'Grey imports' win for industry hits CD prices

The row over so-called 'grey imports' of CDs took a major step towards being settled this week, with the British Phonographic Industry (BPI) and CD-WOW settling their differences out of court, and the music seller agreeing to stop selling CDs imported from outside Europe.

CD-WOW had been buying its stock from Asia, among other areas, and selling it to consumers in the UK at prices far lower than many of its high street competitors, with an average chart CD costing around £7.99.

With the case due to go to court in around two weeks, Philip Robinson, co-founder of CD-WOW, told silicon.com that commercial reasons had driven the company to settle out of court with the BPI.

Robinson said that the UK and Ireland were only "a percentage of [CD-WOW's] worldwide market" and that the company "could cope with" the impact of the settlement.

The decision isn't ideal for consumers, said Robinson. "For UK and Ireland consumers to have their wings clipped over what they can and can't do on the internet is outrageous...I don't see anyone doing well out of this – [CD-WOW's sales] benefit the artists and benefit the industry. Now no one will be a winner and the UK consumer will be the loser," he told silicon.com.

While the BPI might be patting itself on the back on its victory, the UK consumer is unlikely to be quite so impressed about the settlement. CD-WOW will now be buying its CDs from inside the more costly European Economic Area, pushing the prices up by at least £2.

The BPI is currently investigating Amazon.com and Play.com for similar business practices. CD-WOW is also fighting a similar battle over grey imports in Germany, but believes that the situation in the UK and Ireland won't set a precedent in other countries.

The BPI's victory may be bad news for music fans, but given that the judgement only affects the selling of CDs, anyone buying computer games or DVDs won't see any rise in prices. However, Robinson added that CD-WOW would be working with suppliers in Europe to try to secure better deals and reduce the surcharge, which previously the importer had been unable to do because of the litigation.