July 30, 2002

2002 July 30 Links [8:15 am]

(entry last updated: 2002-07-30 16:40:21)

It’s going to be a busy day for me. But the article in today’s Boston Globe should not go unremarked.

Geoff Edgers reports in today’s Boston Globe [PDF] that market economics even seem to effect the record industry.

The most remarkable part of this article is the response of the RIAA to the fact that record stores are reducing their CD prices to get customers into the store. A Globe chart (not given online) shows that the average suggested retail price of CDs was $21.50 in 1983 (the introduction of the CD), dropping rather steadily to $12.50 in 1990 and trending slowly back up to $14.02 in 2000 (sourced from the RIAA). The fact that local stores are discovering that they need to offer product at $9.99 to get people into stores, however, leads the RIAA to this position:

But Hilary Rosen, chief executive officer of the RIAA, said that it’s unfair to expect record companies to cut costs. She says people who steal music by downloading soundfiles or burning discs illegally are responsible for sales drops.

”In the age of $150 sneakers, $12 movie prices and $40 video games, I’m just unsympathetic,” Rosen says. ”At any price in the $10 to $18 range, CDs are a great value.”

It would be interesting to track the real prices of the products that she cites, particularly if one were to consider the trends in quality and features of those products along with their prices.

But, there’s another feature of her position that screams for consideration - "it’s unfair to expect record companies to cut costs." Really!?! Every other industry looks upon cost-cutting as the standard - a day to day practice. There are plenty of industries where cost saving - continuous improvement - is the centerpiece of operations. Yet the RIAA, confronted with technological challenges that have been commonplace since the invention of the player piano, refuses to acknowledge that cost might have something to do with their declining performance in the face of these challenges. Rather than exploring new business models, it’s all about modifying law and regulations within the industry, and calling for dramatic changes in industries outside of their traditional purview - computer technology.

And worse, they’ve managed to convince a large fraction of the population that their position is reasonable. For anyone who’s read Courtney Does the Math, and looks at  [PDF] the implications of her numbers has to ask about the costs of promotion - and wonder, for example, why killing webcasting seems to be the objective of the RIAA.

As far as I can see, it comes down to a simple fact - the record companies are control freaks, pure and simple. Somehow, they have managed (along with the movie industry) to convince us that their monopoly control should be perfect, unassailable by advancing technology and guaranteed by the state. And worse, our government representatives see that their role is to employ the instruments of public policy to maintain their control.

It’s time for a change. And it’s up to us to bring it about.

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