Alright, today, let’s talk about a classic case from a while back, and yes, we’re referring to the Music Industry CD Price Fixing Lawsuit. Not a lot of people know about this one, but it was a great example of how a big company thought that they could just manipulate the prices of the CDs and nothing would happen. But things changed for good. Just to be specific here, you see, back in the late 1990s and early 2000s, CDs were the main way to listen to music and a lot of people bought these CDs because they were kinda popular. And yes, it was the music labels that used to produce these CDs and make them available in the market to make it easier for everyone to buy.
Just to give you perspective on things like how big this CD industry was, well, back in the year 2000 alone, right there in the United States, there were more than a billion CDs sold. And at the time, it also became much cheaper to produce these CDs, and when something is much cheaper to produce, you expect them to sell at a very affordable price, right? But nah, there were some big companies that were accused of doing something called the Minimum Advertised Pricing (MAP). Like, this meant that the CD prices were fixed from the backend, and the retail stores had no option but to sell these CDs at certain and fixed prices.
Who Got Busted for This?
Well, it wasn’t like there were some small record labels or music companies involved in something like this, nah, it was all big names like Sony, Universal, Warner (WEA), BMG, and EMI. And just so you know, it wasn’t just the music companies alone, on the retail side, stores like Tower Records, Musicland, and Trans World Entertainment were also part of the deal.
During that 1995 to 2000 period, it is believed that customers were charged somewhere around $500 million more, like, up to $5 extra per CD.
The Government Was Not Cool With It
Things started to fall down for these big music companies and retail stores when the Federal Trade Commission started looking into it like something didn’t add up. Around that same time though, you see, we also saw that about 41 U.S. states (plus a few territories) came up together to sue the music companies.
And right off the bat, the companies didn’t admit that they were doing something wrong, and just think about it, why would they? Though still, two years later, in 2002, they agreed to pay a total of $143 million, which included about $67.4 million in cash and $75.7 million worth of CDs that were given to public libraries, schools, and nonprofits.
This also was the time when music was going digital like people were using digital forms to listen to music, and there were so many websites that were popping up back then. It literally somehow crushed the entire CD market in no time, like, people weren’t interested in buying CDs anymore, and just take the example of today’s time, who buys a CD to listen to an album or music? No one, right?