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THE MORNING BUZZ: CD Settlement Dodges the Bullet

3 Oct, 2002 By: Thomas K. Arnold

I'm glad to see that the record companies and big music chains settled the price-fixing suit against them, but I really wish there had been at least some whispers of “mea culpa.”

Instead, the parties deny there was anything fishy about what they did — a denial no one believes because what happened here is as obvious as can be.

Sometime around the late 1990s, people stopped buying CDs. The record companies had foolishly propelled album prices to higher and higher levels; killed the single, also through inane pricing; and then, when digital downloading arrived on the scene, they tried to kill it and raised CD prices even higher.

So what's a poor record company to do? Get in bed with the music retailers — the specialists who were already losing business to the mass merchants — and implement strict policies designed to curtail their deep-discounting.

No matter that retail analysts pretty much agree that big-box discounters are the future and high-priced specialists are the past. No matter that the video industry, with DVD, embraced the mass merchants and realized soaring sales while the music industry decided to fight them and is limping along.

I'm all for a competitive retail environment, but I'm dead-set against propping things up unnaturally. I don't like farm subsidies, I don't like tariffs, I don't like pouring tons of money into Amtrak just because some bureaucrat thinks the notion of trains is romantic.

I don't really have any strong feelings about Wal-Mart or Target or Kmart or any of the other discount houses. But if they can sell me something for less than someone else charges, I'm going to buy there.

I'm not the only one who feels that way. And by getting mass merchants firmly behind DVD, the video industry has broadened distribution and seen revenues surge.

The music industry has gone the opposite route. And we all know how well they're doing, don't we?

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