Lower CD prices may be on the way thanks to an antitrust settlement announced Wednesday that will end minimum pricing programs tied to promotional funding from major record companies.
The deal between record companies and federal authorities settles the Federal Trade Commission's charges that CD prices have been illegally boosted by a practice in which major labels withhold advertising money from record stores that sell CDs below minimum prices, the FTC said in a press release.
"The FTC estimates that U.S. consumers may have paid as much as $480 million more than they should have for CDs and other music because of these policies over the last three years," FTC Chairman Robert Pitofsky said in a statement. "Today's news should be sweet music to the ears of all CD purchasers."
If the move sparks price-slashing competition from large chain outlets, that could hurt smaller independent stores that don't sell enough CDs to lower retail costs.
list prices are climbing. In the fall, Method Man and Redman's "Blackout!" and Dr. Dre's "Dr. Dre 2001" shipped to stores with a suggested $18.98 price tag, a new high. At the same time, the industry is attempting to battle music piracy online, which may result in new business models as well as prices.
Software programs such as Napster, Gnutella, and Scour Exchange have made it easier than ever for people to download full MP3 copies of albums illegally, for free. Many Napster users cite what they see as an outrageous retail price for CDs as justification for downloading albums.