DOJ goes after record industry for online price-fixing

First it was Eliot Spitzer. Now the Justice Department is following in the footsteps of the New York Attorney General, and is investigating the major labels for the price fixing of music downloads. While we don't necessarily think it's such a bad thing for the government to take a look at some of the record companies' practices, we'd sort of prefer that they look into some other activities first (things like rootkits come to mind). But the pricing of online music is one of those things that we tend to think the marketplace will sort out: if 99 cents per song is too much, consumers will go to subscription services, Russian sites or even -- perish the thought -- buy CDs instead.

[Zorn @ Mar 3rd 2006 1:38PM]

Buy CDs instead? 99 cents a song might be too much, but $18 for a CD full of songs I don't want is ignorantly too much. I think allofmp3.com is a much better deal than CDs, but wiping my ass with money is a better deal than CDs too.

[Redhorse @ Mar 3rd 2006 1:45PM]

The DOJ can get bent on this. There is a LOT of other things that they need to be dabbling in...

[Jaxim @ Mar 3rd 2006 1:50PM]

$1/song download MIGHT be worth it IF they got rid the DRM. With the DRM, you couldn't pay me to download a song.

[Emil @ Mar 3rd 2006 1:51PM]

Check out http://www.mp3spy.ru

Russian website

1 CD - 1 $

[Beowulf @ Mar 3rd 2006 1:54PM]

We can't trust the marketplace to sort out the right price for online music ... CDs cost much less to produce than LPs or cassettes, yet the record companies increased the CD price until they charged more than they ever did for the older technology. Why didn't the Justice Dept ever uncover price fixing then?!

[uomolinux @ Mar 3rd 2006 1:58PM]

Buy CD instead, when I think about the pod music store, I can't affirm that what I get there is mine. Think about it, after 5 copies you have to buy the music all over again. Who can affirm that the proprietary Apple format will still be around or compatible with new devices in a few years? Apple DRM music is similar to renting music except that they use the word "sell" instead, it's never yours, Apple is the owner not U. you can find better deal at audible.com or emusic.com for a monthly fee.

[koppite1 @ Mar 3rd 2006 2:00PM]

Well the EU or the UK government should investigate why downloads for a single are 99p but those on the continent pay the equivelent of 70p

It all adds up

[Sean Cummings @ Mar 3rd 2006 2:06PM]

Ok, so they go after the industrry for "price fixing" of downloads, but DON'T go after them for 20 years of price fixing CD's?

Something tells me this was not initially thought of by the DOJ but pressured by lobbying groups for the likes of Walmart, and the Record Industry itself who is concerned about Apple's new control over the pricing.

Wasn't it the record companies trying to force Jobs to change the pricing so they could charge different rates for new music and popular songs?

hmmmmmmm...

[Christian @ Mar 3rd 2006 2:20PM]

Actually #6, after 5 copies, you have to make a new playlist and then reburn the CD. The playlist that apple provides expires, but you're free to make you own and let the good time roll.

The real problem is that we and everyone else already know that they're activly involded in price fixing and a whole lot of other schinanigans, but what is the DOJ really going to do other than slap them on the wrist. When it comes down to it, there going to pay the government and make the inquiry go away and we all know it.

[doyouflip @ Mar 3rd 2006 2:21PM]

What is this "CD" thing everyone is talking about?

In all seriousness, how about bitch-slapping mobile providers for charging $3 a song instead.

[Jim N @ Mar 3rd 2006 2:33PM]

Bewolf, and Sean C. Thank you, while I was reading this article I could not believe that the DOJ has let the RIAA and these labels r@pe the american public for over a decade with CD prices. But now they are getting all excited about $.99 downloads. While I do believe that $.99 for a downloaded sound is way to much, I find it tolerable.

[travis @ Mar 3rd 2006 2:37PM]

"but $18 for a CD full of songs I don't want is ignorantly too much"

Ok, when was the last time you actually paid 18 bucks for a cd? Honestly? Theres this store, maybe youve heard of it. Its called Best Buy. The majority of new releases will come out at 9.99. Thats right, 9.99. Now Im no math wiz, but Im thinking 9.99 for an average of about 12-13 full cd quality songs is an enormously better deal then 99 cents for a crappy 128KBS download from itunes. Even cds that arent new releases are generally around 14 or 15 bucks max.

