MPs hear fierce attack on high price of CDs: Record companies have been put under renewed pressure as a select committee is addressed by pop managers. David Lister reports

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Indy Politics
THE campaign to force record companies and retailers to lower the price of compact discs gathered momentum yesterday when the managers of two of Britain's most successful bands told MPs that the price should drop by up to pounds 2.

With leading record company executives looking shell-shocked at the back of the committee room, the managers of Dire Straits and Simply Red accused the big multinational companies of being inefficient and charging well above the market rate for the design and packaging of CDs.

Committee room 15, where the National Heritage Select Committee began its inquiry into CD pricing, was predictably a scene of culture conflict. 'I wouldn't actually buy a Dire Straits' CD,' John Maxton MP said to the band's manager, Ed Bicknell. 'It's OK, I'll give you one,' Mr Bicknell said. 'I wouldn't take it,' replied Mr Maxton.

But he did, he said, buy Billie Holiday and couldn't understand why he had to pay the full CD price, which currently ranges between pounds 12 and pounds 15, as there were no artists or production costs to pay, only the transfer of the music from vinyl.

Mr Bicknell pointed out that record companies justifiably used back-catalogue artists to subsidise present-day acts. But he agreed with the general point, saying: 'The record industry has managed to sell the same goods twice. It's brilliant. And they have sold it more expensive the second time. I think the record companies could afford to reduce their prices by pounds 1 to pounds 2.'

Elliott Rashman, manager of Simply Red, believed that reducing the price would increase sales. He said: 'The CD format has reached 51 per cent market penetration after eight years. Vinyl had 90 per cent. Now vinyl is being phased out. You can no longer buy Simply Red on vinyl. But people are not rushing out to buy CDs. That's a sobering fact.'

The artists, Mr Bicknell said, would lose money if the price came down. 'But we would hope that if prices came down, turnover would increase. The British phonographic industry (which represents the record companies) say they don't believe it would increase. But I find that surprising as they run mid-price labels.'

The profits were going back to service debts of the big multinational companies, Mr Rashman said - in the case of Time Warner, going to America to service a billion-dollar debt.

He challenged BPI figures on both artist royalties and the cost of design and packaging. 'The pounds 1.32 figure for an artist royalty is patently wrong,' he said. 'Only artists like Michael Jackson and Paul McCartney receive that sort of royalty. If CD prices come down, Simply Red will make less money. We're prepared to accept that because more people will have access to a populist art. The music industry never asks the artists or the public about price. They aren't accountable to anyone. Where did the original price of a CD come from in 1985? No one asked then. Even now, there's a new format called digital compact cassette. Manufacture costs are less than a normal cassette. But it costs pounds 6 more to buy. Why?'

Warming to his theme, Mr Rashman said that record company contracts with artists were archaic. One company still took off a percentage for breakages of 78s. 'If you get anything out of this,' he said to the committee, 'it will be to look at the way the BPI figures are made up. The BPI quote pounds 1.05 for packaging costs. I had a quote this week from an independent company for 58p. Simply Red's last album sold 3.2 million. Imagine the discount one could have got.'

Next week the committee interrogates representatives of the retail trade; and finally, in two weeks' time, the record companies.

(Photograph omitted)

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