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Attorney General Investigates Music Price Fixing

ScuttleMonkey posted more than 8 years ago | from the when-you-get-done-there-go-talk-to-the-oil-companies dept.

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.'"

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257 comments

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Forgive me for plugging my site, but (5, Funny)

Anonymous Coward | more than 8 years ago | (#14852880)

Another pretty good article on this subject can be found at this site [slashdot.org]

Parent exposes duplicate link, but anyway... (5, Interesting)

Wayne_Knight (958917) | more than 8 years ago | (#14852889)

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.

Re:Parent exposes duplicate link, but anyway... (-1, Flamebait)

Anonymous Coward | more than 8 years ago | (#14852920)

Well it must be true if Jobs says it, right? LOL! Up with Piracy I say!

Re:Parent exposes duplicate link, but anyway... (3, Interesting)

SubcomandanteTorta (623303) | more than 8 years ago | (#14852929)

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.

Re:Parent exposes duplicate link, but anyway... (2, Interesting)

Nicolasd (875160) | more than 8 years ago | (#14852980)

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...

Re:Forgive me for plugging my site, but (0)

Anonymous Coward | more than 8 years ago | (#14852947)

Zonk, is that you?

Music industry answer: (2, Interesting)

SmallFurryCreature (593017) | more than 8 years ago | (#14852896)

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!

Re:Music industry answer: (4, Insightful)

Anonymous Coward | more than 8 years ago | (#14852927)

I always think of how it can cost 99 cents to download a full song from iTunes, which is a reasonable price considering a music CD costs at most that much on average, but then a ringtone of the same song, a 15 second or so clip, costs 3 dollars to download from the service provider of the phone. I should at least get the whole song on my phone for that much moola.

Re:Music industry answer: (5, Insightful)

Znork (31774) | more than 8 years ago | (#14853008)

"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.

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.

Re:Music industry answer: (3, Informative)

Anonymous Coward | more than 8 years ago | (#14853035)

Thats because when you buy a ringtone, you in fact license it for playing it in public. When you buy a song, you license it for playing it in limited groups.

Re:Music industry answer: (1)

masklinn (823351) | more than 8 years ago | (#14853037)

Get a modern phone that can use mp3 files as ringtones (my Nokia 6230i can)

Re:Music industry answer: (2, Informative)

Animaether (411575) | more than 8 years ago | (#14853072)

Most phones can play MP3 files now.. heck, they could 2 years ago. The problem is that the phone operators deliberately disable functionality to, for example, copy files to the device or download them off the web if it has a browser. So you're forced to go through the provider or a third party 'ringtone' store such as Ringtone King, Jamba!, etc. in the EU (same company, different name, practically a monopoly) from which the provider gets a kickback.

Doesn't mean you can't get a phone which you -can- copy files with, though.. my $80 prepaid Sagem does it, and a $400 S/E w800i does it. Plenty of choice if you actually go and look for it.

Re:Music industry answer: (1)

m50d (797211) | more than 8 years ago | (#14853009)

Lol, yeah, that's why he's charging $.20 more than anyone else and putting it straight into Apple's coffers.

Re:Music industry answer: (2, Insightful)

shmlco (594907) | more than 8 years ago | (#14853258)

You have that backwards. The other services are charging 79 cents in an attempt to steal market share from iTMS. Apple has mind share, market share, the iPod, iTunes on Mac and Windows, and an integrated service. Everyone else is lowballing price to compete.

Three articles (0, Troll)

anupamsr (910397) | more than 8 years ago | (#14852899)

and no one getting any good reply. A long time has passed since I saw such detoriation in articale chosing at Slashdot. Recently it has been frequent.

"And therefore?" -- "He's a Troll!" (0)

Anonymous Coward | more than 8 years ago | (#14853323)

You guys are being a little intolerant. I think he is saying that he's disappointed in this article because it's old news. I agree (anonymously, of course).

I read about this on Friday and again on Saturday (in paper form). I'd only expect to see this on /. if something NEW had happened.

I know, I know..."shut-up and get back in your cage with the other trolls and lemmings."

