From: velde2@jhunix.hcf.jhu.edu (Velde Francois)
Subject: Re: EMI price increase
Organization: HAC - Johns Hopkins University, Baltimore
Date: Wed, 14 Oct 1992 17:37:15 GMT

In article <1992Oct14.155610.19715@bas-a.bcc.ac.uk> ucap22w@ucl.ac.uk (Martin S T Watts) writes:
>velde@gopher.Stanford.EDU (Francois Velde) writes:
>
>>If the high price of CDs is only due to
>>the big bad companies price-gouging, why are the CDs cheaper in the
>>US (inclusive of transportation costs) than in Europe?
>
>You tell me. I'd be interested to see a rather more quantitative breakdown
>(just an approximate one) to demonstrate your argument. In such an analysis
>I'd rather expect transportation costs to come under 'distribution', which
>you give as a reason for the price differential in Europe and the United
>States. I'm particularly interested in why a British company (EMI) is
>marketing CDs at a lower cost in the States than it does in the UK. Maybe
>that would be a good example to start with.

My point exactly: if the market for CDs was dominated by the big firms,
that would be true in the US as in Europe, and the said big firms would be
extracting as much as they can from us consumers on both sides of the Ocean.
Fact is, CDs are cheaper here (in the US). My argument: the market in  the 
US is competitive; as for Europe, either it is not competitive, or prices
are distorted by inefficient distribution systems and taxes. These 
inefficiencies must be large if they are enough, in the case of EMI, to make 
CDs produced in the UK cheaper in the US (same for Harmonia Mundi, BTW).

>>>
>>>And are DG and Philips (and Decca) not just different aspects of a three-sided
>>>Polygram coin? If so, are they really likely ever to enter into any cut-throat
>>>marketing campaigns?
>>>
>>So my example was poorly chosen.
>
>So it was, but I suspect that there may be other people who remain ignorant of
>the association, an association which may account in part for the unusual
>uniformity of pricing of CDs. 

As I said, they are not uniform across the Atlantic: explain that under your
monopoly hypothesis.

>Such people might well consider that present CD
>costs have been arrived at through fair competition. Considering though that
>DG, Philips and Decca are enormous companies in their own right, I would think
>that Polygram holds rather more than the balance of power in the CD market,
>in Europe at least.

We need hard numbers on this. Anyone?

>[extraneous discussion fo the price of water removed for sake of brevity]

>But you're basically saying, let them eat cake. As long as you're in a position
>to enjoy the CD market as it stands and able to rationalise having to make
>a substantially larger outlay than is necessary, the ethics of the CD
>industry and the concerns of the less well-off are immaterial. I don't agree.

My point is this: as long as the CD industry plays by acknowledged rules
of competition, that's fine. If CDs are more expensive than the cost of
producing them, the differential goes as a rent to artists who have a 
monopoly on their own talents. If you are unhappy with that kind of 
monopoly, nationalize artists and force them to perform for free.
If the CD industry does not play by the competitive rules, than there
is a problem; but I argued above why I do not see evidence for that.
I don't think there is a natural monopoly in the record industry, and
therefore it doesn't deserve to be nationalized on those grounds.

For all their immorality, those companies brought us the CD, not for the
love of humanity, but to make money. Don't you think we're better off for it?

The ethics of the CD industry are relevant insofar as they abide the laws
governing competition; beyond that, their ethics are as irrelevant as your 
ethics or my ethics.

As for the less well-off, as I said, it would be great if everybody could 
afford everything.  I agree with that. I disagree with the notion that 
they will be better off if:

>> If you are 
>>unhappy with this state of affairs, and you think that the right to cheap
>>CDs is a fundamental human right, then nationalize the record industry and
>>subsidize it with everyone's taxes.
>
>OK, I'll do that!

I have a guess on the outcome of that policy...  When the State has a 
monopoly on art, the results are often desastrous.

A few weeks ago, the NY Times
had an article about Holland's museums, whose cellars are overflowing with 
mediocre paintings bought in the 60s and 70s when the government thought 
its duty to support the arts, no matter who called himself an artist and
what he painted.  Now they acknowledge that it was a waste of money then, 
and is a waste of space now.

But this gets us back to the thorny issue of...

>The major companies record all the big names, and people are prepared
>to pay the extra at present. The ball is pretty much in the consumer's court.
>

My point exactly. Why do you want to deprive these big names" of their 
earnings to have cheaper CDs? Why is that more fair?