Attorney General Investigates Music Price Fixing 257
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.'"
Forgive me for plugging my site, but (Score:5, Funny)
Parent exposes duplicate link, but anyway... (Score:5, Interesting)
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: Hopefully that will keep those crazy anti-Apple fanboys at bay.
Re:Parent exposes duplicate link, but anyway... (Score:3, Interesting)
Re:Parent exposes duplicate link, but anyway... (Score:2, Interesting)
Re:Parent exposes duplicate link, but anyway... (Score:3, Insightful)
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 bet
Re:Parent exposes duplicate link, but anyway... (Score:3, Interesting)
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 gene
Re:Parent exposes duplicate link, but anyway... (Score:5, Insightful)
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.
Music industry answer: (Score:3, Interesting)
Re:Music industry answer: (Score:4, Insightful)
Re:Music industry answer: (Score:5, Insightful)
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.
Which industry is more corrupt? (Score:3, Interesting)
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
Postive Price == Collusion/Stupidity (Score:5, Informative)
I have currently purchased about ~50 cds. I got most for about $3 - $4 each on average including shipping. Each CD is a full album (no singles). Most have 10-15 songs on them. Many come from shops specializing in the sale of used cds...
Which means I'm paying about $0.30 per song. And to think that someone had to collect these CDs, figure out which ones were scratched, which not, advertise on ebay, put them into a box, and ship them to be via the postal mail...
Even if 25% of the CD is so scratched up that my computer can't read it, I still come out -- way ahead. And I like to think that maybe I'm helping someone [non-RIAA] out... (which may/may not be the case)
And to think that we currently have an *industry* selling electronic copies of songs for $0.99? Thery already had the digitized recording from the recording studios... Bandwidth these days is practically free. There is virtually no packaging or transportation cost. Very little human intervention is required....
So are the music companies colluding? Maybe. Or maybe they are just exploiting the dumbness of their customers... These companies are large enough to **define** the market. They don't have to answer to supply & demand. The real crime is that the public puts up with this and asks for more...
Does anyone remember how buying home VHS/DVD movies used to be expensive? $15-$20 US for a single movie? Lately, Wal-Mart has a huge crate in their electronics dept, filled with DVDs for ~$5-$7 each... (*renting* at blockbuster costs almost that much ~$4). When displayed like that, I realize how stilly this whole $$$ for IP thing really is... But when displayed neatly in nice packaging on a shelf, these videos somehow appear [to the public] to merit their price...
Some might say the $5-$7 movies are crap... Well, what are most of downloadable songs selling for $0.99 EACH??? And movies cost far far more to produce than music...
Re:Music industry answer: (Score:3, Informative)
Re:Music industry answer: (Score:2)
Re:Music industry answer: (Score:3, Informative)
Doesn't mean you can't get a phone which you -can- copy fi
Re:Music industry answer: (Score:2)
If c
Kind of like lottery tickets.... (Score:2, Funny)
Obviously it's not working. Verizon, would you please, PLEASE increase the price on ringtones? How about $19.95? Wait -- I've got an even better idea -- why don't you bill it at 20 bucks per ring? You'll get right on that? Thanks.
Re:Music industry answer: (Score:2)
Re:Music industry answer: (Score:3, Insightful)
Re:Music industry answer: (Score:5, Insightful)
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!
And if convicted... (Score:5, Insightful)
Re:And if convicted... (Score:2)
Re:And if convicted... (Score:2)
all the best,
drew
Re:And if convicted... (Score:3, Insightful)
Yes, but music will outlive these people. Art and entertainment is a human adventure, it has value beyond dollars and sense. Part of the reason why marijuana is illegal in the US is a racial slur and detainment of musicians http://www.google.com/search?q=marijuana+illegal+ j azz+musicians [google.com]
It cracks me up that when I go to a concert, the law and everybody knows what we do there, but they mostly tolerate it. They bust a token number of people for stupid stuff, but _let_ 99.999% of us do what we want, simply
can the record labels justify the expense? (Score:3, Interesting)
Re:can the record labels justify the expense? (Score:2, Informative)
Actually the cost of the physical medium is really small, they get them really cheap (I'd say $0.20 off the top of my head) when mass-produced. The largest part of the price is marketing, studio personnel and rent, and of course record company margins.
Re:can the record labels justify the expense? (Score:2)
Re:can the record labels justify the expense? (Score:3, Funny)
Re:can the record labels justify the expense? (Score:3, Insightful)
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.
