October 2002 -
The Attorney Generals of 47 of the states and the Federal Trade Commission are going to make the major record labels pay a $138 million fine for alleged price-fixing of CDs. This grew out of the majors - Universal, Warner Bros., BMG, Sony & EMI in order of market share - group decision in 2000 to stop giving budget stores such as Good Guys in-store goodies such as life-sized Britney Spears cut-outs. The very logical reason was that such stores were selling CDs as come ons to other electronic hardware they provided, and they were selling them for less than the $15-$20 of strictly CD shops such as Tower. This was all part of a scheme known as MAPs (Minimum Advertised Pricing), which incidently is also used in book publishing. The government said this practice violated anti-trust laws and ordered the labels to pay $62 million in cash to the governments of the 47 states where this took place, plus another $75.5 million worth of free CDs to be given to the schools and the handicapped. The cost of all this will probably be deducted from the performing artists' accounts as "special free goods," resulting in even lower royalty checks. More lay-offs and fewer signings of new artists can be expected from this.
Legitimate CD publishers crying foul when using illegal sales tactics is somewhat ironic and hypocritical. I would support the record industry in their business endeavors if they were truly focused on the side of the consumer and the musicians they represent, rather than the large profit margins they no longer have.
