Music Industry Pays $67M Fine For Price Fixing 511
Krelnik writes "Reuters is reporting that the music industry is paying a $67.4 Million settlement to end a lawsuit where they were accused of artificially inflating CD prices at retail. Yeah, P2P is causing their problems. Sure, sure it is. Here's the story at Reuters UK."
No surprise here.... (Score:2, Funny)
Re:No surprise here.... (Score:2)
NOT AT ALL (Score:3, Funny)
All kidding aside though, it really isn't a suprise at all. Have you ever seen a CD cheaper than the same thing on a tape? It costs them under a penny to produce a CD in under a second while it costs bundles to mass produce tapes. If tapes and cds were the same price, i wouldn't say anything. If tapes were 50 cents more than a cd, i wouldn't say anything, but when you charge more for something that costs less to produce just because of its superior quality some will say its 'whatever the market will bear', while others call it price fixing.
P2P is awesome, nothing will be done to stop it. What is File and Print Sharring or running an FTP server if not P2P? P2P will hopefully take enough money away from the record industry that we will be able to go from
a: choosing an $18 CD from the 200 or so artists that have been played on the radio/mtv in the past year
to
b: choosing a $5 CD from 5,000 artists who make equally good music but don't lip sync too well N'Suck or have a face good enough to paste on top of porn star bodies and post all over the internet Britney or can play awesome live shows but don't have hollywood making million dollar videos for their lame music Lincoln Park.
Hopefully we will get more variety and less MTV / Hollywood bullshit in our music.
I'm just waiting for a similar lawsuit to follow for Hollywood charging ridiculous prices for DVDs just because they contain footage that wasn't good enough to make it in the actual film....Tell ya what, how about I pay $20 for the DVD without any extra crap, and if i feel the urge to hear it in Pakastani or want to watch some deleted scenes, i'll come back and buy the other half for another 10 bux.
I'm just rambling, its late...But as far as the music industry goes,its right up there in the list of things that have power which shouldn't...Microsft/MTV/AOL/Bush goodnight bedtime
Re:NOT AT ALL (Score:4, Interesting)
Actually Hollywood has been doing a better job of pricing DVDs than the RIAA has been with music. I have been able to pick up LOTR, Harry Potter, and Monsters Inc. (yes, I have a kid) all for (well) under $20.00 -- and Monsters Inc. was $14.88 (DVD OR VHS Tape) at Wallyworld (Wal*mart). I was also able to get War Games for under $10.00.
New Music CDs are $13 to $15 and old CDs run just as much! No wonder the RIAA's sales are down -- My 11 year old Daughter would rather spend her $15 on a DVD instead of a CD -- she gets more out of the DVD and she had grown bored with Britney and the boy bands. The only way the RIAA is going to get more of her (and her peer's) money is better music and lower prices. DVDs, PS2, and Gameboy Adavance is beating Music out in the battle for the pre-teen dollar.
Re:No surprise here.... (Score:4, Funny)
That kind of question is a priori.
Re:No surprise here.... (Score:3, Interesting)
Price Quantity
>250 71
250 103
200 159
180 243
120 360
100 463
80 690
Of course, there are a bunch of things that could explain this (unpopular CDs priced higher to account for the lack of economies of scale, price increases as inventory dwindles, etc.) but it's kinda interesting anyway.
Great timing. (Score:4, Interesting)
RIAA's next move? (Score:5, Interesting)
Re:RIAA's next move? (Score:5, Interesting)
Re:RIAA's next move? (Score:4, Interesting)
Apple will hold out to the bitter end. Jobs said on CNN that DRM will not work, there will always be a way to crack it.
Re:RIAA's next move? (Score:3, Informative)
Re:Great timing. (Score:4, Insightful)
I like this bold prediction from the article:
"Former FTC chairman Robert Pitofsky said at the time that consumers had been overcharged by $480 million since 1997 and that CD prices would soon drop by as much as $5 a CD as a result."