Re:can the record labels justify the expense? (Score:2)
Re:can the record labels justify the expense? (Score:2)
I believe they usually get CDs at a 50% discount.
Re:can the record labels justify the expense? (Score:2)
It does? Most albums on iTunes cost $9.99. CDs cost around $15 on average, sometimes as much as $20 for a single disc. Older ones do cost less, and stores often put them on sale for $10-12. But there's still no way I'd say the average price of a new CD is less than $10. I'm not saying online music isn't overpriced - more that CDs are MORE overpriced, and I'm amazed this lawsuit was never brought in rega
Re:can the record labels justify the expense? (Score:3, Informative)
Re:can the record labels justify the expense? (Score:2)
It is not a free market economy when we are talking copyrights and patents. Then it is a market of protected government granted monopolies.
all the best,
drew
Dupe :-( (Score:5, Informative)
Re:Dupe :-( (Score:4, Funny)
You go ahead and get things started, we'll, uhm.... be along, you know, after awhile; but whatever you do don't come back here cause we'll all be gone.
bye
Re:Dupe :-( (Score:3, Interesting)
Re:Dupe :-( (Score:2, Informative)
answer (Score:5, Insightful)
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.
About time (Score:3, Insightful)
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.
Re:About time (Score:3, Insightful)
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
Re:About time (Score:2)
I agree that the labels do serve a purpose - but maybe the whole point is that it's time to find other means to that end. If radio stations weren't 90% owned by one of a couple huge corporations, I bet it'd be easier for indies to get airplay. The whole system needs a reboot. Maybe between online music downloads, podcasts, and satellite radio (I know
MP3 players on K-12 school property (Score:2, Insightful)
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
*Cough* (Score:5, Insightful)
Re:*Cough* (Score:5, Interesting)
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.
Re:*Cough* (Score:2)
Why hasn't it been used yet? Because th
Re:*Cough* (Score:2)
I think the labels see their doom, but they just don't understand how to make a legitimate go of things as the old style payola model is being stripped away and artists have other distribution outlets for their content. So I suspect you'll see them continue to dig in their heels and make increasingly desperate moves to maintain the status quo...because they
Just downloads? (Score:5, Insightful)
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.
Re:Just downloads? (Score:2)
Care to share with us how you calculated that?
Re:Just downloads? (Score:2)
Sorry, but... (Score:2, Interesting)
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
These number's can't be close (Score:5, Informative)
Impossible.
Sony BMG has once-a-month sales where they ship CD's to your house at $6-7 per disk. Presumably when I buy a $6 CD, Sony is not losing money, so it suggests the cost is significantly lower than you calculate.
You're forgetting something... (Score:2)
You presume wrong, or at least, you presume halfway.
That's for a direct shot from Sony to you, without the middleman, getting rid of excess inventory (rather than throw them away, they sell them to folks like you for a cut price). These aren't "profit CDs, they're "cutting our losses" CDs.
Those $6 to $7 CDs are part of the *costs* of the expensive ones (where they make the profit that they don't make on the cheap "get them out of the warehouse for
Re:You're forgetting something... (Score:2)
All. Shipped. $6.
A few notes about BMG (Score:3, Insightful)
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 guy
Re:Sorry, but... (Score:2)
Re:Sorry, but... (Score:2)
1) Labels do not charge themselves for studio work of any type. They have people on salary for this stuff. They charge the *band* for these things, and put the band into debt from the start. This is part of their contract practices that ensures that the band
Re:Sorry, but... (Score:2)
Really? Put fifty of them in a box and ask UPS if they'll ship it across the country for $1.25. With a ten pound package, shipping UPS ground, regular pickup, you're looking at about *eight times* that, not even considering the costs of assembling the order, putting it all in the package, having someone deal withe the UPS paperwork, or billing.
The rest of your numbers come from similar (really, really flawed) assumptions a
Re:Sorry, but... (Score:2)
You, obviously, have not.
Especially if you believe the big record companies (or the middlemen distributors) pay *1/8* the price other businesses pay (they get a few percent discount, not 80%+).
You just described one way price fixing works. (Score:4, Insightful)
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.
Re:Just downloads? (Score:2)
Hmmm, but when you are dealing in a product where the government is giving you a protected monopoly on said product, you are not talking free-market economics anymore.
