Changes Sought In French Music Biz: Gov't Contemplates Fixed Prices

PARIS‹The French government has begun its inquiry into the feasibility of fixed retail prices for records here. On July 24, Finance Minister Dominique Strauss-Kahn and Culture Minister Catherine Trautmann signed a document commissioning a study of the concept. The move follows concerted lobbying by the indie labels' body UPFI (Billboard, July 18).
The two inspectors who will conduct the inquiry will be named before the end of August; one will come from the finance ministry and the other from the culture ministry. Their joint report is due by the end of the year.
"This is an important step forward," says culture ministry adviser Dominique Chavigny, "because even though Culture Minister Trautmann was really convinced of the need for this study for cultural reasons, the finance ministry has finally accepted the idea of working with us on this question."
Chavigny adds that both ministries have been spurred into action by the fact that supermarkets now account for around 60% of record retailing in France. That concentration of power has hugely damaged the independent retail sector.
One of the inquiry's objectives will be to establish the concentration of record distribution and retail in terms of both new albums and back-catalog items. It will also seek to define consumer expectations and will review the level of emergence of new French talent over the last five years.
The inspectors will then examine the effects of letting record companies fix the retail prices for their products and the possible implications of similar measures, such as setting minimum prices or minimum margins for the retailer. This will be done in the context of the single European market, where records move freely between the 15 nations of the European Union, as well as in light of growth in online sales.
However, according to a source in the culture ministry, "the finance ministry will never accept the idea of fixed prices, particularly because it would be very difficult in the context of liberalism and EU." Adds the source, "But we can persuade the finance ministry to accept the minimum margin on the record, and this measure should not contravene European Commission directives."
While UPFI is committed to the concept of fixed prices, its major-label counterpart, SNEP, remains undecided.
"The problem is that leading executives have different opinions on this question, and all the differing arguments seem sound," says SNEP GM Herv Rony. "The two main majors [PolyGram and Sony Music] are against fixed prices, but the other majors seem to be OK over doing something in order to help the market to be less concentrated."
SNEP has ordered its own market study, the results of which will be revealed before the end of August. However, according to a source, "this study will not reveal any new advice in favor or against the fixation of record prices."
Observers suggest the profession is really divided about the price question, noting the setting of the minimum margin could be the consensual solution.