NVIDIA Dictates Advertised Video Card Pricing
Did you wonder why your GeForce purchasing experience may have changed? Have you wondered why you might have seen all cards priced the same or not priced at all? According to this DIGG story, it is all about Nvidia’s “UMAP.”
You may recall how this policy was used by the record labels to control the discounting of music. See The Great Music Bubble of the 1990s.
Now, it seems that NVidia is putting into place a similar practice. (NOTE: the big difference here is that NVidia and AMD are NOT in collusion – as alleged by the FTC when it went after the major labels).
What did the labels do you may ask? In the 1990s the Federal Trade Commission and 43 states went after the record industry for violations of antitrust laws – alleging CD/album price fixing. (The industry settled the allegations without admitting to violations). The FTC alleged that the music industry engaged in acts that unreasonably restrained competition in the market for prerecorded music through the adoption of “Minimum Advertised Price” (MAP) clauses in their cooperative advertising programs with retailers. The FTC stated that a retailer seeking any cooperative advertising funds was required to observe the distributors’ minimum advertised prices for all media advertisements (even those that were entirely funded by the retailer itself). This included in store display advertising. If a retailer breached the MAP severe penalties were imposed on the retailer such that “even the most aggressive retail competitors would stop advertising prices below MAP.” (All of this according to the FTC). A Wired story from 2000, said that the “only place lower prices could be displayed was on a small sticker on the CD case itself.”
The FTC said that, at the time the MAP policies were adopted, a retail price war had broken out “that had resulted in significantly lower compact discs prices to consumers and lower margins for retailers. . . Through these stricter MAP programs, the distributors hoped to stop retail price competition, take pressure off their own margins, and eventually increase their own prices.” The FTC concluded that the MAP policies were effective and that each distributor was able to raise their wholesale prices. (The distributors were BMG Music, EMI Music, Warner-Electra-Atlantic, Sony Music, and Universal Music Group).
Anyway, in this case it is just a single business attempting to prevent the slide of the prices for its products through the threat of withdrawing support for advertising.
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