Gernb1, the concepts associated with market structures are not predicated on contemporary events and Power is foolish to invoke them. Economics is not just my major; I'm an economist. In fact, I have been teaching the subject and practicing it extensively for the last 30 years.
The reason the prices appear to be fixed is because the decision making of its firm in the oligopolistic market is strategically associated with what it perceives its competitors will do as a response to its every move it makes. That's why in analyzing companies in this enviroment we always use, and I might say very successfully, the tools that the theory of games provides us. Now, if the products are close substitutes- as they usually are e.g. cereals as you suggest- the oligopolistic firm knows that if it will increase the price, competitors will not follow and its market share will decline. It also knows that if it will decrease the price, everybody will follow and therefore its market share will not increase but everybody will be worse off. Therefore, prices stay put for a long time and appear to be fixed. This behavior is well established over time and the US courts do not consider it as evidence of price fixing and collusion, unless something else transpires.
Now, the main point of my argument was and is that the record companies are not oligopolists but instead they are monopolists and their behavior is both suspect as well as subject to the antitrust laws. This is as far as we should take this.
