Commentary: Song and dance over CD prices
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Compact disc prices are too high. Cassette prices are creeping up, too. That's not just the opinion of music buyers, but of Sir Simon Hornby, chairman of the WH Smith group, the largest seller of pre-recorded music in the country. Smith insists the retail trade is not to blame. Its gross margin on CDs is the same in Britain as in the States, where CDs are two-thirds or even half the price.
The real culprits, it says, are the producers, a few powerful international organisations like Philips, Sony and Thorn EMI. For them, the UK market - 8 per cent of the world market - is a sideshow. They can therefore charge UK buyers high prices and hang the consequences.
Producers argue that in the UK there are not the same scale economies as in the US. State taxes there are invariably lower than Britain's 17.5 per cent VAT. After all, virtually all consumer products are much cheaper there, not just CDs.
It is also hard to accept that Smith, which owns the Our Price chain and has a half-share in Virgin Retail, has no buying clout. Twenty-eight per cent of UK market share and music sales of pounds 500m must count for something.
The Office of Fair Trading cleared the Virgin purchase earlier this year, perhaps believing that if Smith had extra muscle it would be able to negotiate better prices and pass them on. That is, in theory you neutralise one cartel by allowing another one further down the supply chain.
Unfortunately, the danger is that the consumer gets ripped off not once, but twice. Perhaps that is why Sir Bryan Carsberg, the incoming director-general at the OFT, is re-examining the evidence.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments