January 2004
On-line CD Retailer Wowed by Music Industry Settlement
The high profile row between CD-Wow and the British Phonographic Institute was resolved just two weeks before it was due to go to the High Court. The dispute centred on CD Wow providing CDs it had obtained at cheaper prices from outside the EU and sent them to its UK customers from its base in Hong Kong. As a result of this practice, CD Wow were able to supply CDs to its UK customers at cheaper prices, typically £8.99 for a chart topping UK album, while maintaining larger profit margins than its rivals.
The British Phonographic Institute (BPI) cried foul, feeling that the practice was illegal under EU law. CD Wow had vowed to fight the case, but in the end, director Philip Robinson had to give up stating that as a small business it would be financially imprudent to take a case to the Court of Appeal or the European Court of Justice. CD Wow will now add a £2 surcharge on CDs that it imports to the UK or Ireland.
Consumer groups have lamented the settlement, feeling that it will drive up the already unrealistically high prices of CDs on the high street. The BPI have, however, insisted that they will protect their copyright against importers from outside the EU. Cases against Amazon.com who have been selling CDs for lower prices than their UK counterpart, Amazon.co.uk and music download site Play.com have also been mooted.
BRIFFA Comment:
As EU law on intellectual property becomes increasingly harmonised, parallel imports between EU nations are now more difficult to stop. The BPI may, however, protect the prices of CDs sold in the UK which are seen by many as being unfairly inflated by preventing imports from outside of the EU. A similar case where Levi's Jeans sued Tesco for importing Levi's jeans from outside cheaper suppliers outside the EU was successful, and the BPI were likely to use that case as a precedent.
With their actions against parallel importers and music download sites, the BPI appear to be blaming the complexities caused by the Internet for a decline in the revenue achieved by music sales. Whether this is the case or not, the music industry needs to adapt to selling their product in the internet age.