Wow. That gotta hurt! (Score:4, Interesting)
That kinda makes $67 million a fortune or what? Why didn't they fine them at least $500 million? If the fine is lower than the overcharging, seriously, why should they care?
Re:Great timing. (Score:3, Insightful)
It resulted in a 3 dollar increase in CD prices.
I wish I had a link to a historical reference to the previous lawsuit. I have plenty of faith that CDs will now cost nearly $25 apiece, esspecially as DRM starts to make a strong foothold in the marketplace.
It's about time. (Score:2, Interesting)
Re:It's about time. (Score:2)
Out of curiosity... (Score:5, Interesting)
No it doesent (Score:5, Insightful)
$67M is a Joke. A single company could foot that.
It Pays to Read the Article (Score:5, Informative)
The worst part is (Score:4, Insightful)
Re:No it doesent (Score:4, Funny)
It's Tommy Mottola's wall-safe money.
The lawyers get a third, the rest of us get 50-cents-off coupons for Chicago MCMXVIIIII.
Re:No it doesent (Score:4, Informative)
If you believe that a retail price war wouldn't have put any pressure on wholesale prices you're smoking crack.
Lower retail prices would mean higher retail sales. Can't make a retail sale without buying it wholesale first. If retail prices don't put any pressure on wholesale prices then the RIAA should have ENCOURAGED a pricewar.
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Re:Out of curiosity... (Score:3, Funny)
They probably spent that much on lawyers fighting the case.
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Where's my cheque? (Score:3, Funny)
Re:Where's my cheque? (Score:5, Insightful)
Re:Where's my cheque? (Score:3, Informative)
The cash settlement will be paid to the 43 states. The companies also agreed to distribute $75.7 million worth of CDs to public entities and nonprofit organizations in all 50 states.
From this it sounds like they're giving out CD's instead of cash. Shitty deal, 'cause they'll probably just give out worthless CD's anyhow. We can have RIAA coasters to go along with the AOL ones.
Regardless, sounds like a good arguement against the "P2P is the reason nobody buys CD's"
The RIAA made me do it - phorm
Re:Where's my cheque? (Score:3, Informative)
Do you have any applicable laws?
Correction (Score:5, Funny)
WHAT!?!?!?! (Score:5, Funny)
Re:Where's my cheque? (Score:2, Funny)
And at a board meeting, a single tear is shed.. (Score:5, Insightful)
Re:And at a board meeting, a single tear is shed.. (Score:5, Funny)
I have a theory that what geeks need is a large advertising budget. We need commercials on TV that tells our side of the story.
Imagine it...
View of a long haired pale man hunched over a keyboard
Johnny is a hacker. But he doesn't live in his parent's basement. He doesn't work for an evil foreign government. He's not part of a group that spells their name with numbers. No, Johnny works for the record companies. Under a proposed US law, Johnny will have the right to hack into your computer and break it. The record companies are very concerned with getting the ability to hack your computer - even though they aren't concerned about lower CD prices. They were recently convicted of overcharging Americans roughly half a billion dollars for CDs.
See, we need an agency to mix the FUD our way. :)
hrm (Score:5, Insightful)
Re:hrm (Score:5, Insightful)
I know if I were on the board of directors, I'd be asking for the head of the person who cost me this fine, and getting something signed in blood by the people who I can decapitate if it happens again.
And something like that is going on where the left hand paid the $67 mill, with regard to the right hand that caused the damage. This is probably the first time left and right hands have actually met in that organization. How fitting that it happens today, in a climate where suits begin to actually fear consequences of their actions!
Re:hrm (Score:3, Interesting)
P2P actually saved the consumer money during the price fixing and we are going to end up paying for it in the long run.
Let's write a law (Score:5, Funny)
* hack meaning to chop into little pieces
Re:let;s tell lawyer jokes (Score:3, Funny)
Shoot the lawyer twice.