And if convicted... (5, Insightful)

Anonymous Coward | more than 8 years ago | (#14852901)

...they have to pay a $50 fine and publish a press release including the words "We are vewwy, vewwy sowwy." Rinse, repeat 10 years later...

Re:And if convicted... (1)

Bananatree3 (872975) | more than 8 years ago | (#14852918)

I really wish it was more along the lines of 731 million dollars [technologynewsdaily.com] , which hynix memory is paying for its price fixing.

Re:And if convicted... (0)

Anonymous Coward | more than 8 years ago | (#14852939)

I Imagine the main difference is that Hynix are not American. They probably went to University with the RIAA execs, got to cut your alumni some breaks.

The parable of the two farmers and the customer (1, Insightful)

BadAnalogyGuy (945258) | more than 8 years ago | (#14852902)

Once upon a time, there were two farmers. One farmer sold apples and other sold pears. Now, if you know anything about these two fruits, it's that they are very similar. Each farmer only grew that one crop on his land because the soil and weather conditions didn't allow for the raising of the other fruit crop. At the market, though, customers could buy either one easily. In fact, the prices were within cents of each other.

"There must be some kind of collusion," the customer thought to himself, "some kind of price fixing that is artificially keeping the prices of these apples and pears high." So he sued them both and the pear farmer went bankrupt fighting the suit in court. The apple farmer managed to settle out of court with the customer, but not without incurring a substantial cost to himself.

Then pears went off the market and the price of apples went sky-high. "A-ha!" said the customer, "I was right all along. The farmers must have kept the prices relatively equal in order to maximize their profits. Now that there is no reason for the apple farmer to keep the prices even with pears, he has raised it substantially!" The customer was satisfied with himself for having been clever enough to discover the nefarious plot.

The apple farmer, back on his farm, sat at the drawing table and muttered to himself about his terrible luck. "I am losing a lot of business to these high prices. If only I weren't forced to raise them so high to fight that worthless lawsuit. If only... If only..." "The pear farmer and I don't even sell the same produce..."

Re:The parable of the two farmers and the customer (5, Funny)

Aggrav8d (683620) | more than 8 years ago | (#14852913)

But we're talking about music and music here. Your parable and the attorney general's actions are like apples and oranges.

Re:The parable of the two farmers and the customer (1)

value_added (719364) | more than 8 years ago | (#14852962)

But we're talking about music and music here. Your parable and the attorney general's actions are like apples and oranges.

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 (1)

SIInudeity (822415) | more than 8 years ago | (#14852924)

Dont be silly and compare the music giants to poor apple/pear farmers. Music labels are the devil.

Re:The parable of the two farmers and the customer (3, Funny)

Anonymous Coward | more than 8 years ago | (#14852932)

The music industry is solely responsible for the awesome quality of music that is available to everyone, and without them, this music would never see the light of day. I don't even want to think about how we would all survive without these conglomerates!

Re:The parable of the two farmers and the customer (0)

BadAnalogyGuy (945258) | more than 8 years ago | (#14852933)

Music labels are the devil.

And who was the first apple salesman? Are you catching on now?

Re:The parable of the two farmers and the customer (1)

KDR_11k (778916) | more than 8 years ago | (#14853102)

But he only sold one of them and that at cost. I wouldn't hire a salesman like that.

Re:The parable of the two farmers and the customer (1)

BadAnalogyGuy (945258) | more than 8 years ago | (#14853123)

Sure, but look at the market landscape today. Sure the original owner may have a significant marketshare, but I think that you'd have to agree that the salesman in question really succeeded with his franchise business.

Rule 1 of slashdot: (1, Funny)

Anonymous Coward | more than 8 years ago | (#14852935)

It doesn't matter if it's apt. It doesn't matter if it's expressive. It doesn't matter if it's relevant to the situation, or if it accurately parallels reality. It doesn't even matter if it makes any sense.

If you make a post-length analogy, you will get +1 insightful.

(Rule 2 of slashdot is that if you say "I know I'm going to get moderated down for saying this, but...", you will get moderated up.)

Re:Rule 1 of slashdot: (0, Troll)

Spazntwich (208070) | more than 8 years ago | (#14852943)

I don't know what you're talking about. Usually if I make an intentional troll and call it such, I just end up modded as flaimbait or redundant.

