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February 20, 2007

CD-Wow: music industry needs to manage public perceptions

Leading UK record companies have demanded that the high court fines Music Trading Online - operator of CD-Wow - for breaking a promise it made in 2004 to stop illegally importing CDs into the UK. While there may well be a legitimate case to be made against the retailer, the PR being generated is doing the beleaguered UK music sector no favors.

By CBR Staff Writer

CD-Wow has been accused of illegal importing.

This latest action, led by the British Phonographic Industry (BPI), follows an earlier case in 2004 when CD-Wow agreed to stop importing CDs for sale in the UK, sourced from outside of the EU. Previously, the Hong-Kong based retailer would source product in the Far-East, where music copyright is cheaper, to then sell in the UK at highly competitive prices while maintaining a healthy margin. Copyright law prevents such practices without permission from the owner of the intellectual property rights.

The retailer has not disputed breaching the agreement, but has denied any foul play, claiming that any breach is merely down to human error. And, Philip Robinson, a major shareholder in the company, has agreed to pay GBP50,000 to settle the claim and has apologized to the industry.

The fact that, in the eyes of many consumers, CD-Wow is being targeted for selling cheap CDs – whether illegally sourced or not – is not producing helpful PR for the UK music industry. By and large, UK consumers have little sympathy for record companies and many believe it was the previously inflated prices charged for CDs that are the root of the sector’s current structural problems. Poor perceptions of prices are blamed by many for the proliferation of pirated CDs and the rise of digital downloading, which have hit the UK market far harder than other EU nations. Last year music retail sales in the UK are estimated to have fallen by 5.2%, making it the country’s worst performing retail sector.

The issues facing the UK music industry will not be solved by retailers and record companies locking horns. Co-operation and collaboration are required to tackle the growing piracy epidemic and to change the consumer mindset, which still sees the music industry as part of ‘rip-off Britain’ – whether that is justified or not.

Source: Verdict Research

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