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Bothered and bewildered: Gerald Kaufman encounters the different reality of the people who set CD prices

Gerald Kaufman
Saturday 15 May 1993 23:02 BST

ON MY way to the office the other day, I nipped off the bus at Piccadilly Circus and ventured into that emporium of recorded music, Tower Records. There I found a newly released compact disc of the original London cast recording of Stephen Sondheim's A Funny Thing Happened on the Way to the Forum. Price, for a 30-year-old recording, pounds 10.99.

Later that day (not from the House of Commons, where international calls are strictly forbidden) I telephoned a branch of Tower Records on Broadway, Manhattan Island, NY, and asked what their price was for this same recording. Reply: dollars 11.99, plus 8 per cent sales tax. At the not very favourable rate of exchange last Wednesday, the day the National Heritage Committee report on compact discs was published, that came to pounds 8.60 - 27 per cent cheaper than the London price.

The managing director of Tower's European operations, Ken Sockolov, explained in a letter to the Independent last Thursday: 'We're living in a different economy than the people in the US are.' Why that should justify one outpost of his organisation charging 27 per cent more than another branch for the very same product, made and packaged in the same place, is a mystery. A further mystery is that this same product can be obtained at Dress Circle, whose Monmouth Street premises are not in a different economy but about 15 minutes' walk from Piccadilly Circus, at pounds 9.99.

Mr Sockolov is of the opinion that our committee 'is living in a different reality than the rest of us'. I am certainly living in a different reality from him - in which anyone charging substantially more than someone else for an identical product is open to being regarded as overcharging.

I am a born sucker when it comes to showbiz, whether it is the showbiz of Sondheim and Broadway or the showbiz of Domingo and John Eliot Gardiner. I can talk reasonably fluently to presidents of the United States and to sundry kings and potentates, but I become tongue-tied in the presence of Luciano Pavarotti (whom I met at a lunch last year, when my hosts were Decca Records, whose hospitality, to be realistic, I do not expect to enjoy again) or Frank Sinatra (whom I met in, of all places, 10 Downing Street during Harold Wilson's premiership). When it comes to the record industry, whose products overflow their containers in my homes in Manchester and London, I am in principle a willing suspender of disbelief. But there is only so much disbelief that even I can suspend; and the representatives of the record companies have defeated my credulity.

When I chaired our committee's sessions I was ready for crushing answers to my questions about the difference in CD prices in the UK and the US, and for obvious explanations, which only my stupidity had failed to anticipate, for the difference in price in Britain between compact discs and cassettes, which cost almost exactly the same to manufacture.

The responses to the first of these queries referred to comparative overhead costs; but these could not possibly justify a 27 per cent difference. The argument has been superseded by Mr Sockolov's alternative - and inaccurate - claim that 'everything costs more in the UK than in the US'.

The response to the second question was a protracted and uncomfortable silence, ended by the bleat that the much higher price of CDs 'is to do with quality'. I fail to understand why quality justifies charging dealers an average pounds 2.50 more for a product that costs almost exactly the same to make as the cheaper product. Maybe I really am 'living in a different reality'.

The industry certainly offers a fascinating spectrum of personalities. On the retail side there are the staid, elegant and very English Sir Malcolm Field, group managing director of WH Smith; the earnestly American Mr Sockolov; and the self-effacing Alan Gouden, who runs the Music Discount Centre, where I buy most of my CDs.

From the record companies there are the delightful Edward Perry, managing director of the independent Hyperion company, who, failing other employment, would be ideally cast as Mole in Alan Bennett's adaptation of The Wind in the Willows; Rupert Perry, president of EMI, a real gentleman to whom I regretted having to put searching questions; and Maurice Oberstein, executive vice-president of PolyGram International, a costume virtuoso, one day appearing dressed in baseball cap and tartan jacket, and on another garbed in a Western outfit that Robert Redford would have been proud to don for The Electric Horseman.

But I was still not convinced. John Craig of First Night Records said the National Heritage Committee was 'totally out of control because we are a sexy business which puts Kaufman and his crew in the vote-catching limelight'. If only Mr Craig and his colleagues had realised how ready I was to be, simultaneously, dazzled and humbled by the representatives of his sexy business.

Instead, the evidence I and my crew got from his crew left us with the conviction that they (to quote our report) 'are effectively cartels'; that 'the record companies effectively collude to confront the retailers with prices which do not vary significantly according to record label'; and that 'the major retailers do not give the consumer an effective choice in prices according to which shop he or she decides to patronise'. The action of Sir Bryan Carsberg, in asking the Monopolies and Mergers Commission to investigate the supply of recorded music in the UK, might be taken to indicate that our committee has not been propagating quite as many lies as Mr Oberstein believes.

I was, to quote Lorenz Hart, bewitched, bothered and bewildered by the record industry, but I never did get its representatives to provide a convincing explanation of why they charge what they do for their products. Maybe that's because I'm so dim. Maybe it's because there is no convincing explanation.

The author is the chairman of the Commons National Heritage Select Committee, which reported on CD prices last week.

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