be? When the individual exists solely for the State? The answer is simple: when Fear, the

  9. Sorry, but... by cirby · · Score: 2, Interesting

    ...your numbers are just plain wrong.

    Hell, it would cost more than a quarter just to *ship* one CD.

    Let's look at some more realistic assumptions.

    First: Let's say a "typical" CD sells 100,000 copies (they don't, on the average, but we'll go with the 100K number).

    We'll assume the band is made up of five guys.

    If they're using a good studio (not the cheap-ass garage-based kind), you're looking at $10,000 for studio time alone. A good producer will want to pay for a good engineer, so there's another $10,000 or so. Add in design costs, and actual physical production, and you're looking at upwards of $50,000 for a serious production (yeah, you can get an album hammered out at your cousin Phil's for a couple of thousand, but you can also drink Budweiser).

    So you're up to 50 cents a pop, just for recording and preproduction.

    CDs in bulk cost about 25 cents each for actual physical production in huge quantities, with labels and in boxes.

    So there's 75 cents in real production costs, and everyone concerned is going to make *zero* profit.

    Now, the label gets into the act, they have a bunch of people out there looking for the Next Big Thing, and they have to be paid for. The people who own the studio also need to be paid. Then there's the band. Suppose each of these groups make 50 cents a pop for each CD sold (a not-extreme number).

    So you're up to $2.25 in actual physical production costs plus royalties and a moderate amount of profit.

    Now, here's the hard part: Moving the damned things around. They have to go from the factory that prints the CDs, to the warehouse owned by the label, then to the first middleman. You're up to $2.50 a pop now.

    That first-level middleman is going to want to make some profit, too. So he's going to take that $2.50 in costs and double it (he has to pay his warehouse crew, plus his staff, plus pay the rent on the building, et cetera - doubling is pretty common in order to make a decent profit). So you're at $5 a shot, and it's in a big buildding out in St. Loius or something.

    Now, the middleman takes orders from all of those little retailers, plus all of the big retailers, and ships them out UPS (or the like). Every Tuesday, those retailers get that week's stock of CDs in, and what to they do? They double the cost (what the middleman charged with shipping coss, then a markup for the store's costs, which include rent, staff, and al otehr costs).

    So even for the "cheap" model of production, you're looking at $10 CDs.

    Which is, oddly enough, what the price is for "discount" CDs of fairly popular bands, and what most local bands charge or their locally-producred discs.

    NOTE:

    The numbers above assume a fairly high number for a "typical" CD. The real average is closer to 5,000 than 100,000...

    There's also the "risk taker" model to be included. They don't charge $16.99 ($12.99 at Best Buy) for a successful CD to rip you off. They charge that much to pay for the next CD they put out that tanks in the market, where they eat all production costs yet still have to pay those folks all up and down the line.

  10. Re:The parable of the two farmers and the customer by pipingguy · · Score: 4, Interesting


    How about a new parable that actually fits?

    Rewind a bit...

    "Pop" music depends on hype. I, for one, do not think that the screaming teenage girls in the 50's phenomenon was entirely "spontaneous". That was staged and aggressively promoted. Thus, pop music hysteria was born, and what better pent-up group of emotions than pre-adolescent, innocent females would there be to manipulate?

  11. Which industry is more corrupt? by argent · · Score: 2, Interesting

    "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.

    $0.99 per song isn't "cheap"... iTMS attraction is that I don't have to buy 10 songs I don't like to get one I do. If I like the music enough to want the whole album, I buy the CD.

    It's the album price that limits the iTMS price. They couldn't get away with charging significantly more than CDs on iTMS when they get less for it.

    The prices of ringtones are high because you only need to buy a few, maybe even one, and unless you're a total pop culture slut once you find one you like you're unlikely to buy another for six months.

    And they don't need P2P ringtones. If you're savvy enough to be using P2P and you have a cellphone, there's bunches of programs out there that will let you take any chunk of a song and turn it into a ringtone for all kinds of phones. People don't care, because the $3 for the ringtone is nothing compared to the $1000+ they're paying for the phone over a 2 year contract.

    Speaking of which, is the music or the cellphone industry a bigger rip-off?

  12. I Seem to Recall... by Greyfox · · Score: 4, Interesting
    Another price fixing invesigation of the music industry a couple of years back. If memory serves me correctly, the music industry got a slap on the wrist at the time, the price of a new CD didn't drop and the industry came up with (Apparently legal) new and interesting ways to expose millions of computers on the Internet to malicious intruders in the name of protecting their franchise.

    Come to think of it, the DOJ antitrust investigations really aren't what they used to be at all. When they smacked down IBM, they put the fear of God into the company! For decades after that IBM bent over backwards to obey the terms of their agreement with the department. Ever since then though, it seems like all the companies that get investigated and found guilty of anti-competitive behavior just shrug it off and keep doing what they were doing before.

    I don't know when exactly the DOJ lost the ability to scare the living hell out of a company like they did with IBM, but I think they need to get that ability back. Otherwise they're just wasting my tax dollars. I think the best way to do that is to make a particularly brutal example of the next company they investigate. What? You say it's the music industry? Well... OK then! Get to it, guys!

    --

    I'm trying to teach myself to set people on fire with my mind... Is it hot in here?