Re:Rule 1 of slashdot: (0)

Anonymous Coward | more than 8 years ago | (#14852983)

Well, that's because you're bad at it.

Re:Rule 1 of slashdot: (1)

DancesWithBlowTorch (809750) | more than 8 years ago | (#14853125)

(Rule 2 of slashdot is that if you say "I know I'm going to get moderated down for saying this, but...", you will get moderated up.)
Actually, I've always either downmodded posts including this sentence or left them unmodded, if they were really good. And I am quite sure that a lot of other mods do just the same.

Re:Rule 1 of slashdot: (0)

Anonymous Coward | more than 8 years ago | (#14853170)

maybe so, but there are a lot more doing the opposite since i always see that shit modded (+5 Cocksucker)

Re:Rule 1 of slashdot: (0)

Anonymous Coward | more than 8 years ago | (#14853180)

Well, you may mod down, but more of them mod up, and in the end it's the net modding that counts.

Which raises an interesting question: what post holds the record for the greatest total mod points, where the mods fight each other up and down, up and down? I once had a post that was modded up to +5 then down to -1. But I wonder what the record is: what was the greatest mod fight of all time?

Re:Rule 1 of slashdot: (2, Informative)

BadAnalogyGuy (945258) | more than 8 years ago | (#14853184)

This is a long time ago, but this post [slashdot.org] is what you are looking for.

Everyone lost.

Re:The parable of the two farmers and the customer (1)

DDLKermit007 (911046) | more than 8 years ago | (#14852968)

Difference here is the studios have begun messing with prices. Like say the Verizon $2.50 songs that last 60 days + cost of downloading the data. Jobs wants to keep the price at 99 cents (which is in all honesty is still too expensive for digital distribution) and the industry has been trieing to gang up and allow "varriable priceing" which would likely even up being closer to $2.50 that Verizon pays and you'd never see a song below 99 cents that way thats "unpopular."

Re:The parable of the two farmers and the customer (4, Insightful)

Wes Janson (606363) | more than 8 years ago | (#14852977)

How about a new parable that actually fits?

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 (5, Funny)

Kingofearth (845396) | more than 8 years ago | (#14853050)

How about a new parable that actually fits?

What did you expect from BadAnalogyGuy?

Re:The parable of the two farmers and the customer (1)

Shadowlore (10860) | more than 8 years ago | (#14853212)

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...


Wait, when did we start talking about the US Postal Service?

Re:The parable of the two farmers and the customer (4, Interesting)

pipingguy (566974) | more than 8 years ago | (#14853337)


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 (3, Insightful)

AuMatar (183847) | more than 8 years ago | (#14852990)

Now if you want to write a real analogy

*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 (2, Interesting)

larry bagina (561269) | more than 8 years ago | (#14853074)

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).

Re:The parable of the two farmers and the customer (1)

hunterx11 (778171) | more than 8 years ago | (#14852994)

username delivers

O...K.... (1)

foreverdisillusioned (763799) | more than 8 years ago | (#14852995)

Well all I can say to that is you are really, really living up to your name. Well done.

The parable of the dimly disguised simile (2, Insightful)

TiggertheMad (556308) | more than 8 years ago | (#14852998)

...wait a second, I thought that you could fix prices all you wanted to on non-essential products. Wasn't The Sherman Anti-Trust act addressing critical comodities, such as food, fuel and similar vital products that are important to the economy?

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 DOLLARS if they want to.

can't have it both ways (2, Informative)

192939495969798999 (58312) | more than 8 years ago | (#14853228)

I think the point is that price fixing fosters piracy, so you can't both claim that piracy is hurting your business, and then charge 'a hundred billun dollars' for some song(s). Anyone who wants those has to steal them, just like with prohibition... making something that is already extremely popular illegal just makes everyone an outlaw and fails to address the problem.

Re:The parable of the two farmers and the customer (0)

Anonymous Coward | more than 8 years ago | (#14853068)

So how come insurance premiums continue to rise event with a decline in claims?