Drop in the bucket (Score:3, Funny)
Re:Drop in the bucket (Score:5, Funny)
The real problem here is that anybody is paying for a Britney CD.
Understand, in this case I'm most definitely not advocating piracy.
only 67M? (Score:4, Insightful)
Re:only 67M? (Score:2)
A lot of people here on slashdot would talk for days about how much they hate the RIAA, but they won't do a thing about it. Discover some new music, find a new favorite band, get some friends together and go to a show, do anything but let the RIAA get bigger and bigger.
Re:only 67M? (Score:2)
Re:only 67M? (Score:5, Insightful)
Gotta love that logic.
Re:only 67M? (Score:4, Insightful)
$0.02USD,
-l
Music Companies won (Score:2)
This is common, the lawyers sue and settle for way less than they should because they are payed a percentage. I think tort reform should include only paying lawyers only out of punitive damages unless the class votes for the settlement.
This should have been a 2 billion dollar cash settlement. 480M*3(cartel)+500M(punitive). Though I'm more partial to the corparate death penalty, we need some serious tort reform to increase settlements if we want to keep the current system working.
This is like those car safety lawsuits where you get a coupon for buying another crappy car from the same company. Yeah Right!
Re:only 67M? (Score:4, Insightful)
Re:only 67M? (Score:3, Insightful)
Sad.
So they can sue hundreds of millions out of MP3.com for letting people listen to their own music, but when the record companies cheat consumers, they didn't do a thing wrong. Yuck.
Remember, it's only a settlement... (Score:5, Insightful)
They are just paying their way and donating CDs to certain organizations just to say drop the suit... that's it.
Re:Remember, it's only a settlement... (Score:2)
So, yeah. Figure they'll be back at it in about seven years. Honestly... some times the US gummit just lays down and dies [slashdot.org].
Re:Remember, it's only a settlement... (Score:3, Insightful)
I am confused
$75.7 million in CDs? (Score:3, Funny)
75 million in CDs? So what's that buy nowadays, 20, 30 CDs?
It had to happen (Score:3, Interesting)
1) Cost to profuce cd's is probably less than $1/CD including case and linear notes, excluding production costs.
2)The cost of CD's, with everyone making substantial profit could be $3.50
3)The only way for the prices to be so artificially high was for price fixing.
I know I would buy more music if it came at a reasonable price.
Maybe someone in the software industry will realize that: more people will buy this if we only charge $20 for it!
Re:It had to happen (Score:5, Funny)
Re:It had to happen (Score:2)
It's not as simple as just charging for the plastic and paper that make the CD. Though I seriously doubt it is anywhere near $14 or whatever CD's are going for today - I usually just make an xmas list for the family as ideas and get my music once a year.
Re:It had to happen (Score:2)
So (Score:2)
One can always wish...
Priceless... (Score:5, Insightful)
No it won't! The suit was filed two years ago. $67.4M divided over all the CDs distributed by the labels ends up being fewer than pennies per consumer. At best, I'd expect little more than a $5 coupon off my next overpriced music purchase. The settlement also doesn't do anything to address future infringement.
and result in the distribution of a wide variety of recordings for use in our schools and communities."
Not under today's Fair Use [wired.com] laws...
$480M vs $67M (Score:4, Insightful)
Well now we know what step two is:
Step one, rip off consumers.
Step two, settle out of court.
Step three, $413M profit!
Re:$480M vs $67M (Score:5, Interesting)
Idiot.
The RIAA did not make a cent off the price fixing, as that had no effect on wholesale prices. What the RIAA was doing was to say to the chain stores, "you can't advertise the new Britney CD at less than a certain amount over wholesale". Why was this done? To prevent the Wal-Marts and Best Buys of the world from monopolizing CD retailing and using their distribution might against the RIAA. It's in the RIAA's interest to keep as many non-chain and small chain stores around as possible, as it prevents WalMart from holding CDs for ransom (as in, "we won't buy the CD for our stores unless you sell it to us for $2 less than normal wholesale").
