When businesses do stupid things.


Like every American, sometimes I get disgruntled when I see big business do things that just don’t seem right. “It’s Un-American!” Well here’s one for the recordbooks, graciously reported by Slashdot.

“The folks over at Techdirt just put up a great story today, with the RIAA claiming the cost of a CD has gone down significantly relative to the consumer price index. The RIAA ‘Key Facts’ page claims that based on the 1983 price of CDs, the 1996 price should have been $33.86. So naturally, you should feel like you’re getting a bargain. Sounds an awful lot like the cable companies saying cable prices are really going down even though they’re going up.”

Now, I’m not a religious kind of person, but all I can say to the following Techdirt commentary is AMEN.

Now The RIAA Wants You To Believe That You Should Be Paying Much, Much More For CDs (from the nice-try dept)

By now, it’s no secret that the folks running the RIAA have no clue about basic economics, but that’s no excuse for some of their more ridiculous claims. The latest, as pointed out on Digg, is that the RIAA has an information page where they try to convince you that the cost of a CD should be much, much higher than it is, and therefore you’re getting a great deal. Commentator Ben Woods gives a quick run down of why the RIAA is out of their minds. Basically, they’re claiming that based on basic consumer price index information (i.e., inflation) the price of the CD should have risen over the past few decades, rather than stayed more or less the same. This is really weak economics, and highlights why the recording industry continues to shoot itself in the foot. It shows that they either don’t understand (or would prefer to ignore) the differences between decreasing marginal returns (of rivalrous goods) and increasing marginal returns (of non-rivalrous goods). Anyone in the tech industry knows that overtime products get cheaper, not more expensive — but the recording industry wants to pretend that music is non-rivalrous and therefore should increase in cost over time, rather than decrease — even as the actual costs of production, distribution, discovery and promotion have all gotten cheaper over time? Sorry, but economics doesn’t work that way — and it’s safe to say that the RIAA isn’t fooling very many people. Even worse, the RIAA is saying all this while failing to recognize the competitive market they’re facing — where people have a lot more choices for their entertainment dollar, which should drive down the price of CDs, rather than the other way around. If the industry can’t even understand these basic facts, is it any wonder they continue to destroy the core of their business?

I’ve said it before and I’ll say it again: Only in America would a business be so arrogant as to think it can rape, pillage and sue its customers and still end up ahead. Is it any wonder that ITunes, Wal-Mart music and the like have found millions of customers or that artists are now releasing their albums by themselves on the Internet?

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