"But I dont want the whole cd". From my experience Ive found that generally the most popular songs from an album are never the best ones on the album (unless youre talking to rap, in which case they usually
are...I love rap, but thats just how it is).

Look, I think we're all being ripped off too, but I just hate it when people tell total untruths like they're paying 18.99 for a cd. Thats just crap.

[DG @ Mar 3rd 2006 2:39PM]

I kind of like my current setup. I buy CDs by bands that I care about. I want the artwork, the case, the physicality of it. When I hear a good song on the radio, I buy the mp3 from Apple. When I just want one song I can't get out of my head, again, I buy it from Apple. Their DRM is easily circumvented with a CD-RW so I don't see what the big deal is. If I can pay $1 for a Coke, I can certainly pay $1 for a song.

EMusic is an attractive alternative for some eclectic stuff. Subscription sites aren't for me -- especially because I use an iPod. BitTorrent provides me the opportunity to unleash my inner-16-year-old. And under no circumstances will I hand my credit card info off to a Russian website.

And the DOJ can start being useful by investigating our current administration for war crimes. How many thousands dead in Iraq and to what end should certainly be of greater interest that what music I'm buying.

[Bellman @ Mar 3rd 2006 2:51PM]

Uh, guys, a little sense of history here? The states (led by Spitzer in New York) DID mount a massive antitrust suit against the record labels for CD price fixing in 2000. It was settled in 2002 with a very large payout to all 50 states and an agreement to cease certain practices. CD prices dropped sharply soon thereafter and have been creeping up since. A simple google search on "cd price fixing" will provide further information -- maybe try it next time BEFORE you post.

[uomolinux @ Mar 3rd 2006 3:02PM]

I'll try that, tks N9 :-)

[kbiel @ Mar 3rd 2006 3:02PM]

#5:...the record companies increased the CD price until they charged more than they ever did for the older technology. Why didn't the Justice Dept ever uncover price fixing then?!

Because the states beat them to it.

#1:...wiping my ass with money is a better deal than CDs too.

Which is why I prefer to use credit/debit cards and checks. When I can't avoid using actual green, silver, and copper stuff, I bring out the surgical gloves. ;)

[Richard @ Mar 3rd 2006 3:13PM]

If it is too much, don't buy it!

Don't let your kids buy it!

The market WILL figure it out you darn communists!

[Steve Rhodes @ Mar 3rd 2006 3:34PM]

Best Buy is fine if you only like a limited range of music (and even there only a few CDs are $10, most are from $13 to $16).

But some of us like lots of different music which will never be sold let alone go on sale at Best Buy (though it might at Amoeba, Tower, Virgin, and other places).

The bottom line is all CDs should be around $10. A lot more would be sold, particularly newer bands.

[KNOCK @ Mar 3rd 2006 3:46PM]

I think .99 is just fine for tunes. I buy nearly all my music through iTunes as it is. They almost always sell the entire album for a lower price than I could buy it for in the store.

And the DRM isn't an issue. I just let iTunes burn the songs to audio CD as a backup copy, and then I just rerip that audio CD and all my songs are instantly DRM free.

For life.

It really doesn't get any better than this.

[Alcaron @ Mar 3rd 2006 3:49PM]

"But the pricing of online music is one of those things that we tend to think the marketplace will sort out: if 99 cents per song is too much, consumers will go to subscription services, Russian sites or even -- perish the thought -- buy CDs instead."

This is possibly the dumbest thing I've ever read on engadget...

So, price fixing is cool, nevermind that...Sony putting a rootkit out (btw, uh, I thought they WERE looking to introduce legislation to make that a no-no, does this not count as looking into it?) is more important than price fixing, possibly with the intent to make said online market fail to justify the lawsuits and legislation they are trying to push in the name of "these people just can't be reasoned with, I mean, look, you offer downloads and they still pirate it!".

And go back to buying CD's???? Do you guys not use the internet? I mean, honestly, as much Apple leg humping as you guys do you've clearly never used iTunes, where most CD's are $9.99...

So how does that affect $0.99 a song being overpriced?

I'm struggling to find anything other than "we need to fill space" in that quote.