The $480 million that consumers overpaid went to CD retailers, not the RIAA.
Re:$480M vs $67M (Score:5, Insightful)
"The RIAA did not make a cent off the price fixing, as that had no effect on wholesale prices."
Then..
"won't buy the CD for our stores unless you sell it to us for $2 less than normal wholesale"
Erm.. so better retail price competition will affect wholesale price and yet wholesale price is not affected. Bravo!
this is good news (Score:5, Interesting)
Re:this is good news (Score:2, Funny)
Re:this is good news (Score:4, Funny)
Dang I just submitted this, my 1 chance at fame! (Score:2)
Not a bad use in my opinion but maybe they should make the libraries buy 2nd hand cd's and allow people to check them out. That might get the RIAA's attention. Payback can be such a bitch.
Re:Dang I just submitted this, my 1 chance at fame (Score:2, Insightful)
It would work better if ... (Score:2)
In a world where children go hungry, addicts are jailed instead of helped, grandparents cannot get perscription drugs because I needed a tax cut, the RIAA gets no sympathy from me (but I'm just a "liberal democrat" so what would I know).
fit penalty? (Score:3, Insightful)
In seriousness, it says in the article "consumers had been overcharged by $480 million since 1997." I don't know what the other details are, but it seems that the penalty is just a slap on the wrist since it barely adds to $200 million. Isn't that half of what they gouged? They still made off with a ton of cash. Where's the hurt?
So are they going to lower prices now? (Score:5, Funny)
And the money goes... (Score:5, Interesting)
The music industry has been ripping us off (no news there) to the tune of $5 per CD.
The have to pay up $67 mil + $75 mil to non-profit, etc.
Who the hell gets that $67 mil? I want my cut!
~50 CD's over the last few years....where is my $250?
Flabbergasted. (Score:2)
bull.
Brad Maione, Spitzer's spokesman, said the companies would not admit any wrongdoing.
bullshit^2 and abdication/autoabsolution in the same sentence. There is no way this "settlement" can be viewed as anything less than an utter failure. Mariah Carey's contract was purchased [yahoo.com] for more than one third of this settlement IN CASH, not in the distribution of recordings for our schools and communities, just to get her to stop singing. Give me more bull.
This is a landmark settlement to address years of illegal price-fixing, New York Attorney General Eliot Spitzer said in a statement.
This is not a landmark. It ain't even a bookmark. Read the article and boggle at the audacity.
Before p2p (Score:2, Interesting)
Great (Score:5, Insightful)
So now the local indy shops that can't match the $8 a CD that the big chains can sell for will go under. They're already more expensive, but it just got pointless for them to even try.
It'll be like bookstores all over again.
No No No (Score:2)
Re:No No No (Score:2, Insightful)
Re:No No No (Score:2)
The last time I bought music in a chain was when I got Britney Spears for my 6yo daughter, and that was because Last Chance didn't have it. My daughter did see some all-girl punk vinyl that she wanted, though. There's another plus, helping good kids get away from bad music
Re:Great (Score:4, Insightful)
SO people complain when CDs are too expensive, but also when they are too cheap? The CD manufacturers no longer have any control over how much Best Buy et. al. charge for their CDs. The chains like that can afford to take a loss on CDs because their hope is to get people in the door and sucker them into buying some other, more expensive, item. The RIAA actually tried to get them not to sell their CDs at a loss, since it was hurting other CD outlets, but the chains took them to court and won. So you can either complain about the RIAA making prices too high, or the chains making prices too low, but you can't complain about both.
Re:Great (Score:3, Funny)
You mean there aren't supposed to be different people in this world? With different opinions, even?
Damn, I must have missed the hivemind meeting.
Used stuff (Score:2)
But I think what helps them is the used CD's. They may pay me $2-4 for a CD and resell it for $8. Hopefully that'll help support them for also promoting local and non mainstream stuff.
