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Price fixing in music

The music industry has just been hit with a massive class action suit for price fixing. Fox News reported on the details today.

Glenn Reynolds, a law Professor at the University of Tennesee, has been expecting this for ages. He’s gone so far as to say even industry insiders feel they are vulnerable to a RICO.

Kudos to Glenn and his crystal ball!

13 comments to Price fixing in music

  • Ted Schuerzinger

    Hmmm…. You don’t actually think using RICO against the music industry is a good idea, do you?

  • RICO itself is a very bad idea… but then the irony of an industry using the state to prop up an obsolete business model getting bitten by the state is something calculated to bring a smile to my lips regardless.

  • *sweatdrop* …. What’s RICO?

  • Simon Austin

    My Dear Malcontented and Frustrated Musicians

    Please enlighten a poor old soul from the music industry as to what would make a good, compelling, unique, diverse sustainable business model for the music industry.

    It’s all very well and easy to knock the music industry. I’d love to know your suggestions


    Simon Austin

  • Dale Amon

    I don’t like the RICO, but when a law professor (who also runs a record label) says they are vulnerable to it, I do get a bit of a chuckle.

  • Dale Amon

    Simon: I don’t have a crystal ball. I’ll make some suggestions, but they are as likely to be accurate as would have been the predictions of Mozart upon being asked to predict the shape of music in a world of records.

    The business model of today has had a good run, but is near the end. Number One chart songs have very low sales these days. The business has contracted into fewer and fewer hands with control ultimately in the hands of conglomerates who have no interest in music. When the bottom line drops enough, those parts of the companies will be divested or closed down and all the staff given their notice.

    A more viable long term model is artist centred. Not the boy/girl flash in the pan wonders that are selling so poorly today, but musicians with long term careers and business sense who take charge of their own music and careers. Hardly anyone will make the sort of fortunes we have seen during this rather brief interlude of 40 years or so. But those riches only ever came to a very small number anyway.

    I suggest there will be a larger number of musicians churning out a larger variety of music with smaller followings. They’ll distribute mp3’s for free and try to push for as wide a spread a viral marketing of their product as possible. Internet radio stations with advertising and small performing right fees are one way to get income; even a penny a play adds up if you can get enough buzz going. The fact that anyone could start an internet radio station would do a hari-kari on the payola based top 40 of today. Good riddance to them anyway. They’re boring.

    Musician will tour; they will sell autographed CD’s at premiums’ they’ll do merchandising and perhaps promote products; they will *hire* professionals to work *for* them for PR, and such. Without the need to pay for lifestyles of the recording executive and A&R, they’ll be able to do quite nicely on a much lower income stream off their work.

    Basically with the internet and modern kit, for the most part smart musicians simply don’t NEED the bloodsuckers any more.

    They are obsolete. I’m not the only person with these impressions. I know quite a few people who make their living doing something they love. The money they earn isn’t great but the lifestyle is freedom itself. I also know a fair number of people in the studios and band support and promotion and the local union foreman here in Belfast.

    If Sony and the others take a fall, hardly anyone will weep over the corpse.

  • …except that part of rock and roll mythology came to be about the chance of getting suddenly made mega-wealthy by the suits, even while sneering at the suits.

    There will always be musicians, but quite a number of them may miss that alluring 50-year dream of winning a restrictively-run but very lucrative tournament….. once anyone can join in – and once it really is anyone, not just art students pretending to be anyone….

  • Simon Austin

    Dear Dale

    I actually agree with everything you say. Except about how the artistswill conduct themselves on the net revenue & mareting wise.

    As I stated in an earlier post (Janice Ian),I was in the fortunate position two years ago of managing the highest selling artists on mp3.com. These top 20 artists accounted for up to 22% of monthly downloaded music (legal) on the net at that time. Those artists were making pretty reasonable money too.between $5000 and $25,000 / month.

    mp3.com at that time were dividing up $1m / month between the 165,000 registered artists from around the world on the site. It was a great time since there were no “signed” artists on the site since mp3.com were in litigation with virtually every major record company in the business.

