From: adario (adario@thingsburnup.com)
Date: Wed Dec 04 2002 - 19:46:35 CET
Here's the scoop on the CD price-fixing if anyone's curious. I wonder about
the companies' argument about independent retailers. Not that they would
care, but is it a viable argument? Personally, I avoid those kinds of
discount merchandisers out of principle. I just wouldn't be happy buying my
records at Wallmart. Or at a Virgin megastore for that matter.
Anyway, you can probably get some free cds out of this,
a dario
9/30/02
http://www.usatoday.com/life/music/news/2002-09-30-cd-settlement_x.htm
States settle CD price-fixing case
By David Lieberman, USA TODAY
NEW YORK — The five largest music companies and three of the USA's largest
music retailers agreed Monday to pay $67.4 million and distribute $75.7
million in CDs to public and non-profit groups to settle a lawsuit led by
New York and Florida over alleged price-fixing in the late 1990s.
Attorneys general in the two states, who were joined in the lawsuit by 39
other states, said that the industry kept consumer CD prices artificially
high between 1995 and 2000 with a practice known as "minimum-advertised
pricing" (MAP).
The settlement will go to all 50 states, based on population. Consumers may
be able to seek compensation.
Under MAP, the record companies subsidized ads by retailers in return for
agreement by the stores to sell CDs at or above a certain price.
"This is a landmark settlement to address years of illegal price-fixing,"
New York Attorney General Eliot Spitzer said in a statement. "Our agreement
will provide consumers with substantial refunds and result in the
distribution of a wide variety of recordings for use in our schools and
communities."
The companies, including Universal Music, Sony Music, Warner Music,
Bertelsmann's BMG Music and EMI Group, plus retailers Musicland Stores,
Trans World Entertainment and Tower Records, admitted no wrongdoing.
The companies have not practiced the pricing agreement since 2000. At that
time, they agreed in settling a complaint by the Federal Trade Commission
that they would refrain from MAP pricing for seven years.
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.
In settling the lawsuit, Universal BMG and Warner said they simply wanted to
avoid court costs and defended the practice.
"We believe our policies were pro-competitive and geared toward keeping more
retailers, large and small, in business," Universal said in a statement.
Previously, the companies said that MAP was needed to protect independent
music retailers from rising competition from discount chains such as
Wal-Mart, Circuit City and Best Buy. They had slashed CD prices, below cost
in some cases, in the hope that once consumers were in their stores they
would buy other, more expensive products.
The music companies said that MAP did not directly help them because it
didn't affect wholesale prices. Retailers added that they needed support to
keep prices up because their rents, particularly for stores in malls, were
higher than the discount chains.
Lately, several record companies have cut prices on some CDs, particularly
for new acts, to counter the continuing industry slump. Album sales are off
nearly 11% this year compared with the same period in 2001, according to
Nielsen SoundScan.
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