One might argue this rips off the musician - sorry they won't get their $0.50, but hell...most of the stuff I'm shopping for you can't find on the shelves anymore anyway.
There are a few obscure, non-mainstream bands I like - and I try to buy the CD's right from their website if possible, hoping it'll generate max revenue.
Same as above with used books, except it's hard to buy the book straight from the author.
Curiously enough... (Score:5, Interesting)
This would at first blush seem perfectly reasonable, until one notices that one United States dollar buys about $1.58 Canadian. That's right--CD's are typically about 50% more costly as soon as you go from Windsor to Detroit.
Granted, I've noted a similar pricing trend with some other goods--groceries come to mind. But for non-perishables, the price disjoint is quite stunning.
Is it price fixing? Or plain old-fashioned gouging? All I know is that for a ten-cent piece of plastic, that's quite a markup. Charge what the market will bear, and hope nobody notices that the neighbours are getting a 30+% discount. Does anybody know if there are any retailers taking advantage of this price difference? Buy Canadian, sell American, pocket the difference. (Whatever you do, don't write a post containing the phrase "3. Profit!!!")
Re:Curiously enough... (Score:5, Interesting)
Actually I'm Canadian too and found that in Canada, the U.S., and the U.K., for a basic meal you can expect to pay about $10 CAD, $10 USD or 10 GBP respectively. Considering there are about 2.5 Canadian dollars to the British pound you see that in Britain a meal "costs" about 2.5 times as much. But this is mostly elementary since their pay cheques (not checks!) are also paid in British pounds so there's no discrepancy unless you're a tourist. It's not really a matter of price gouging, simply of exchange rates and inflation.
What's more interesting is that a CD typically costs $20 to purchase yet a cassette tape costs around $10. Yet the cassette costs much more to make! (Cassettes are recorded, CDs are pressed on a high capacity assemply line.) This means that recording companies can turn a profit at $10 with higher cost of materials, so why the $%^@ do they charge us $20? This is the price fixing.
Re:Curiously enough... (Score:3, Interesting)
Essentially early-mid 90's the Australian music industry had to smarten it's game because with our high level of sales tax on CDs, strong conversion rate, and the internet allowing easy access to the highly competitive American market place CDs could now be imported at a significant discount to purchasing locally. So local runs of CDs included bonus tracks, extra material, whatever they could to make them more inticing to buy than the overseas counterparts.
Now the sales tax has been replaced with a lower GST, our dollar isn't as strong against the US, and purchasing internationally is no longer a very economic decision for Australians. However, the distribution channels have maintained their previous practices. Locally produced CDs still contain more material than the US releases, but with a weaker dollar it's now usually cheaper for US citizens to import into America from Australia. It's meant Australian sales are at an all time high, and US sales appear to have slumped. In reality, the volume of sales probably hasn't changed at all, it's just where they are transacted has shifted.
Well, I found it interesting at least
Re:Curiously enough... (Score:3, Interesting)
I've always thought that they should have named the Canadian currency the "Zglortblag" or something totally different from "dollar", so people wouldn't compare two totally different currencies just because they happen to have the same name. After all, are things 100 times as expensive in Japan because it takes 100 yen to buy a dollar?
Reuters = Good reporting (Score:3, Insightful)
Reuters should be commended for not confusing the issues.
It won't be long (Score:2)
Next year's RIAA "Chicken Little" News Release.. (Score:2)
so, next January, we'll be treated to a news release from the RIAA, proclaiming that P2P and file-sharing services have cost them, *gasp*, $67 million in 2002!
As part of the settlement... (Score:2)
"We believe our policies were pro-competitive and geared toward keeping more retailers, large and small, in business," Universal said in a statement.
They should have had to drop all P2P lawsuits.
This is a perfect example of the pot calling the kettle black! The only difference is that the pot has paid off a few Congressmen, so they get whatever they want, be it illegal or not.
