RIAA — Take Us Back To The Days of Illegal Price Fixing.

One final point about Recording Industry Association of America (RIAA) CEO Cary Sherman’s NYT Op Ed on “how the Internets did us wrong.” Mr. Sherman notes that:

They [Congress] knew that music sales in the United States are less than half of what they were in 1999, when the file-sharing site Napster emerged, and that direct employment in the industry had fallen by more than half since then, to less than 10,000.

There are two caveats here worth noting. The first is that when Mr. Sherman talks about sales and the “music industry” generally he means his organization’s members — specifically the four (soon to be three) “major labels” and all of their various sub-labels and subsidiaries.

This is important because in 1999, according to the Federal Trade Commission (FTC), the major labels were engaged in an illegal price fixing scheme. The major labels agreed to discontinue their price-fixing practices as part of settlement decree in May 2000. Not surprisingly, once the major labels stopped violating antitrust law, their artificially inflated profits declined and independent competitors saw a significant rise in profits.

Needless to say, as part of the general magical thinking problem of the industry, Mr. Sherman and his fellows don’t believe the loss of their stranglehold on industry distribution and the rise of competitors (online and offline) has anything to do with their fading fortune. No, it is all that evil Napster and its wicked legacy of Internet piracy. But any legislators and policymakers who expect to be taken seriously ought to seriously consider using a benchmark other than the period from 1995-2000. It would be embarrassing for those not explicitly in the pay of the music industry to believe that it is the responsibility of government to return the industry to glory days of price fixing and monopoly profits.

Stay tuned . . . .

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  1. Don’t you realize that oligopoly profits are the free market in action? Just ask ten Libertarians; at least nine will say so.

  2. J B says:

    You cannot ingore the fact that the recording industry was pumped on by the artificial economy created when people changed from:
    LP’s to
    8-Tracks to
    Cassettes to

    Anyone growing up in the 70’s, 80’s and 90’s knows that they had numerous instances where they formed their music collections multiple times. It would not be unusual for a Led Zeppelin fan to have the same album on disc, cassette and eventually CD.

    Those multiple purchases caused multiple sales for what is essentially the same product.

  3. Every time a change to copyright law is proposed, it is in response to demands from powerful lobbies like the RIAA. When have you ever seen a grass roots demand for broadened rights, stricter enforcement, or longer copyright duration? Never! Legislation reflects neither the will nor priorities of the majority. Check this out: http://whynotaskme.org/

  4. Peg. says:

    Very interesting about the price-fixing, Harold!

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