Letter: Compact disc prices: facts the select committee overlooked

Sir: It was refreshing to read an article (13 May) that reflected an objective view of the data on CD pricing. It is difficult for the industry to add to the body of available information, when the Select Committee's report, in my opinion, suppressed any evidence that did not support its own polemic. It is also the case that the arguments are complex and do not lend themselves to snappy headlines. Nevertheless, in order to redress the balance, here are the simple arguments we have now been making since the Consumer Association report.

We sell music, not formats. We are no more in the business of manufacturing plastic to sell at a premium than a motion picture company is selling celluloid: it is selling movies.

There are no excessive profits in the industry. A report by Coopers & Lybrand in 1990 revealed an average profit in the British record industry of 5 per cent. A reduction of pounds 2 or pounds 3 in the prices of CDs can only mean either reduced investment or job losses. British record companies have given British consumers the best value in the world in terms of the range of repertoire available in new talent.

If there is to be a Monopolies and Mergers Commission investigation, in spite of the fact that the Office of Fair Trading has already examined and cleared us once, then so be it. At least we will have the benefit of being examined by impartial and intelligent people who understand the concepts of marginal costing and basic economics.

Yours sincerely,

JOHN PRESTON

Chairman

BMG Records

London, SW6

13 May