Just watch...Congress will pass a law legalizing this MAP pricing.
$67 million is a slap on the wrist. (Score:2)
The other boot has yet to fall... (Score:5, Informative)
While the record companies refused to admit fault with words, they did it with dollars. You don't settle a lawsuit for that much money unless you are pretty sure that you will be found liable at trial. If they were really settling for the 'nuisance value' of the lawsuits, the amount would have been much lower. Think of this settlement as plea bargaining for guilty corporations--"We won't fight the the punishment as long as we don't have to say 'we're guilty' out loud."
The other shoe, or boot, that is waiting to fall is private class action litigation. If someone robs you, the government can prosecute or sue them. But as a victim, you also have a right to sue. (Alas, you don't have a right to start a criminal prosecution--under US law--but you can, like the family of O.J.'s wife, sue in civil court.)
There was at least one private class action lawsuit filed against these record companies for price fixing in 1996. The last I saw (1997), it was still kicking around the courts. In dollar terms, private class action suits can easily exceed the damages they'll pay to settle the government's case.
The other damage the industry faces is that this settlement, while not technically an admission of guilt, is tantamount to it in the court of public opinion. The industry has been shown to be bigger pirates than Napster--they've been ripping off ALL of their customers.
Re:The other boot has yet to fall... (Score:5, Insightful)
That may be, but the problem with class action suits is that they are almost always brought in order to benefit the lawyers. It's rare indeed that the actual plaintiffs in such suits gain anything significant from them. Often the plaintiffs end up with a settlement that represents less than what they lost at the hands of the defendant. But the settlement amount is usually large enough that the lawyers representing the plaintiffs make enough to retire to a life of complete luxury.
Remember: the lawyers representing you in a class action lawsuit don't work for you: they work for themselves, and are just using you as a tool to gain for themselves insane amounts of money.
What that means in this case is that if the RIAA offers to settle early for $100 million, the lawyers will probably take the deal, because their cut will be something like 30% of that, and $30 million for a small group of lawyers is a lot of money if the amount of time it represents is small. They know that if they don't take the deal, the RIAA has the resources to drag the case out for decades if need be, so they'll take the deal. And the RIAA is thus still ahead a cool $300 million.
If there's another boot to fall, it'll be something other than a class action lawsuit. And if you want an idea of the likely long-term outcome, just look at the tobacco companies and how much they were "hurt" in the end (hint: not much) by the class action lawsuits.
The Real Solution (Score:2)
Minimum Advertised Price? (Score:2)
Incremental copies as settlement (Score:2)
This doesn't make much of fine, when you can consider the real incremental cost of the media.
$67M is just cash, then there's the 5.5M CDs... (Score:3, Informative)
Justifies P2P downloading! (Score:4, Funny)
Re:I wonder (Score:2)
Open Source is a term that deals with software, and has nothing to do with the arts. Yes, you can run a similar principal to an extent, but it's really not the same thing.
I wonder... (Score:2, Interesting)
Re:I wonder... (Score:3, Funny)
Of course, when the cops arrest you for admitting to music piracy remember, IANAL.
Re:I wonder (Score:3, Insightful)
They will deserve their fate, which they have earned by continuing to treat their customers and talent with contempt.
Re:MORON! (Score:2, Insightful)
Plus, what's the point of paying $16 for 10 songs that of which only 2 are good.
Re:artificially inflated price (Score:2, Interesting)
In a competitive market, if you put your price to high, you loose almost all your customers to the competition, which has the lowest possible price. For example, if Dell set their prices just a bit higher, they would loose a lot of their business to Gateway and others.
The allegation here is that the market is not competitive, and that the music industry jointly sets a high ('artifical') price. They had used an advertising scheme to prevent stores from selling below a certain price.
If this is true, then there is a need for lawyers and judges. What I don't understand is why no new records companies emerged, selling CDs at lower prices. They could have made a killing.
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