City: Wrong track

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The Independent Online
About the best that can be said for the Commons National Heritage Select Committee report on the price of compact discs, published last week, is that it is short - just 10 pages, to be precise. In almost every other respect, however, it has to rate as one of the most daft, predictable and ultimately irrelevant pieces of unthinking consumerism ever to have come out of the select committee system - and that's saying something. The committee singularly failed to prove its case that there is any kind of monopoly operating in the supply of music or that there is anything wrong in the way the industry prices CDs.

Not that the committee was in any way being deliberately disingenuous. Its motives were sincere and understandable enough, if a little naive. Gerald Kaufman, the Committee's Labour chairman, is another of those opera- loving bores who spends huge amounts of his disposable income on CDs. He wants to see lower prices; who doesn't? It would also be nice while he's about it if he could persuade David Hockney to cut the price of his paintings and Giorgio Armani to sell his suits for pounds 100 less. Cheaper Dom Perignon champagne, Johnnie Walker whisky, Nikon cameras, Reebok shoes, Levis, tennis balls and Zantac would be a good idea too, but somehow I doubt he'll be taking up these causes with the same vigour.

Last year Maurice Oberstein, chairman of the British Phonographic Industry, arranged for Mr Kaufman to share the same table as Placido Domingo at the British Gramophone Awards, but it clearly didn't do him any good; Mr Kaufman is as enraged now as he ever was by the fact that CDs cost less in the US than here. Never mind that virtually everything does.

Music is one of the very few industries in which Britain still reigns supreme (sales in the UK are less than 10 per cent of the world total but British recordings account for nearly a quarter); the price it charges for CDs in its home market may have a little bit to do with that success. If you forced the industry to cut its dealer prices by pounds 2 per CD, as the select committee demands, most companies would have to sell nearly three times as many to sustain present levels of profitability in the home market. Maybe Mr Kaufman understands more about the relationship between price and volume than the industry, but I doubt it; it's hardly likely a cut of a sixth in the price of CDs is going to lead to a trebling of sales.

Like any other industry, music companies price their products according to what they think the market will take, with the specific aim of maximising profits. Most people would find that a reasonable way of doing business, though Mr Kaufman apparently does not. If Warner Brothers thought it could sell a lot more Madonna by cutting the price of her CDs, it probably would. But it doesn't work that way. People will buy Madonna CDs in roughly the same quantities whether they cost pounds 12 or pounds 10. Apparently, there are more than 140 different versions of Vivaldi's Four Seasons available on CD, ranging from around pounds 3 to pounds 14. Surprise, surprise, the pounds 14 one sells best because that's the one music buffs want.

But let's for the moment assume there is something inherently wrong with allowing the music industry to charge what it likes, and that CDs are not luxury branded products but a fundamental human right like water, electricity or the telephone service. What can the Monopolies and Mergers Commission, which thanks in part to Mr Kaufman's rantings is now investigating the industry, do about it? Not much is the answer.

The copyright laws could be scrapped so as to allow an influx of cheap foreign imports. The only trouble is that Britain would find itself out on a limb in doing so. The US wouldn't dream of following suit. So long as advanced capitalist economies continue to exist, so will copyright and patent laws. Mr Kaufman may not like it very much, but it is one of the ancient laws of such economies that if you invent, create or discover something, you should have the right to exploit it on an exclusive basis, at least for a little while. Without it, there would be just one company that produced everything and there would be no invention.

Then again, the MMC could impose price controls - perhaps a BT- style RPI minus X formula - but the effect would be the same. Profits would fall, studios would trim their recording budgets accordingly and some smaller independents would close altogether. Fewer artists would be recorded, fewer records produced, there would be less choice, and eventually music would go the same way as the British film industry and become no more than a marginal backwater on the world stage.