Music That's Off-Key
America's strong love of music has created a $15 billion industry. But its has also created an unhappy melody among both sellers and consumers.
On Wednesday, the Federal Trade Commission (FTC) announced that the nation's five largest music distributors have agreed to end practices that resulted in higher prices for music CDs from 1996 until last year.
Music buyers might have benefited from some $480 million in discounts if the firms had not prevented retailers from offering discounts through special promotional schemes.
The firms had threatened to withdraw millions of dollars in promotional payments - or "cooperative advertising dollars" - from retailers who tried to undercut set prices. The companies claim that such deals were necessary to avoid a repeat of the price wars of the early 1990s and to help music specialty stores that can't compete against chains like Wal-Mart. Big retailers use discounts on hit CDs to lure customers into their stores.
The FTC says the deals were "industry-wide vertical price-fixing" and that buyers might now see CD prices fall by as much as $5, especially on new and popular releases.
Another dubious distribution of music comes from a music-sharing Web site called Napster.com. This site allows anyone with special software to download digital copies of recorded songs for free from the computers of other users.
While Napster is Internet wizardry, it may be illegal. On Wednesday, the site kicked 317,377 users off its service after Metallica, a rock band, sued for copyright infringement and racketeering. The users had been accused by the band of pirating its music.
The Internet's ability to transmit free music poses a huge problem for the industry. Artists may lose financial incentives for their creative works if anyone can obtain them with the click of mouse.
Keeping music sales both legal and cheap will require some astute thinking as new technology and rising consumer demand bring new pressures on the industry.
(c) Copyright 2000. The Christian Science Publishing Society