    The site ran its own chart system and a myriad of internet radio channels flourished on mp3.com. Interestingly however it was possible to rig the chart to a certain extent. mp3.com invented a term called NMA (New musical army), this was the net equivalent of a “plugger”. Two of the pluggers were virtually accounting for every major hit on the mp3.com chart. The pont that I’m trying to make here Dale is that no matter how much of a leveller the internet is, those capitalist market forces, entrepreneurialism, business tactics and different levels of artists skill will lead to massive successes and dismal failures. We found this out in the microcosm of mp3.com during the Halcyon 24 month period of bliss before it was taken over by Universal. As soon as Universal took ovr the company the royalty rate was slashed by over 90% to all 165,000 artists around the globe. Now, artists receive no royalty and have to pay for the service.
    This action by Universal left a lot of young 15-24 year old kids in their bedroom studios high and dry.
    Without an income and forced to find a regular record deal. I for my part was forced to drop the artists in my care since the finance was no longer there to run their and therefore my own overhead.

    I have other music & TV business interests so I wasn’t hit too badly. (-$400k / yr????). HORRIBLE.

    The overall point that I’m trying to make is that there will always be excess in the music industry since that is the very nature of the beast. The mp3.com scenario proves this point too. Even without the major record labels, some artists will still break through. Furthermore, I sincerely believe
    that even if your prediction about the conglomerates dropping the record companies comes true, it will only be a short matter of time before major marketing houses spring up on the net that will be the new equivalents of the current majors (BMG, UNIVERSAL, SONY, EMI, WARNERS). Those marketing houses will then exploit those artists and sign them to regular deals like the majors do at present.

    Let me know what you think



  • I agree with Simon’s point about new marketing houses popping up with a focus on promoting bands online…sort of a record label without the records. William Gibson predicted this evolution in “Virtual Light” and “Idoru”. Besides, all but the upper crust of “studio created” musicians and mega-stars make far more from touring than record sales.

    Bands can and often do end up in the negative after “promotion and manufacturing” are deducted form their album sales anyway, and the profit split with an online marketing house and the artist has room for a much sweeter deal for the musicians when you remove the overhead for CD manufacturing/distribution.

    Promotion costs for concert, MTV placement, etc. will be the same, but when you take out the up-front costs of CD’s being made and shipped down the very dirty pipeline to the record stores, the numbers make a lot of sense.

  • Ted Schuerzinger


    RICO stands for the “Racketeering Influenced and Corrupt Organizations” Act. IIRC, it was originally designed to be used against the Mafia, but has since been used against, amongst others, Operation Rescue and other anti-abortion groups, and a whole host of other groups and businesses.

    It’s a perfect example of how bad laws end up being used for things that the original authors claimed they never intended. (Just like the Americans with Disabilities Act, or the Rape Shield Act that allowed Paula Jones’ suit against Bill Clinton and the Monica Lewinsky line of questioning.)

  • Curt Wilson


    You write, “[RICO]’s a perfect example of how bad laws end up being used for things that the original authors claimed they never intended.”

    I recently heard an interview with the man who drafted the RICO statute. I don’t remember his name, but I believe he is now a well-respected law professor. When asked about whether he intended the law to be used against non-Mafia types, his reply was simple: “What part of ‘no person’ don’t you understand?”

  • Julian Morrison

    Price fixing does not involve breach of property rights. Preventing it does.

    However, state backed copyright does involve breach of physical-property rights so I have little sympathy.

  • zack mollusc

    The music industry is really strange. The economic model is inapplicable to anything else. You don’t see bands paying royalties to the guitar manufacturer whenever they play a note. The roadie who packs the equipment away in the truck doesn’t get a royalty whenever someone subsequently packs stuff in the same order. I don’t get paid a royalty every time someone uses a pcb that I laid out. Sod the musicians and the music industry, let them get McJobs.