The row between online retailer CDWow and the UK record industry over the sale of cheap CDs on the web has been settled just two weeks before the landmark case was due to go to court.
The British Phonographic Industry and CDWow today announced they had reached a settlement over claims that the online retailer was breaking the law by selling CDs from the Far East.
The reason that CDWow was able to offer chart CDs for £8.99 and under was because it bought them at lower wholesale prices in the Far East and sold them directly to consumers. The BPI argued that CDWow was breaking the law by importing CDs from outside the European Economic Area and selling them at cheaper prices than UK retailers without the consent of copyright owners. However, CDWow in turn argued that the company agreed deals with the record labels concerned overseas and didn't actually import the CDs, merely posting them individually to the UK from the Far East. Under the settlement announced today, CDWow has backed down and agreed not to sell CDs that have first been placed on the market outside Europe to UK and Irish customers.
The BPI chairman, Peter Jamieson, announced, "I am delighted that we have been able to resolve this case on agreed terms without the need for a trial.". The BPI is also looking at taking similar action against Play.com and US web retail giant Amazon.com.
The settlement is likely to hit CDWow's sales because it will now add a £2 surcharge to buyers from the UK and Ireland, explaining that the extra cost is as a result of the BPI's action. But while the major record labels have won their battle against CDWow, many industry insiders believe that they will come under increasing pressure to reduce the retail price of CDs in the UK in any case. As legal download services offering albums from £6.40 become more popular, high street retailers are likely to put more pressure on the labels to slash prices.
Already, Universal has agreed to cut the price of CDs by 25% in the US, and the UK Consumers Association is believed to be investigating the possibility of taking the UK's major labels to court over the price difference between CDs in Europe and the rest of the world.
Even Amazon.com could be drawn into the row because it sells CDs to UK customers that are not available in this country, undercutting traditional high street retailers. The BPI could argue that they are acting without the consent of UK record companies
The British Phonographic Industry and CDWow today announced they had reached a settlement over claims that the online retailer was breaking the law by selling CDs from the Far East.
The reason that CDWow was able to offer chart CDs for £8.99 and under was because it bought them at lower wholesale prices in the Far East and sold them directly to consumers. The BPI argued that CDWow was breaking the law by importing CDs from outside the European Economic Area and selling them at cheaper prices than UK retailers without the consent of copyright owners. However, CDWow in turn argued that the company agreed deals with the record labels concerned overseas and didn't actually import the CDs, merely posting them individually to the UK from the Far East. Under the settlement announced today, CDWow has backed down and agreed not to sell CDs that have first been placed on the market outside Europe to UK and Irish customers.
The BPI chairman, Peter Jamieson, announced, "I am delighted that we have been able to resolve this case on agreed terms without the need for a trial.". The BPI is also looking at taking similar action against Play.com and US web retail giant Amazon.com.
The settlement is likely to hit CDWow's sales because it will now add a £2 surcharge to buyers from the UK and Ireland, explaining that the extra cost is as a result of the BPI's action. But while the major record labels have won their battle against CDWow, many industry insiders believe that they will come under increasing pressure to reduce the retail price of CDs in the UK in any case. As legal download services offering albums from £6.40 become more popular, high street retailers are likely to put more pressure on the labels to slash prices.
Already, Universal has agreed to cut the price of CDs by 25% in the US, and the UK Consumers Association is believed to be investigating the possibility of taking the UK's major labels to court over the price difference between CDs in Europe and the rest of the world.
Even Amazon.com could be drawn into the row because it sells CDs to UK customers that are not available in this country, undercutting traditional high street retailers. The BPI could argue that they are acting without the consent of UK record companies