[E-Rock @ Mar 3rd 2006 3:58PM]

I think you're all missing the point. Price fixing isn't about whether the price is good/fair, it's about all the manufacturers of a product colluding together to all charge teh same amount, preventing competition.

When it's done with a wink an a nod rather than a formal agreement there's nothing to prove (gasoline prices). When your industry organization negotiates for you as a block, then the deal is illegal.

[Aaron @ Mar 3rd 2006 4:12PM]

"I just let iTunes burn the songs to audio CD as a backup copy, and then I just rerip that audio CD and all my songs are instantly DRM free.

It really doesn't get any better than this. "

This is what I fear. We have an entire generation growing up listening to low bitrate encodings of music through crappy earbud headphones.

A low encoded track off itunes already sounds worse than a CD. My ears are wincing at the sound of re-encoding low itunes songs yet again.

I'll take my $10-$12 CDs over the lower bitrate track any day.

Now if they wanna offer FLAC downloads...

[Joey Geraci @ Mar 3rd 2006 4:43PM]

The guy that mentioned mp3spy, lol, they completely copied the interface of the real music store (not that I mind). The reason I wouldn't use them is that allofmp3 offers superior aac downloads for about the same price (and they look to have a superior selection). As far as the people that don't want to give their credit card info to a russian site, lol again, as long as you are careful there is nothing to be worried about. Despite the potential illegality of allofmp3, they have been out almost as long as iTMS, and have a perfect reputation. I have spent over $100 there, never had a problem.

[Joey Geraci @ Mar 3rd 2006 4:51PM]

Jan Alberts (troll), you have no idea what you are talking about! The RIAA has no authority in Russia, and the Russian equivalent has almost the same amount of authority. If you actually researched the situation, you would find out that allofmp3 has a chance in hell of ever being shut down, much less having their records successfully subpeonoed.

[Ken @ Mar 3rd 2006 4:55PM]

hey i am very offended by the idea that you don't think people buy cd's. i am actually a person who does. in fact i won't buy musid online unlesss it is free(i don't do things illegally just get itunes gift cards every once in a while) and even then i only buy exclusives or online only music i can't buy in stores. i have bought over 12 cd's since 1 year ago and have over 28 over a 3 year span of buying. i feel if i break my ipod or something at least i don't have to go through all the trouble of burning cd's to use on a trip or something for my music fix.

[Michael @ Mar 3rd 2006 4:58PM]

I can confirm what Bellman says. I got a check for $13 or something similar a few years ago as part of the settlement.

[Chris @ Mar 3rd 2006 5:18PM]

#13: You realize that Best Buy actually loses money on those CD's right? Have you ever noticed that the CD's are right up near the front of every Best Buy? The reason why they price those CD's so low is to get people in the door. Once they're in the door they're a lot more likely to think to themselves "hmm, maybe I need some more ______". Best Buy actually gets screwed with the sale of each CD.

DEATH TO THE RIAA.

[oboogie @ Mar 3rd 2006 5:44PM]

I buy CDs by the bands I love, and download the occasional song if something strikes my fancy. You can find CDs for a whole hell of a lot less than $18.00 online. Buying them for that much is plain stupid. You are going to the wrong stores, dude.

I got the $13 check a couple of years ago, too. I kind of hoped fewer people would sign up so the checks would be bigger, but word got out, dammit.

[Loch @ Mar 3rd 2006 6:00PM]

There are a lot more important things to be dealing with... Although, I am happy to see Apple jumping through hoops while it feeds us all DRM tainted music. Just a matter of time before the layman gets hit by it and gets mad.

[Sean Cummings @ Mar 3rd 2006 6:05PM]

Britman,

Yes, I know that the states went after the labels for price fixing, which they then universally tended to lower their price, which now stands at the new price fixed amount... but that is not the DOJ.

I applauded Spitzer for his actions. The difference is that I seriously believe the DOJ's actions were spurred by the Record Industries lobbyists to try and force Apple's hand. The iPod and iTunes are becoming a juggernaut. Even Google's attempt to break it with their deal with the NBA, CBS video downloads has imploded.

I am just saying that I believe the case is spearheaded by the actual companies it is purporting to go after, as a subversive tactic to get more leverage with Apple, at which point they will all say "Hey, it's not us price fixing, we WANT to charge different pricing, it's Apple."

[Galley @ Mar 3rd 2006 6:10PM]

I guess no one here has heard of YourMusic.com. It's a service from Sony/BMG that offers 14,000 CDs at $5.99 each with free shipping. There's no limit, and all you have to do is agree to buy one disc per month from your Netflix-like queue.

[Ron G. @ Mar 3rd 2006 6:23PM]

99 cents is still within the realm of reasonability, no matter what other people might say. What should be deemed ILLEGAL is this "Album Only" crap. Each song on iTunes (and other services), should be able to be purchased individually. You shouldn't have to buy a whole album just to get one song because the idiots in the RIAA and the record labels themselves decide that they want to hold back one or two songs to buy accessible only when a customer buys the whole album.

[Dave M. @ Mar 4th 2006 9:47AM]

Looks like I'm a little late to post a comment here, but...

Personally, if the RIAA is going to make ripping my CD's to MP3 so that I can put them on my iPod, I don't care what the price of songs are, I'm going to get them by any means necessary. Right now that's via AllOfMP3.com.

[Smoke_Dawg_187 @ Mar 4th 2006 10:17PM]

It's a stupid argument to compare the physical price of a CD to work involved in actually writing, producing, playing music. Good music has a lot of production involved and those people need compensation.

[Steve @ Mar 5th 2006 9:49AM]

Smoke_Dawg

A lot of work goes into coal mining, but you don't see coal miners making 10-20 million dollars a year. I agree that artists deserve to be compensated, however when you're dealing with products that are sold in the hundreds of thousands or millions, they don't need 3000% overhead to make their money.

[Alice @ Mar 6th 2006 4:11AM]

There seems to be alot of plugs in here for other websites where you can buy your music... I feel like being advertised to, whew.

Its really difficult to put value on music, its an art so its indecipherable so i think its best to have one value for all so as not to allow advantages for other people. Its simple and managable if its all the same price.

[Jebby Deringer @ Mar 6th 2006 3:16PM]

You people need to stop listening to "pop" music if you feel there are only a few good songs on a CD. Most of my albums I listen to are 98% great songs. Most popular music is at least one hit a couple decent tracks and some filler. The sad part is that a number of the artists have talent and it's so obvious the producers are calling the shots and dumbing down their music.

I agree that cell phone companies are ripping people off way more than music ones. Charging $1 for a ringtone is a joke and all the companies asking you to call in for a joke and charging 50 cents. The cell phone industry is the largest scam in the modern world. I had one back in 2000/2001 but I doubt I will buy into it again for a long time unless either things change or it becomes incredibly useful for me to have one.

[Dave M. @ Mar 6th 2006 9:55PM]

He, if only the ring tones were $1! Try $2 a week! That's right there are companies that charge your cell bill $2 a week.

I personally make my own ring tones from my MP3's... Oh crap, that's probably illegal too!

As for "pop" music, if that is what the person listening likes, then they will like the whole album. I have quite a few "pop" albums. I enjoy them as much as my classical rock stuff from back in the 70's.

I don't have any Britney songs. I wouldn't be caught dead. It's a shame that the record industry can make stars out of no talent hacks like those.

However, I don't really know what that has to do with the cost of a CD being way over what it should be. I paid $30 for Serenity. The movie cost about, what, $30,000,000 to make. So my $30 movie is 0.0001% of what it cost to make. So are we saying that an album costs $15,000,000 to make? I really find that hard to believe.

[Finished.Law.School @ Mar 7th 2006 8:49AM]

They need to go after the RIAA and their fuck everyone tactics.

[Dave M. @ Mar 7th 2006 12:58PM]

@Jebby Deringer: Are you saying that you don't own a single CD/album where you only like 2 or 3 songs? I really find that hard to believe. However, if it's true, your collection must not be very large.

I have quite a few CDs/albums where I don't like all the songs on it. Most of the music I have bought before the advent of downloadable music was because of a single track. I grew to like the other music, but not at first. Some I just never grew to like.

With AllOfMP3.com and BitTorrent, I can try out an album before wasting the money on it, see if I like the other songs, if not, just buy the ones I like from iTMS and that's that. I've still paid for my content, but didn't have to take the risk of buying a CD for nothing.