The RIAA Cartel

A Washington Post columnist talks about the RIAA lawsuit against XM, and hits the nail on the head in describing the RIAA:

Here in Washington, there is nothing more amusing than watching business interests work themselves up into a righteous frenzy over a threat to their monopoly profits from a new technology or some upstart with a different business model. Invariably, the monopolists (or their first cousins, the oligopolists) try to present themselves as champions of the consumer, or defenders of a level playing field, as if they hadn’t become ridiculously rich by sticking it to consumers and enjoying years in which the playing field was tilted to their advantage.

The fundamental problem here is that there really isn’t a free and open “market” for recorded music.

It starts with copyrights, which are nothing more than little government-issued monopolies. As a result of the recording industry’s lavish political contributions, Congress has extended the copyright for music to absurd lengths of time (70 years after the death of the artist) and absurd situations (singalongs at Boy Scout campfires). This is well beyond what is reasonably required to meet the aim of encouraging artistic creation.

The copyright laws also effectively set up the record labels as a cartel that can bargain as a group with satellite and Internet radio operators over royalties and other terms. Not surprisingly, the same cartel-like behavior appears to extend to the industry’s negotiations with Apple’s iTunes and other download services, which seem to strike suspiciously similar deals at suspiciously similar times with all of the major recording studios. It’s perhaps no coincidence, then, that the industry has already settled an antitrust suit over price fixing of compact discs and is reported to be the subject of another antitrust probe regarding prices for music downloads.

The interesting thing is that the RIAA isn’t anything unique here; the first paragraph is a template that fits almost any extablished industry you could name. Anti-trust laws created a disincentive to become a monopoly, enough of one that true monopolies are rarely seen these days (the only one I could name offhand is Microsoft, and that’s a special case in many ways). So now corporate slimeballs seem to gravitate towards the next worst thing: oligopolies, represented by “trade associations” like the RIAA. But you can see the same thing in industries across the board. Two to five companies make up 90% of the industry, and soon enough innovation screeches to a halt and the products become impossible to differentiate. Then they just take to clobbering anyone who threatens their cash cow business model.

It’s a sad state of affairs; unfortunately though it’s not one I expect to change anytime soon.

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