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Unrepentent Price Fixers?

Posted By Barry Ritholtz On February 7, 2004 @ 11:53 am In Finance,Music | Comments Disabled

We were hoping this would become a regular thing [1]: While we’re pleased to note that the weekend circulars reveal price cuts for some CDs long after the holidays have ended, we have alas, sad news to report: genuine price competition on CDs is still no where to be found.

We were hoping this would be the makings of a trend, given that the music cartel’s illegal “Minimum Advertised Price” fixing scheme [2] has been disassembled.

But alas, it is not meant to be: [Sigh] the latest ads show the exact same CDs discounted for the exact same price:

target.jpg [3]

Target has a “Tune in Tuesday” $9.99 sale:

~ Harry Connick Jr
Only You
Reg Price: $12.98 $9.99

http://www.target.com/gp/detail.html/sr=8-2/qid=1075568147/ref=sr_8_2/601-7558011-4800142?asin=B000127EUQ

~ Kenny Chesney
When the Sun Goes Down
Reg Price: $13.49 $9.99

http://www.target.com/gp/detail.html/sr=8-1/qid=1075568243/ref=sr_8_1/601-7558011-4800142?asin=B00016XNCA

~ Lostprophets
Start Something
Our Price: $10.99 $7.98

http://www.target.com/gp/detail.html/sr=8-1/qid=1075568388/ref=sr_8_1/601-7558011-4800142?asin=B00019PD0W

~ Five for Fighting
The Battle For Everything
Reg Price: $9.98 $7.98

http://www.target.com/gp/detail.html/sr=8-2/qid=1075568732/ref=sr_8_2/601-7558011-4800142?asin=B00012FNDG

best_buy.jpg [4]

What a coincidence! Best Buy has a sale running also — surprise! — its the same few CDs. And get this:

CC_shop.gif [5]

The same CDs are on sale at Circuit City also! What are the odds of that?

Perhaps I was premature when I suggested that real price competition had finally arrived to the Music industry. Alas, it is not (yet) meant to be. Artificial price supports are what was killing sales, and not the advertising that is P2P file sharing.

Now, we witness a variation on a theme: With minimum advertised price (MAP) supports theoretically eliminated, the industry is trying a backdoor variation of MAP: Encouraging select CDs to be offered at a sale price, while leaving the rest of the overpriced catalogue, well, overpriced.

This is a fool hardy and self-defeating attempt to cling to the old methodologies, the decaying business model — “the old regime.” Merely encouraging/allowing sale price competition on the same select few artists is not the same as opening an industry up to real market place competition.

Is there any industry more afraid of its own shadow than the music business? Afraid of technology, afraid of markets, afraid of competition, and most of all, afraid of their own ignorance and lack of talent?

How long will it be before this entire industry gets completed disintermediated by their own idiocy?


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2004/02/unrepentent-price-fixers/

URLs in this post:

[1] thing: http://bigpicture.typepad.com/comments/2003/12/music_sales_ris.html

[2] Minimum Advertised Price” fixing scheme: http://www.ftc.gov/os/2000/05/mapanalysis.htm

[3] Image: http://www.target.com/gp/browse.html/ref=sc_fe_c_3_0/602-5339045-7779868?%5Fencoding=UTF8&node=301668

[4] Image: http://www.bestbuy.com/site/olspage.jsp?id=cat02001&type=category

[5] Image: http://www.circuitcity.com/a_dept.jsp?c=1&b=g&store=Music&name=Main

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