Re:The parable of the two farmers and the customer (0)

Anonymous Coward | more than 8 years ago | (#14853130)

Try selling the same product as a music label...

Just to be a little obtuse (0)

Anonymous Coward | more than 8 years ago | (#14853133)

Different music labels sell different products. Sure, they both sell music, but this one sells Britney Spears and that one sells Nine Inch Nails. The products may be similar, but they are not interchangeable. A label with more desirable artists will sell more product than the one with less desirable artists.

The product is the artist, not the band. And so unless you are talking specifically about artists that have cross-label contracts, you'll have to agree that the music companies are all selling similar, but not identical stuff.

Re:Just to be a little obtuse (0)

Anonymous Coward | more than 8 years ago | (#14853142)

That's because copyright does not allow them to sell the same stuff, so an apples to apples comparision isn't possible due to goverment granted monopolies.

Re:Just to be a little obtuse (0)

Anonymous Coward | more than 8 years ago | (#14853206)

Which sort of proves the point about not selling the same stuff... Which sort of makes the original analogy not so bad.

Contrary to the guy's moniker.

can the record labels justify the expense? (3, Interesting)

spacepimp (664856) | more than 8 years ago | (#14852905)

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.

Re:can the record labels justify the expense? (2, Informative)

opqdonut (768567) | more than 8 years ago | (#14852925)

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? (1)

Firehed (942385) | more than 8 years ago | (#14852934)

I buy CD-Rs at 13c a disc. I'd imagine they cost considerably less than 20c to the suits. Unless that means disc, case, inserts, and quite possibly distribution.

Re:can the record labels justify the expense? (2, Funny)

FidelCatsro (861135) | more than 8 years ago | (#14852948)

I would imagine it breaks down something like this
  • Media & case: 0.10
  • Artist fees: As little as we can
  • Production: 0.75
  • marketing: 2.00
  • Ivory back scratcher: 5.00

Re:can the record labels justify the expense? (2, Insightful)

Fred_A (10934) | more than 8 years ago | (#14852971)

The problem isn't the cost of the medium (i.e. manufacture), it's transport, storage, handling, etc.

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? (0)

Anonymous Coward | more than 8 years ago | (#14853070)

Well thank you !

You just told us that the price-difference between an old-style vinyl (when they where still pressed in quantities) and a CD was purely artificial ....

Another reason to investigate (I hope :-) )

Re:can the record labels justify the expense? (1)

Dread Pirate Shanks (860203) | more than 8 years ago | (#14853003)

What about the cost of bandwidth? Servers to distribute the product? Clients to facilitate the downloads? I certainly see your point that since the customer is getting less material, it should cost less, but maybe those costs really do justify the convenice you get from downloading.

Re:can the record labels justify the expense? (1)

rohan972 (880586) | more than 8 years ago | (#14853132)

They are replacing manufacturing (per copy) with encoding (once?), storage in warehouse with storage on a server, trucks with bandwidth and packaging (for each copy) with "clients to facilitate the downloads" (write once + maintain)

There is no way the cost to deliver a download service should equal cost of physical delivery, IMO

Re:can the record labels justify the expense? (1)

piggy (5857) | more than 8 years ago | (#14853252)

Those are valid expenses -- for Apple or Napster or whoever is providing the tracks for download. The fact remains that there is a large per track cost that the labels are charging the distributors.

The labels are people with very little sense of Economics, but very good Marketing and Business skills. They stated that they want the prices to become untethered to Apple's $0.99 per track, and that that would cause more popular tracks to become more expensive. That is, as supply remains constant and demand rises, one would reasonably expect prices to rise, too. The problem is that supply does NOT remain constant in a download distribution economy -- at least not the supply of goods (tracks), although bandwidth -- again, the distributor's costs, not the label's -- remains fixed.

Re:can the record labels justify the expense? (0)

Anonymous Coward | more than 8 years ago | (#14853005)

That's easy to justify for downloads. People are probably less likely to buy whole albums (just a guess) so you need to raise the prices of the individual songs if you want to keep making the same amount of money as you were with CDs. It's not a great justification if you're a consumer, but it works great if you're a record exec.

