IRMA Confirms Action Against CDWow

IRMA Chairman, Dave Pennefather, has confirmed to hotpress.com that the organisation is pursuing legal proceedings against cdwow.ie to force the operation out of the Irish market.

“A court order has already been given in Germany, an action is underway in the U.K. and we have one pending here,” Pennefather, who is also Irish MD of Universal Music, told hotpress.com. “It’s taken a while because of the difficulty we’ve had contacting the principles in the operation – but it is happening. As far as we’re concerned, what they’re doing is illegal.

“From what we can gather, they’re sourcing the stuff in sweatshop economies, where salaries may be no more than 10 euro a week. They are buying CDs in countries where product is cheap, and they’re selling it into Europe without paying VAT. They’re also avoiding paying import duty. Of course it’s hard for legitimate retailers to compete with them on price.”

Pennefather’s verdict is backed by Denis Woods of Warner Music.

“They don’t pay VAT. They don’t employ Irish people. They don’t contribute in any way to the Irish economy,” he says. “There is no way that you can legitimately compare them to people like HMV and Golden Discs, good retail operations who have been coming under a lot of unfair criticism from the likes of Joe Duffy on RTE over the past week.”

In relation to price differentials between retailers, a topic which has occupied considerable media attention in recent days, Woods is dismissive of the idea that people are being ‘ripped off’.

“On the contrary, the fact that prices are different is a good thing,” he says. “That’s the cut and thrust of a competitive market at work. Sony may do a deal with a retailer one week, that allows them to sell their product cheaper. We’ll do a different deal with another retailer. That’s the way it works because we’re all fighting for market share and for sales. It amazes me that people comment on the radio about these things who seem to have so little understanding of how retailing works – they’re just totally ignorant about it but they still feel free to pontificate.

“I also wonder why it’s always CDs that people focus on,” he adds. “Why not cameras? The prices here are dearer than they are in the US, often by as much as 50%. They also vary widely from retailer to retailer. If I see a Canon G5 on sale for 900 Euro in one shop and 1,000 Euro in another, I don’t think the guy who’s charging more is ripping anyone off. I know that the guy offering it at the lower price has been able to deal based on volume or marketing spend or whatever. That’s the way retailing works, whether its clothes, watches or any consumer product. And it’s the same with CDs and DVDs.

“Besides, if prices were all the same, we’d be accused of operating a cartel. I can assure people that HMV are not ripping people off, or Golden Discs. The truth is that, at the moment, retailers all over the world are going to the wall because margins are too tight. There is no rip-off.”