Last week, I purchased Van Halen’s 1984, The Talking Heads’ Remain in Light, and Tom Waits’ Swordfishtrombones, fresh and unused on CD, for only $8.00 a piece at Manhattan’s Virgin Megastore. If I’d had a little more cash, I could have also bought about a dozen early Bob Dylan albums for the same price. Earlier this year, I scored tons of AC/DC, Police, and Elvis Costello albums for only $10 a pop at the same store. This sounds like a damn good set of sales, but actually the $8/$10 bin at Virgin has become a standard feature. And just when I’d almost given up hope.

You see, the music industry has fed consumers some pretty ugly broken promises over the last couple of decades. When the first compact disc was manufactured in 1982, it cost $30 and was an ABBA album (ouch!). I don’t know much about inflation rates, but that’s got to be the equivalent of $50 or $60 in 2007 dollars. But this was new technology, and as production increased and simplified, the costs would certainly go down. Which they did, to $25 and then $20 in the mid-’80s, and then sometime in the early ’90s, they hit the $13-to-$18 range and just stayed there. For those of us young rockers who were still waiting for prices to go down just a bit more before converting over from cassette tapes, we wondered what the holdup was. The costs of production continued to plummet throughout the ’90s and into the early ’00s, but the cost of albums to the consumer plateaued.

Well, anyone who was paying attention to album prices suspected that something was amiss, and the discrepancy only became more pronounced when packs of 50 blank CDs went on sale at Rite Aid for $10, and CD burners became a standard feature on personal computers. If you’ve been to see any local bands in wherever you live over the last few years, their demo albums (often made at home and sold exclusively at the pubs they perform in) almost always sell for $5-to-$8, and this is without any corporate sponsors. And the big-time acts really got into it starting in 2003, when individual songs became available for download from iTunes for 99 cents. Still, mainstream music albums, whether at Sam Goody, Borders, or Wal-Mart, remained at a hefty mark-up.

And then, just as we were all fine-tuning the technology for music fans to download, rip, and burn their own damn CDs, legally or illegally depending pretty much on the basis of personal moral codes, inventiveness and whim, suddenly retail prices have plummeted. Coincidence? Bitter pricks like Andrew Keen will insist that any Internet user who has ever downloaded a song is a soulless thief who is mercilessly putting artists out of work the world over, even if they buy everything legitimately from iTunes. The fault, Keen and his contemporaries insist, is ours, and we’re personally taking food out of the mouths of the hungry offspring of Warner Bros. employees every time we download a classic Devo song. This sort of corporate victimhood is pathetic at best, and damningly hypocritical when you look at the numbers, especially in the light of a report released by the Federal Trade Commission in 2000.

In an investigation of music pricing complaints throughout the 1990s, the FTC found that Universal, Time-Warner, Sony, EMI and BMG (the Big Five in the industry) had conspired to enforce a “Minimum Advertised Price” to all retailers, in effect pricefixing album costs at an artificial high starting in 1995. Essentially, it went down like this: the basic system of “it’s cheaper to make, so we’ll lower the price” that applies to things like Chinese-manufactured tube socks, was applied to music CDs by early-‘90s discount retailers (your Best Buys and Circuit Cities and whatnot). Prices briefly plummeted to around $10 an album, and this bothered the hell out of the Big Five. So, they conspired to institute the Minimum Advertised Price, and covered some advertising costs in exchange for retailers’ agreement to keep their prices over a certain minimum and halt the plummeting. The result: albums soon went right back to that $13-to-$18 range.

In the report, FTC Chairman Robert Pitofsky was quoted as saying, “The FTC estimates that U.S. consumers may have paid as much as $480 million more than they should have for CDs and other music because of these policies over the last three years [1997-2000].”

$480 million worth of overpriced albums in the late ’90s. I don’t know precisely what their math was, but if we estimate an average of $5 too much per CD, that comes out to 96,000,000 Van Halen albums that United States consumers were overcharged for.

Following the investigation, the FTC unanimously agreed upon settlements with the Big Five, which prohibited the practice of bribing retailers with promotional dollars in exchange for mandatory pricefixing on CDs. And the effect in 2001 was, as you might have expected, virtually nonexistent. Somehow, the rules had changed, but the prices to the consumer hadn’t. That’s to be expected in luxury economics, when the demand is consistent and the supply isn’t an issue. It doesn’t matter what the rules are, because there’s always another legal loophole to sniff out, and I’m sure their lawyers managed it just fine. If prices were ever going to go down, the consumer base needed to be able to exert a force as powerful as the force of the Big Five’s conspiracy. That balancing force was born with the release of Napster in 1999, and has been growing ever since.

In other words, maybe the net-haters in the music industry have a point, and online filesharing really has compromised their economic power. But, if the industry were still governed purely by the cost of production (with a reasonable profit, of course), wouldn’t the average album cost be around $8-to-$10 by now anyway? My guess is yes. My suspicion is that, far from putting artists out of business, online music sharers have simply forced record companies into unwilling fairness. If two armies of equal strength must live side-by-side, they won’t bomb each other into oblivion; they’ll sign a treaty. Apple’s iTunes is one such treaty; the $8 bin at Virgin is another.

And now that that’s settled, I, for one, will happily honor the treaty and buy those $8 albums in droves, because, frankly, my stereo speakers sound way better than my laptop speakers.