Dupe :-( (4, Informative)

xiphoris (839465) | more than 8 years ago | (#14852907)

Re:Dupe :-( (-1, Troll)

Overly Critical Guy (663429) | more than 8 years ago | (#14852957)

Since Slashdot's editors obviously don't care anymore, why not visit Digg [digg.com] and check out the new AJAX threaded comment system? You can actually rate comments in real-time, set friend flags, and more. At Digg, if a story is a dupe, the users rate it as such, and it gets removed automatically. You can even rate articles as inaccurate. Slashdot is the biggest piece of abandonware on the Internet, so why don't we all go to Digg and set up camp at the new epicenter for geek news on the net?

Re:Dupe :-( (3, Funny)

Quirk (36086) | more than 8 years ago | (#14852988)

"...so why don't we all go to Digg and set up camp at the new epicenter for geek news on the net?"

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 :-( (2, Interesting)

pomo monster (873962) | more than 8 years ago | (#14852993)

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

Re:Dupe :-( (0)

Anonymous Coward | more than 8 years ago | (#14853264)

bye, moron.

-N. Portman

Re:Dupe :-( (0)

Anonymous Coward | more than 8 years ago | (#14853290)

Don't let the door hit you on the arse on the way out, tit bucket

Re:Dupe :-( (2, Informative)

webagogue (806350) | more than 8 years ago | (#14853379)

You mean Digg? Lucky day, pal! Digg just introduced those features.

Re:Dupe :-( (0)

Anonymous Coward | more than 8 years ago | (#14853067)

I think I speak for a majority in here when I say: F$CK OFF. Why are us nerds gathered here? Because of the comments, the users, and the occasional dupe keep us coming back for more. If you like digg, GO THERE. Leave us alone. If it's sooooo cool to go to digg, why aren't more of us over there? We know about it, we've seen it, we've given it a chance. But it just doesn't have what it takes to be 'news for nerds'. Digg's comments are bland at best, the summaries are way too short, and it just generally doesn't appeal to us slashdot readers. This will probably be modded troll (hence the AC) but I just get so freakin' tired of being told that digg is greater, newer, faster, updated quicker, makes julian fries! Honestly, it's not better. It isn't organized better, it isn't commented on better. I feel dumber for having gone there. I personally didn't learn a damn thing from their posters, and felt like I was back at high school arguing over which fast food joint was better. Digg isn't doing it for us, so back off. Quit trolling here. Go back to Digg, and come back when you hit puberty so you can join in an intelligent discussion. Oh, and AJAX isn't all that hot. Get over yourself.

Re:Dupe :-( (1, Informative)

Anonymous Coward | more than 8 years ago | (#14853213)

Digg's comment system is not truly threaded. Digg has a reply button only on top-level comments. There is no such thing as a reply to a reply. It's like they're actively trying to discourage intelligent discourse.

About time (2, Insightful)

TJ_Phazerhacki (520002) | more than 8 years ago | (#14852909)

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 that more and more artists are going independant, either producing or marketing their music on their own terms.

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 (3, Insightful)

Loconut1389 (455297) | more than 8 years ago | (#14852921)

labels -are- useful in some/many aspects. They do hunt for talent, provide resources for recording, orchestrate tours and publicity, and provide financial backing of upstart groups.

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 labels have connections and can get things done more easily and if the label is willing to back the singer, then the people that deal with the studio and band will trust their judgement.

An artist can certainly get their music recorded in a garage or even a studio if theyve got a few bucks, and release it on the net- but try getting your song available on iTunes. There are songs from real, popular bands that aren't on iTunes, why should I be able to find a song by Joe Schmoe's Band? Getting a booking for a little band is tough too. You pretty much have to have someone whose heard your music recommend/suggest you, which makes a chicken and egg deal for a new group. Labels get your foot in the door because they trust you.

MP3 players on K-12 school property (1, Insightful)

tepples (727027) | more than 8 years ago | (#14852936)

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

...that independent artists have no better way to reach minor audiences. Minor children can't get into affordable live music venues (all of which serve alcoholic beverages), and they often are forbidden to bring MP3 players or other electronic contraband onto school property (and are thus forced to listen to whatever RIAA shit the school bus driver's favorite Clear Channel monopoly is playing).

