Going into my research paper, I believed I would find ample proof that the RIAA should not continue its present course of legal action against people involved in file sharing.
PART 2
I was appalled at what I found. Going into the research, I was expecting to find that CDs were overpriced because of the exorbitant sum paid to big-name musicians, and that the market had to reflect that fact. I also expected to find that CDs had increased in price as a result of the increases of cost of living.
The music industry would have you believe that costs for creating a CD have endured “a 41% price increase in 5 years” (Boycott-RIAA). The fact is, the music companies pay about $7.50 to create a CD, including money paid to bands, producers, distributors, and songwriters. They then sell the CD to a retailer for a 30% profit, and the retailer sells it for an additional 30% profit. The record company uses their 30% profit to pay for “all the record company’s operations including, staff, severance packages, expensive building leases/rent, computers, cars, sushi lunches, flights, conferences in Hawaii, cell phones, etc.” (Taylor)
There was a time, leading up to 1996 when competition between music retailers had CDs selling for $9.99, delivering a smaller kickback to the music companies. At that point, the five companies that make up the bulk of the Recording Industry Association of America, or RIAA, “modified their existing cooperative advertising programs to induce retailers into charging consumers higher prices for CDs, allowing the distributors to raise their own prices” (Anonymous – FTC). In 2002, the FTC found the RIAA, which controls 85% of all music purchased on CD guilty on monopoly charges, citing that their price fixing over three years caused “U.S. consumers (to pay) as much as $480 million more than they should have for CDs and other music” (Anonymous – FTC). Since the price fixing to stop CDs from selling at $9.99, the market has never dipped below the ten-dollar mark for individual CD purchases. Many would have you believe that that is simply a reflection of inflation, but it is interesting to note that DVDs, VHS cassettes, CD-Rs, CD Recorders, and CD players have all dropped significantly in price since 1996, with the Retail music CD being the exception. Although prices have fallen since downloading has provided an alternative, the average new release prices still range from $13.99 to $19.99.
When Napster first arrived on the scene offering downloadable music for free over the Internet, many consumers claimed to download because they didn’t want to have to buy entire albums for one or two songs they liked. Flash forward to today, and the recording industry would have you look at the new pay-per-download version of Napster, which charges 99 cents per song as the solution. The problem isn’t solved, however. “They will find that top-selling acts Madonna and Red Hot Chili Peppers sell their songs by the album, but not as singles. They will find some musicians on one service, but not on others”, they will not find The Beatles anywhere, and they will find all of this on a peer-to-peer network. (Ahrens) Finally, it is important to note that the record companies currently pocket 70% of profits from most online downloads, with artists getting only 10-15%, and all of this with the end user using bandwidth, time, and their own materials (CD-Rs for instance) in an attempt to get a better deal, and still failing to do so (Boycott-RIAA).
With all these factors in place, it is easy to see how the general public began to look for another alternative. What they found was peer-to-peer file sharing. The only question was.. is there any reason not to?