Record Industry Wants Royalties for Used CDs

By Richard Menta 6/16/02

I have come to the conclusion that the music industry must be ruled by organized crime because everything they do is a shakedown.

One of the most prominent examples is for the industry to distort the notion that you buy a CD by claiming that all this time you have been only renting it. That is a lie, but one the lobbyists and lawyers for the industry will chant in unison as they enter the courts and the legislature to contort the fair use laws to their fiscal advantage.

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The latest example came across my monitor from the San Diego Union Tribune. Used CD sales have been skyrocketing over the last few years and the record industry doesn't like it. The reason is that they don't get a cut of the action. They shouldn't, they made their money on the CD already and, once sold, that disc became what the legal community calls chattel, i.e. a possession that can be re-sold, traded, lent, or given away by its owner.

According to the Tribune the record industry is considering charging used CD retailers a royalty for every CD they resell. That falls in line with the "rent" theory Big Music wishes to push on consumers. You can't resell that CD because you don't own it. Therefore, they are entitled to additional rent once it leaves your hand and goes to another.

As they say in the UK, Bollocks!

There is reason that the used CD market is booming. It is because new CDs continue to skyrocket in price as the industry uses its stranglehold on the consumer to push prices up. Consumers, unwilling or unable to pay these ridiculously expanding prices are doing what all consumers do when things get too expensive. They look for alternative ways to spend their money.

Last year I wrote an article called 6 CDs that addresses this issue. 6 CDs constitute the number of new records the average consumer purchases in a year. Does this mean this is all the music we ever listen to? Heck no, it just means that new records are too expensive and so we must be extremely selective over which discs we turn into a purchase.

We as consumers then supplement our music through various ways. This includes free sources like the radio, MTV, file trading, & cassette recording. It also includes paying less through the purchase of used CDs.

And it is no wonder that used CDs have taken off in the last couple of years. The industry has forced upon the consumer the introduction of the $20 CD, one of several price increases in the last several years. You can do that when you have cartel power. The problem is a CD was already way too much.

The $20 CD will price only more people out. The industry then has the gall to scream that because record sales are down a mere 5% in a recession it must all be because of piracy. Now that they have targeted the used CD market as a lucrative venue, they are calling the sale of used records without giving them a taste of the revenue - yes, you guessed it - piracy.

From the Tribune story "Royalties proposed for booming used market as new-CD sales stagnate"

The industry worries that the expanding used market is cannibalizing new-CD sales, as well as promoting piracy by allowing consumers to buy, record and sell back discs while retaining their own digitally pristine copies.

One proposed remedy being debated by record label executives is federal legislation requiring used-CD retailers to pay royalties on secondary sales of albums.

A cover story in last week's issue of the music trade publication Billboard quoted several executives who said they favor the establishment of an agency that would exert a flat royalty rate - say, 6 percent or so - on retailers' sales of CDs sold over and over again.

Frankly, it is the record industry itself that is the wearing the eye patch and parrot on the shoulder.

Personally, I have purchased more CDs in the last couple of years than ever before despite the raise in prices. That is because my mind and ears have been opened to a much broader array of music than the record labels or the radio stations want me to listen to.

The problem is every time I just pick up a CD in the store now I can't help but feel I am a sucker for doing so. I am a sucker for supporting an industry that overcharges for their product. I am a sucker for supporting an industry that bullies their own artists, record stores, teenagers who trade, libraries, and even the federal government when their well-funded lobbyists can get away with it.

Most of all - as I hold in my hand that CD of some artist whose music I really want and whose efforts I truly want to support - that buying that small silver disc at the record store is simply a bad value.

I wonder how many other record buyers have thought the same thing.

With that thought, what surprises me is that record sales have not dropped 30% this year based on greedy industry practices alone.

And that is another reason why I think the promotional effects of the Napster clones have done more help record sales than hurt it.


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