*Cough* (5, Insightful)

Dr. Sorenson (947697) | more than 8 years ago | (#14852915)

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.

Used CDs (1)

tepples (727027) | more than 8 years ago | (#14852942)

my issues were the $21 for a CD with one decent song.

That's why I head to the local pawn shop (which, ironically, doesn't have chess sets) and pick up 10 CDs at a time. Volume discount means I pay $21 for ten CDs, each with one to four decent songs encoded without psychoacoustic distortion on a durable medium. The current m4p/wma business model, on the other hand, makes no provision for a counterpart to the used CD market.

Re:*Cough* (5, Interesting)

slashdot.org (321932) | more than 8 years ago | (#14853073)

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.

Re:*Cough* (1)

Ritz_Just_Ritz (883997) | more than 8 years ago | (#14853240)

Ten years ago, Apple and Microsoft weren't feuding with the labels and weren't throwing bucketloads of $$$ at politicians to "level the playing field."

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 don't know how to do it any other way.

Hmm, let me think (0)

Anonymous Coward | more than 8 years ago | (#14852940)

with federal officials understood to be focusing on whether the companies have been colluding to keep the price of downloads artificially high

[Drawn Together]Ah DUUUUUUUUUUUuuuuuuuuuuuuuuuuuuuuaaaaaaaaaaaaaaaaaa aaauh[/Drawn Together]

Just downloads? (4, Insightful)

Dracos (107777) | more than 8 years ago | (#14852986)

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:

  • Studio time
  • Engineering/mixing
  • Paying the artist
  • Promotion
  • Distribution

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:

  • $16.00: Cost to consumer
  • $9.60: retailer (wholesale) cost
  • $4.80 to $6.40: distributor cost
  • $2.00: production cost

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? (1)

lasindi (770329) | more than 8 years ago | (#14853011)

It costs any record company, on average, about $0.25 to get one CD into a retail store.

Care to share with us how you calculated that?

Re:Just downloads? (1)

Josh Hughey (917270) | more than 8 years ago | (#14853039)

I completely agree in that, by all moral standards, that CD should cost about $2.00, however you're forgetting the ultimate "rule" of free-market economics: charge as high a price as people are willing to pay, not what's really fair. It's all about profit maximization! Honestly, since it's the record labels' job to make as much money as possible (the entire point in a capitalist economy like that of the United States), I'm glad that they do all the things they do to try to make money. I do NOT agree with them on a moral level and I despise their lack of fairness, however I do understand why they do it. Since the record industry is doing its job, and music is still horribly overpriced, despite competition, that leaves only one possibility: the US Government isn't doing its job - looking out for US consumers and the economy as a whole, by cracking down on abuses like this. If this investigation does force royalties that labels charge to go down, I think their next stop should be a possible antitrust case against Apple. As much as I like Apple (and believe me, that's a lot!), I really have to question the wisdom of allowing the iTunes music store to be compatible only with the iPod and vice versa (as far as I know), especially given its popularity. The fact is that with royalties being as high as they are (I'd guess that the majority of the cost we pay for that $0.99 song is royalty fees - at least half anyway), and the closed nature of the iPod and iTunes technologies, it would be very difficult - if not impossible - for a real competitor to enter into the marketplace with real force and drive those prices down. A competitor, I might add, that will still be around in a few years. That's just my two cents!

Sorry, but... (2, Interesting)

cirby (2599) | more than 8 years ago | (#14853223)

...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.

These number's can't be close (5, Informative)

tkrotchko (124118) | more than 8 years ago | (#14853305)

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

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.

Too little too late (2, Insightful)

porkface (562081) | more than 8 years ago | (#14853001)

Where was this investigation a decade ago when it was price fixing and racketeering of the music printing and distribution business that resulted in $18 CDs as the cost of doing business and bringing the product to market declined?

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! (5, Funny)

jimicus (737525) | more than 8 years ago | (#14853004)

Don't they realise that 90% of albums make a loss?! That marketing and distribution is incredibly expensive? That the few artists who do make a profit essentially provide a subsidy so the record companies can go out and find new talent?

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! (1)

cougar100 (959014) | more than 8 years ago | (#14853110)

very very simple Instead of ripping the people off they should start looking at the crappy music they try to sell. I know damned well i will buy any album worth it's grain of salt but i wont be ripped off by these executives that think that i should pay an arm and a leg for a song that i can listen to on a radio station.One thing for sure is if these talented artists are really artists and not the famous duo milli vanilli, then they should put a few good songs on that album and then i might decide if my 20 dollars is worth it....damn I miss those beatles at least i got value for money.

As much as I'm inclined to like this... (0)

einexile (159759) | more than 8 years ago | (#14853022)

Do we really want the government hassling the record labels in the same (sort of) way they've been hassling music pirates, just because the record labels should have terrible things happen to them? Maybe this is the flip side of the War on Unauthorized Clicking, and sure, turnabout is fair play... but none of that makes this a good idea.

These people will not leave us alone until we start piling their children into dump trucks. Cheering them on won't make things better. Boohing them doesn't seem to do much good either, but at least those of us boohing don't deserve the world they want to create.

CDs (5, Interesting)

tooth (111958) | more than 8 years ago | (#14853028)

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.

Re:CDs (1)

larry bagina (561269) | more than 8 years ago | (#14853087)

Most movies pay for themselves at the box office. DVD sales are pure gravy.

Re:CDs (4, Interesting)

stunt_penguin (906223) | more than 8 years ago | (#14853092)

"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.
 

Cash (5, Insightful)

nighty5 (615965) | more than 8 years ago | (#14853040)

1) Cold hard cash will be transfered under "campaign contribution" from the mysterious Big Four to the US Attorney General.

2) Investigation will reveal nothing.

3) Profit!

Investigations.. (2, Interesting)

novus ordo (843883) | more than 8 years ago | (#14853076)

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

Someone has to say it (0, Flamebait)

daemonenwind (178848) | more than 8 years ago | (#14853139)

Anti-trust investigation of a company strong-arming consumers? Delivered to you by the Bush Administration and the evil henchman Alberto Gonzales.

Because, you know, they're in the back pocket of business.

Re:Someone has to say it (1)

dammy (131759) | more than 8 years ago | (#14853178)

Pull your head out of the sand for a minute and consider it's the RIAA/MPAA crowd that donates heavily to the Democrats, not the GOP. Bet your thinking Hillary is right on top of this extremely stupid and racist anti-Dubia policy right? Take a look at where the money is coming from her joint checking account with Bill, http://www.newsmax.com/archives/ic/2006/3/4/141014 .shtml?s=ic [newsmax.com]

No, if anything, letting the DoJ go play with RIAA or MPAA folks would be a good thing for the GOP. You, as the anti-Bush, anti-conservative type, should be out buying CDs and DVDs by your favorite ant-Bush artist by the arm full. Afterall, your hard earn money is going into their pockets so they can afford to donate for you to the Democrat cause.

Dammy

Re:Someone has to say it (1)

TapeCutter (624760) | more than 8 years ago | (#14853257)

Get a grip mate, oh, and stay away from bell towers.

Re:Someone has to say it (0)

Anonymous Coward | more than 8 years ago | (#14853360)

when i buy a CD, my hard earned money is going into the pockets of the RIAA, not the artist.

The root of the problem (5, Insightful)

Spy Hunter (317220) | more than 8 years ago | (#14853217)

I don't see how price fixing can even be *defined* in the music market. The entire industry is built on government-granted monopolies (copyright). Supply is infinite; competition is crippled; prices are arbitrary even in the absence of any shady dealings.

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.

If ever you are going to be audited... (1)

babbling (952366) | more than 8 years ago | (#14853285)

It is good to be audited by your friends.

That's not price fixing. Now *that's* price fixing (2, Insightful)

michaelmalak (91262) | more than 8 years ago | (#14853334)

The price of mainstream DRM-less downloaded music is still infinity.

(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 (1)

Opportunist (166417) | more than 8 years ago | (#14853399)

Cardinals are conducting an investigation whether or not the pope is Catholic. Results might depend on the question whether he wants to be or not.
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