RIAA Sued for Price Fixing – 6 Years Later

It has been a little over 6 years since the Recording Industry Association of America settled a case where they were accused for price fixing.

Note: This is an article I wrote that was published elsewhere first. It has been republished here for archival purposes

The 2002 case probably felt like a victory for consumers, but six years later, the problem of seemingly unfair pricing schemes still seems to exist today

Six years is an eternity and a half in internet terms. Even in business, six years is a long time to look back. Still, it doesn’t take much away from the significance of the RIAA being sued for the price fixing of their music albums.

History of the Case in a Nutshell

Back then, the RIAA was considered “The Big Five” Today, they are more like the “Big Four” with a possibility of being considered the “Big Three” if Sony and BMG ever become more than a joint venture or if EMI convinces regulators that selling the company to one of the remaining won’t harm competition in the market place (for some, a concept difficult to explain with a straight face)

The case put into question a system known as MAP or Minimum Advertised Pricing. The system was seemingly simple, the major record labels would subsidize record stores in exchange for keeping the prices of CDs above a certain amount. To keep things in perspective, Wikipedia defines Price Fixing as, “an agreement between business competitors to sell the same product or service at the same price. In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers.”

Ultimately, the RIAA settled the case for $67 million and also agreed to send $75 million worth of music albums to public groups and non-profit organizations. Universal Music Group, at the time, denied that they broke the law when using the MAP system for a period of seven years since the year 2000.

More Recent Price Fixing Allegations

The settlement in 2002 did not mean the end of the price fixing allegations. In December of 2006, allegations of price fixing cropped up in online music downloads during the UMG vs. Lindor case. The revelation was made public in 2007. While 99 cents is typically the standard price for an online music download, there was an admission that 70 cents was more likely a natural price for online music downloads. At the time, UMG insisted that the practice of online music store downloads is a trade secret and cannot be made public.

The suggestion of price fixing didn’t end in the courtrooms that year. Later in 2007, Trent Reznor of Nine Inch Nails was quite vocal about how “rediculous” the prices were for buying a music albums – saying that the record labels were “ripping people off” at the record store.

In one famous YouTube live video clip Trent said commented to a cheering audience that if the prices didn’t come down on his music album, “Steal it!”

Nine Inch Nails album “The Slip” currently on Amazon.com is currently at about $21.

A few other prices for music albums from Amazon.com:

Linkin Park – Meteora – $13

AC/DC – Back in Black – $8

Coldplay – A Rush of Blood to the Head – $12

The white Stripes – Icky Thump – $13

Metallica – …and Justice for All – $15

Kiss – Kiss – $11

It may be a far cry from the 20-40 per album a few years ago, so judging by Amazon prices, things have improved right now. It’s unclear right now if the prices today are the result of the economic turmoil or if they’ve been relatively stable for the last six months. Either way, it may be, in part, why there hasn’t been much in the way of major movement against the RIAA for any price fixing these days.

Damage Already Done?

For years, there has been a general sentiment of the RIAA charging insane prices for music amongst a number of customers. To this day, the argument of “the prices of albums are too high” has been a staple argument for many who don’t want to actually buy the albums anymore and turn to file-sharing instead. This is far from the only reason people bring up, but has been one reason both sides of the copyright debate have brought up from time to time.

These days, when it comes to a disasterous public relations record, there is no shortage of people who would quickly point to the RIAA for having the worst. So having a reputation of unfair prices may pretty well be par for the course who have been dealt with several other PR blows, like suing (effectively speaking) bloggers like Ray Beckerman, or Sony BMG’s rootkit scandal to name just two.

Still, one might wonder, what has become of the MAP program? Has it well and truly been perminently banned in favour of alternative business models, or will it make a stealthy return in the coming years? Who knows? At the moment, there doesn’t seem to be any movement to resurrect it, so it is very possible that the RIAA really did learn their lesson from the 2002 case.

Drew Wilson on Twitter: @icecube85 and Google+.

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