January 22, 2004
Parallell import of CDs to UK stopped
Trade body the British Phonographic Industry and CDWow today announced they had reached a settlement over claims that the online retailer was breaking the law by selling CDs from the Far East.

CDWow was able to offer chart CDs for 8.99 and under because it bought them at lower wholesale prices in the Far East and sold them directly to consumers.

I was quite shocked to read this story in the newspaper in my cab this morning. Apparently, online retailer CDWow and the British Phonographic Industry has settled a court case over whether CDWow was breaking copyright law by importing music into UK - bypassing the record companies' standard channels.

This is definitely a new one. Although I have previously questioned the parallel import of Coca-Cola and other beverages into UK, my focus was environmental concerns rather than "intellectual property". CDs carry purely information and I suppose that although shipping them still involves an environmental impact, the profit per kilogram/kilometre transported is in an entirely different league from beverages.

I feel it's time the music (and film-) industry wake up and smell the coffee: information floats easily; controlling CD releases or DVD releases per country or region might have worked in the past, but the way to go for the future is definitely not to run around like this. When iTunes and its clones become available worldwide, the pressure on physical CD prices will be enormous, and maintaining artificially high prices through trade agreements is not exactly going to help CD sales.

Is it just me, or does it look like the music industry is trying really hard to shoot themselves in the leg? What with the growth of illegal as well as legal file-trading online; who's going to benefit from artificially high CD prices? I don't think it necessarily will be the bottom line of the industry: I would imagine the price elasticity of music will lead consumers to look for alternatives if the BPI keeps pushing prices higher instead of helping their artists reach a wider audience by lowering the prices.

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Update: in the series of other things the record companies are doing in an effort to lose customers faster, I thought I'd link to these posts on why copy protection is in fact hurting sales to customers that would otherwise legitimately buy music:

http://www.jacobsen.no/anders/blog/archives/2003/10/02/why_i_am_not_buying_lene_marlins_new_cd.html
http://rc6.org/node/view/545

Posted by: Anders on January 22, 2004 01:50 PM
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