advertising pricing) which therefore acted as a price floor. This still did not solve the problem of overcharging the consumers. As you can see in graph B, the price for CDs could no longer decrease.After the technology of CD burners and Internet free downloading music, people began to realize that they could still receive the music they wanted and pay less for it. As USA Today said in their article HP to Pay Antipiracy Fee for CD Burners, approximately 500 million CDs are pirated annually by people creating their own CDs from downloads off the internet (this doesnt include burning someone elses CD with the burner). Also, as Jefferson Graham quoted Chris Zingg from the article Napster Users Wait, and Download from USA Today magazine, Its not free downloads that have hurt sales for many retailers, but the ever-increasing cost of CDsdownloading is a reaction to that (price remaining high over the years). Finally the MAP has been dropped in order to stop overcharging the consumers and CD prices were to drop by almost five dollars. Since 1997, consumers have been overcharged a total of $480 million dollars because of the MAP (Lieberman). However, since CD burners and the availability of free music from the Internet has become so popular, the prices could not decrease and it apparently did not matter if the MAP was decided to be removed. Also, since the price stayed the same for so many years, the supply curve has become almost completely elastic, which means even if the demand decreases it would not affect the price as you can see in graph C. The total revenue has also decreased because there is still a lower demand for store sold CDs. In conclusion, if the CD market continues charging so much for CDs, the market will slowly become lower, which will affect the musicians income and the stores income as you can see in graph D. Supply will definitely decrease because they are beginning to substitute store bought CDs with home-made CDs which w...
