Music industry guilty of price fixing

— 12:00 PM on October 1, 2002

Many P2P users justify their file trading by claiming that CD prices are artificially high, and they have a point. USA Today is reporting that the several music companies and retailers have agreed to pay out $67.4 million to settle a suit over price fixing in the latter part of the 1990s. Music companies and retailers were both implicated in the suit because the price fixing involved "minimum-advertised pricing," which retailers benefit from as well.

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.

The moral of the story? If you want a CD, try checking somewhere other than your local record shop before downloading it off the net because you "simply can't afford" those exorbitant prices. And if you must complain about CD prices, be sure to cite retailers right alongside the RIAA.
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