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Unauthorised recordings on compact discs can be bought for as little as $4

ELLEN FANNING: Don't be surprised if the next time you buy a compact disc it costs you as little as $4. That was the price of the one you just heard. A price war has been raging for some time, now, but the product is a little unorthodox. The cheap CDs are clearly marked as unauthorised recordings and the company which manufactures them has fought a successful court battle with Sony Music and Michael Jackson for the right to sell them. Apple House Music is now waiting a final decision on the matter in April, but until then, it's reporting sales of up to 20,000 CDs a day. General Manager, Noel Forth, joins us now in our Adelaide studios.

Mr Forth, even without paying royalties to the artists, how do you manage to sell a CD for $4?

NOEL FORTH: Well, we do actually pay a royalty to the song writer and, in most cases, the song writer is the artist, so when that statement is made - and it's been made a number of times - we shift in our seats slightly because it's obviously aimed to tell the consumer that no money is being paid. But in accordance with Australian copyright law, we are paying appropriate royalties to the song writer which - in the case of U2, Madonna, whoever - is mostly the artist.

ELLEN FANNING: But it is unauthorised?

NOEL FORTH: Absolutely. As is an unauthorised biography, for example, it's done and released without the permission of the person who is the artist.

ELLEN FANNING: So how do you offer them for $4?

NOEL FORTH: Well clearly, we're running on a very small profit margin which is obviously not normal for the music industry.

ELLEN FANNING: Can you keep that up?

NOEL FORTH: Yes. My word, we can.

ELLEN FANNING: Your major competitors seem to think you'll put yourselves out of business if you do.

NOEL FORTH: Well, they can say what they like but, I mean, we're running more effectively and more profitably now than we ever have before when we tried to cling on to a $19.95 price tag. Obviously, we're selling more. The profit margin is obviously a lot less at $4 retail than it was at $20, but the quantity we're selling is incredible.

ELLEN FANNING: Why are your competitors selling CDs for $30?

NOEL FORTH: Well, there is a situation whereby the Australian market - we've been talking with a number of people, or you have been on air for a long time, about freeing up market for competition and so forth. Basically, if a person wants to buy a CD you have to buy it from the Australian company which means that you pay $30 or thereabouts. Now, if they were to allow parallel importing - importing of the same CDs from overseas - we might see some drop in the price but you won't see it while the market is protected like it is now.

ELLEN FANNING: Well, if that protection is stripped away, what would the price be?

NOEL FORTH: I don't know. I'm not exactly sure - nobody can be - but I know I just recently went to America a couple of times and the prices there in most of the chain stores of $13.99 is very common of new releases. And I know that there's a difference in the Australian dollar to the American dollar but, quite frankly, the dollar has shifted quite remarkably in the last few months and there's been no shift in the Australian price of CDs, so I don't see that that bears any resemblance to any sort of market conditions at all. If the dollar was equal tomorrow, I guarantee the price wouldn't shift from its current level in Australia.

ELLEN FANNING: But does your whole enterprise have a limited life span given that copyright laws seem to dictate that you can only sell unauthorised live recordings which were made up until the middle of 1992?

NOEL FORTH: Yes. Well, see, that's another fallacy. People keep coming up with this middle of 1992 figure. It's actually 2 January, so whoever said that in the first place has got their facts wrong which, unfortunately, tends to occur. I mean, statements are made by people from the outside of the industry, so it's not as simple as that. It is very, very complicated. It's not everything from 2 January 1992 either. Certain artists from certain countries are still legal now.

ELLEN FANNING: And do you have a limited supply, though, of these unauthorised recordings?

NOEL FORTH: No. We have an enormous supply.

ELLEN FANNING: Through to what - baroque recorder music ? I mean, does it cover all ....

NOEL FORTH: Well, it does, but we'd only choose to record contemporary pop music even dating back to the early '60s - Beatles, Rolling Stones, right the way through to the U2s and the Madonnas from today. But we have not put out such a thing, for example, as country music and so forth. It's just supply and demand - whether or not the public wants it. And clearly, the public are the winners in this situation. They're buying these in enormous quantities. No one can say that the public doesn't like it.

ELLEN FANNING: And how many are you selling a month, just tell us?

NOEL FORTH: A month? Oh, I don't know - in a good month, about 200,000.

ELLEN FANNING: Mr Forth thank you.

NOEL FORTH: Thank you.

ELLEN FANNING: Noel Forth, the General Manager of Apple House Music.