From a free market perspective, things happened just about “as they should have.” Big chains were able to outcompete smaller chains and mom-and-pop stores because they had the buying power to get discounts—and because CDs weren’t the way they made most of their money, the chains could practically give them away to get people to come in and perhaps buy other things.
In the end, this led to the dark days before iTunes (as Piver says in comments below the article) “pulled the whole situation out of the toilet”—which suggests that in terms of maintaining the ability of all content creators to create and distribute their content, perhaps the free market might not be all it’s meant to be.
And Piver sees the start of the same destructive pattern of behavior in Amazon’s $9.99 e-book loss-leaders.
Whether you agree or disagree with the points she raises, the article provides some food for thought—and unlike John Scalzi, Susan Piver seems willing to engage in dialogue with people of opposing viewpoints in the comments. TNH has some thoughts to add in the Making Light entry as well.
I still dislike the anti-consumer implications of the agency model, but I find it hard to argue with the music industry’s example. It is interesting to note that the music industry tried to take control of the prices for which their records sold as well, but were not as successful at it as it appears the publishers are going to be.