Way back in 1993, a Best Buy opened on the lower East side of Albuquerque. They offered lower prices for electronic goods, videos and CDs. At the time, the only outlets we had for music were local record stores (where I usually shop), Hastings and The Wherehouse. Best Buy offered new CDs for $10.99--almost a third off of regular prices at $14.99 to $16.99. A year or so after Best Buy opened, another discount music store (affiliated with Musicland, kings of high music prices) opened right next door to Best Buy. There was suddenly a war to see who could offer the lowest price for all those hit music CDs, books and videos we entertain ourselves with.

But then, suddenly, the war stopped. Quickly and quietly these stores had a "low" price of $12.99 for some releases and $13.99 for most. Best Buy's competition folded soon after and there was little difference from store to store for the price of music. Circuit City opened. The Wherehouse was bought by Blockbuster and then Blockbuster changed the name back to just Wherehouse when they realized that the brand name Blockbuster was bad news for a music store. But no new pricing war ensued. You couldn't get a cheap CD anywhere unless you bought used CDs.

This last week an explanation for the lack of music price competition was given by the FTC: the five big music companies paid incentives to large music chains to have minimum pricing norms set. The music chains got money for advertising, the music companies made sure the rest of us pay at least $13.99 for the latest set of dolphin screeches from Mariah Carey.

Over five years the Big 5 record companies made an extra $480 million in profits with what was called "minimum advertised price programs" by throwing a little bit of lubrication cash on the music outlets.

The settlement says that these programs will be dropped, but there is no admission of wrong by the record companies. They might, however, have to pay a small fine: $11,000 apiece. So in exchange for conceding nothing, making $480 million in extra profits and keeping CD prices inflated for five years, they have to pay, in total, $55,000.

This could have gone on for quite a while if it weren't for the proliferation of CD burners attached to computers. Five years ago the cost for these burners was prohibitively high and a recordable CD was around $5 a pop. Now you can get a pretty speedy little burner for your Mac or PC for around $250 and recordable CDs are just a dollar a piece (sometimes even less if you buy a spindle's worth without jewel boxes).

Someone at the FTC put two and two together and realized that producing music CDs doesn't really cost that much--which is what we were all told way back in the 80s when these little plastic discs came out in the first place. Cheaper, no flipping of sides and they'll last forever. Okay, so they don't last forever, old music CDs are worn down in different ways than vinyl. While vinyl creates skips and nicks, an old CD gets quieter and develops scratches that make it hard for the laser to read. But the cheaper thing was right. And now a days, anyone can burn a CD for way cheap, but it still costs $15 to buy a prerecorded music CD. Even though audio tapes are harder to produce, more expensive and the quality is worse, they retail for about a third less than CDs.

So what's next? Will this judgment change the cost of CDs forever? In the age of downloaded music, will anyone care? I don't think there will be a dramatic lowering of music prices for a while. Let's take the example of consumer video and compare:

Until this year, a new movie on VHS cost around $15 to $25 for what they call "sell-through" titles. Sell-through means that it is cheap enough for regular people to buy it--rental only titles cost over $100 a pop. In the new age of DVD video (which cost from $20 to $35 for new titles), VHS prices have dramatically been reduced. New titles on VHS are anywhere from $5 to $20, but most are right around $10. Expect these prices to depreciate slightly, along with the price of DVDs.

But what of the music CD? We have to wait for the next big thing, and MP3 isn't it. The compression makes the quality of sound much less than that found on regular CDs, and musician Neil Young has even said that no one should have to pay for crappy MP3 compressed songs. Until downloaded music is at least on par with prerecorded CDs and take the regular person less than an hour to download, there will be little done to lower the price of CDs at the retail level.

All the agreement this week says is that music buyers have been screwed for the last five years, and you can bet your sweet patootie that we'll keep getting screwed in the future.

Matt Worley has been on a little music kick as of late and eagerly anticipates the release of the new NOFX in June.