Marketplace: News Archives

Wednesday, September 6, 2000
(Jump to the rundown)

It's Wednesday, the 6th of September. I'm David Brancaccio.

The key word in the next sentence is "willfully." A federal judge today ruled that MP3.com "willfully" infringed on music company copyrights when it distributed music via the Internet. The actual punitive damage award will be set later this year, but today ruling means MP3.com might have to pay as much as $25,000 per compact disk to Universal Music Group, part of Seagram of Canada. Since MP3.com had 10,000 Seagram disks on-line, that could be a very big penalty, as much as $250 million. Eban Moglen, a law professor at Columbia University, says he believes the judge is pushing hard for the companies to settle their case.

Moglen: "It certainly enormously increases your leverage in a price negotiation to be able to argue that the other guy is otherwise engaged in intentional copyright infringement and you are going to shut him down and take away his profits. That's a pretty good bargaining strategy."

Moglen says today's ruling does not distinguish between people who used the Internet to download music royalty-free and those who were making digital copies of disks they already paid royalties on when they bought them the first time down at the record store. This, he says, will be an issue for vigorous debate if the case is appealed.

Henry Ford sold cars for 20 years before he let a few customers buy on credit in 1923. But a fellow named E.M. Morris figured this out five years earlier, when he began lending money to buy cars from a garage in Indiana. The financial services giant Citigroup today said it's buying the company Mr. Morris started for $31 billion in stock. You may not have heard of Associates First Capital Corporation of Texas, but it's the top consumer finance company in the country and makes a lot of money off interest payments on loans for cars, trucks, RV's, heavy equipment and corporate fleets. It runs the credit card operations for brand names like Texaco and J.C. Penney. It's pioneered consumer lending in Mexico and Japan. But a key question here is why Citigroup would want to pay $31 billion for a credit company when interest rates are rising and cut-throat competition is eating away at the profits of many of the players in the consumer credit business. Greg McBride, a financial analyst at Bankrate.com, says the answer lies in Associates First Capital's size.

McBride: "For those well diversified financial services entities, they're well positioned in an environment like we've been in in the past six months. Certainly with regard to credit cards and the way that's been going with risk-based pricing and being able to tap into various different markets. That's something that's been a benefit and served to grow those earnings not only now but in the future as well."

Associates shares rose 39 percent today. Citigroup's fell five percent. Today the Chicago Board Options Exchange said it's looking into some suspicious options trades late last week involving Associates First Capital and Citigroup. The trades were placed by Salomon Smith Barney, which is owned by Citigroup. Investigators want to know if someone with inside information about today's deal was trying to set up a big score.

In France, truckers protesting high fuel prices have blocked highways, and nearly 80 percent of TotalFina's gas stations outside the capital are dry. The question now is: How will testy Parisians, who pay the equivalent of four dollars a gallon at the pump, react when a strike hits there tomorrow? Marketplace's foreign editor Karen Lowe takes a look at how the French reached this breaking point.

Lowe: "You heard David right. They are paying four dollars a gallon in France. While Americans would find that outrageous, folks in Britain are paying roughly the same for the gas but there haven't been strikes. So what's happening? Roselyn Hyams of Radio France International says the unions in Britain and other countries have lost their punch. But in France, they are still a force to be reckoned with. And another thing:"

Hyams: "The labor organizations are not going to usually start such a big movement at the time of the summer holidays. The whole country and the whole economy starts getting going again in September when kids are going back to school and they're creating a lot of disruption with school services, school busses, which is something that effects the man in the street."

Lowe: "The real tests may come tomorrow when taxi drivers are expected to go on strike in Paris. Last week, striking fisherman forced the government to lower taxes by 15 percent. And if it worked for the fishermen, why not truckers and taxi drivers? If France buckles, it will be in a precarious position with the European Union, which considers these tax cuts as unfair subsidies. And before you get smug about what you're paying for gas compared to the French, consider this. Oil prices just hit another post-Gulf War high of $34.95 a barrel. From the foreign desk, I'm Karen Lowe for Marketplace."

And that's the top of our news for Wednesday. Today the Dow Jones Industrial Average rose 50 points or 0.4 percent. But the Nasdaq fell sharply today, down 129 points or 3.1 percent.