And copyright is indeed a protected monopoly granted to you by the government. So, no free markets here.
all the best,
drew
-----
http://www.ourmedia.org/node/111123 [ourmedia.org]
A copyleft (ok, a BY-SA) book, jus
Re:Just downloads? (Score:2)
So tell us, how do you determine "what's really fair?" After all, it would be really unfair if someone was forced into paying more than they want, right? Well guess what? If you have to pay anything at all, that's more than you're going to want to pay. I have to ask, what is
Too little too late (Score:3, Insightful)
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.
How dare they! (Score:5, Funny)
Do these busybodies not grasp that record company executives need to have two new luxury cars every year?
Do they not realise that by the time you've bribed DJs all around the world to play your music rather than the interesting demo some promising new band sent them, there's only enough money left for bonuses in the region of $20 million/year? How can record companies hope to continue attracting the best chief executives if they can only pay $20million in bonuses?
Re:How dare they! (Score:3, Insightful)
CDs (Score:5, Interesting)
Re:CDs (Score:5, Interesting)
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.
Re:CDs (Score:2)
I guess that's why I now buy CDs and rent DVDs.
Re:CDs (Score:2)
It seems unlikely to me that a Sony-BMG spends more on marketing a CD than Universal spends on marketing a movie (unless it's Serenity, apparently).
Re:CDs (Score:2)
Cash (Score:5, Insightful)
2) Investigation will reveal nothing.
3) Profit!
Investigations.. (Score:2, Interesting)
Re:Investigations.. (Score:3, 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 whe
The root of the problem (Score:5, Insightful)
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.
Re:The root of the problem (Score:2)
Bam! Finally someone who sees what I see on this. (check my other posts.)
You price fix, you lose your copyrights. (If you are not gonna take them away completely, but just reduce the term, you should include a period right now when they are not enforceable. Immediate punishment as it were.)
As I have been saying for a long while, there are no free markets in goods protected by copyrights and patents.
(With the possible
That's not price fixing. Now *that's* price fixing (Score:3, Insightful)
(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.)
Also in the news (Score:2)
I can see it now (Score:2, Funny)
EMI: ahhh, no.
Sony: no.
BMG: er, no?
Warner: what was the question again? oh, yeah, definetly not.
AG: Well, that settles that, sorry for the inconvenience. BTW, hot dogs and hamburgers at my place tonight.
I Seem to Recall... (Score:5, Interesting)
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!
Re:The parable of the two farmers and the customer (Score:5, Funny)
Re:The parable of the two farmers and the customer (Score:2)
You think you're confused. I'm still working on the one (fruit) farmer saying "The pear farmer and I don't even sell the same produce
Re:The parable of the two farmers and the customer (Score:2)
Re:The parable of the two farmers and the customer (Score:5, Insightful)
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...
Re:The parable of the two farmers and the customer (Score:5, Funny)
What did you expect from BadAnalogyGuy?
Re:The parable of the two farmers and the customer (Score:2)
Re:The parable of the two farmers and the customer (Score:5, 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?
Re:The parable of the two farmers and the customer (Score:2)
My how times have changed....
"I'm not that innocent"
-- Britney Spears
Re:The parable of the two farmers and the customer (Score:4, Insightful)
*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.
Re:The parable of the two farmers and the customer (Score:2, Interesting)
Re:The parable of the two farmers and the customer (Score:2)
O...K.... (Score:2)
The parable of the dimly disguised simile (Score:3, Insightful)
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 DOLLA
can't have it both ways (Score:3, Informative)
Re:The parable of the two farmers and the customer (Score:3, Funny)
Re:Rule 1 of slashdot: (Score:2)
Re:Rule 1 of slashdot: (Score:2, Informative)
Everyone lost.
Re:Someone has to say it (Score:2)
Re:Someone has to say it (Score:2)
Because, see, I think the point was that if the administration *were* in the pocket of big business, then they wouldn't be conducting this investigation.
But don't let me get in the way of what is obviously a well-rehearsed rant.
Re:Allofmp3 it seems (Score:2)
Re:Waste of time (Score:3, Informative)
You are confusing price setting with price fixing. Most forms of price setting are legal - ultimately a manufacturer decides how much they want to charge for their product. Manufacturers cannot, however, legally dictate the final retail price (well, this is true in Australia). Of course, they can always could scuttle $0.99 downloads by refusing to sell tracks to apple under $0.9