Friday, February 09, 2007

The RIAA doesn't understand economics

The Recording Industry Association of America has a web page arguing that we're all getting a fantastic deal on compact discs because, if they had gone up in price along with the Consumer Price Index, they'd be over $33 each. As Ben Woods points out, by that same argument Texas Instruments calculators that cost $20 in the mid-1980s should have cost over $300.

In fact, the recording labels engaged in price fixing, by setting "minimum advertised pricing" on CD retailers, which caused prices to stop their downward trend in 1996--and causing a decline in sales as prices increased.

If you want to sell more CDs, lower the price.

(Via Techdirt.)

UPDATE (February 9, 2007): This post at kuro5hin from January 2003 on "RIAA vs. MP3 vs. Adam Smith" addresses compact disc pricing and demand.

UPDATE (February 10, 2007): And this post at Techdirt reports on a study that shows no measurable effect on CD sales from online downloads (as opposed to, say, CD prices).

No comments: