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Can a commercial CD be made and sold for only $9.99?
Old 26th December 2005
  #61
Gear Maniac
 
Anonymatt's Avatar
 

Quote:
Originally Posted by Bob Olhsson
The only solution is better recordings and packaging to create a product that people consider well worth their 15 bucks.

Somehow, this thread got coughed up.

The first time I read Bob's statement (months ago), I didn't agree with it. Now I believe I do.

I buy three CDs a month. This is the only way I obtain music. Even with iTunes around, I barely ever get the whim to buy music. It only seems to happen when I'm walking past the Virgin Megastore in Union Square. So, I walk in there and I buy whatever strikes my fancy at that moment. $15 is a lot of money to me. I make $10 an hour and my share of the rent's $560. Everytime I plop down $15 on anything, I briefly consider the mental image of myself on a treadmill for an hour and a half. Still, I spend money on all sorts of crap I don't need, records being one of them. And it's NICE to buy records.

1. I'm buying something. Even though I hate spending my money on anything but paying off credit cards, I love buying things. I think it's a disease. Even if it's a pack of gum, my heartrate goes up just a little bit.

2. I get to rip something open. It's like a little Christmas.

3. I don't have to wait for my friend to loan it to me. This is the major dilemma with copying. "Oh, sorry, I forgot ______. I'll bring it tomorrow."

4. You get the neat stuff the CD comes with. Often it's a DVD. Sometimes the notes are worth it.

5. When people visit your home, they can inspect your CD collection while it's on the shelf (not just in some book) and make easy conversation with you.

All this is worth it to me. But above all, if you told me "Dude, here's this record, man, and you can't listen to it until you buy it, but I've got a time machine and future-you's digging it as hard as you dug OK Computer . It's $200," I'd probably spend $200 on the mystery CD. Sometimes, they do manage to fit more than $15's worth of "content" on there.
Old 26th December 2005
  #62
Gear Head
 

I would also agree with Mr. Ohlsson statement. Problem is not in pricing of the CD. Some new ABBA-s would surely sell like hell, even for $20.- because people would like to have it. In similarity, Britney, BSB and N'Sync albums (whatever you think of them) were selling in tons without ever raising question about price. Because teenagers simply wanted to possess that music. It is abit frustrating for other not-so-commercial artists, but it is reality. They can always record their own music and give it for free, if they are inclined to (but they will also need to explain decision to their wives).

Fact is, peope have more entertainment channels and lowering price wouldn't raise demand. Only making (commercial) quality music that people want to posess will.

I wonder how many professionals here vote for lowering price of CD. It means less money for marketing, thus less sold CD's, less money to pay studios, less artists who will pay recordings, producers etc. In fact, it means lowering living standard for people involved in music business. Since music making is sophisticated and demanding profession, this wouldn't be fair. Interesting how nobody ever raised same questions for, let's say, lawyer services which are largely overpriced.

I really don't see CD price as reason for crisis in this industry.
Old 26th December 2005
  #63
Lives for gear
 

consumers that buy CDs will always buy them at the current prices.

people that file share and download cds will never by them even if they were $2/cd retail.
Old 26th December 2005
  #64
Gear Addict
 

Quote:
Originally Posted by DC11
Maybe I'm crazy, but $9.99 looks alot less then $10.00. It's more true with big items. If I saw a console for $49,999 instead of $50,000 my eye and mind jump to the #4, and think it's less.

I'm ********
Anyone who really sees $9.99 as cheaper than $10 should probably not do the accounting for their business. I bet the same people who see this also see God.
Old 27th December 2005
  #65
Lives for gear
 

a little OT here,

but here's what I hate about cd pricing;

the good stuff always cost more!!

A cd with Britney or Mariah or fuc'kin Pussy cat dolls can cost five dollars for what I care,

I recently picked up a couple of Leon Ware cd's from amazon.com, and it cost probably thirty dollars per cd.

Infinitely more enjoyable to listen to,

but it's expensive having good taste!
Old 27th December 2005
  #66
Lives for gear
 
Synth80s's Avatar
Quote:
Originally Posted by dagg
I wonder how many professionals here vote for lowering price of CD. It means less money for marketing, thus less sold CD's, less money to pay studios, less artists who will pay recordings, producers etc. In fact, it means lowering living standard for people involved in music business. Since music making is sophisticated and demanding profession, this wouldn't be fair. Interesting how nobody ever raised same questions for, let's say, lawyer services which are largely overpriced.

I really don't see CD price as reason for crisis in this industry.
I disagree and not because I don't want to see the people on these boards make a living. I think the cost structure imposed by the entrenched oligopoly of media companies and the subsequent barriers to entry in the music industry are responsible for $18.99 CDs. And CD prices, especially in the age of free (albeit illegal) downloads as competition for the unscrupulous, are at least partially responsible for the decline of music sales.

Simply stated, there are too many people/entities being paid too much along the CD chain, most of them having little to do with the artisitic portion of the end result. I realize that, to some extent, this is no different than most other consumer-oriented products, but most other consumer-oriented products originate from companies and their employees (think toaster oven or PC). Saleable art originates from artists who, while under contract to record companies, are not employees of the media industry.

Follow me here: the majority of the talent behind a CD and the primary reason people want to buy the CD derives from the effort of artists, producers and engineers. Most of these people do not work directly for the record companies, but the record companies and distributors take more than their fair share of each CD. They are allowed to do so because there are too few means to promote a CD aside from those owned by the same entrenched media companies: radio, film, video games, MTV, etc.

It's clear that these media companies are competing for every dollar, but they are not doing so with the efficiency of a company like Dell or McDonalds. And before anyone jumps down my throat for comparing music to a PC or a burger, remember that the people who run these companies and their shareholders *DO* view music as a commodity product like a PC or a burger.

That said, why have DVD prices continued to come down while CD prices have gone up over time? And why has this happened at the same time in which movie budgets are skyrocketing, album budgets have been reduced and home studios are lowering the cost of production? The recent layoffs at EMI, Time Warner and Sony are signs of what is to come: media companies are leaning down trying to make money on cost structure efficiencies (bottom line) at the same time that revenue (top line) suffers.

And there's the other big problem that everyone seems to agree upon: as long as media companies continue to treat music as a consumable commodity like a toaster oven, PC or a burger, the art (or "product" in their view) will suffer and sales will continue to decline. That said, I think the quality of the music is what will sell more records, not the quality of the format. SACD is incredible and I'm behind it 100%, but it is also a dying format with the possible exception of clasical enthusiasts. Audiophiles are trumped by those seeking portability and convenience every time.

I strongly believe that competitive forces should be driving the price of CDs down, not up. This alone will not solve the crisis of falling revenue, but it could help ease the inevitable transition to the future of the music industry as "a collection of profitable niche markets." I believe that the music industry, through efficiencies in distribution and other components, will eventually provide a cost structure for a profitable 100,000 CD releases; a cost structure where the people who deserve to profit can, even if not on the massive scale that media companies currently and unrealistically hope for every quarter. That may mean that the current media companies and their shareholders are no longer interested in participating (their money perhaps being more easily invested in energy stocks and the like), but the music industry won't die even if the current media companies die or divest. I predict 10-20 years of further pain before the rebirth of a smaller, more artist-oriented industry.

-Synth80s
Old 27th December 2005
  #67
Lives for gear
 

LPs were starting to go for $7.99 list price in 1980. Put that into the Inflation Calculator and you will see that that would be $20.39 today. From that perspective, $18.99 for a CD ain't bad.

But, consider the fact that a CD package costs relatively less to manufacture today than an LP package did then. And, the bulk of the retail price of a CD goes to the retailer - that's why BB, CC, and W-M can sell CDs for $7.99 and still make a small profit, and the real reason why independent record stores can't compete, and can't stay in business in some cases. These stores discount discs to bring customers in the store, and they are comfortable with making a small markup per CD because they do it with so many other products.

Quote:
The only solution is better recordings and packaging to create a product that people consider well worth their 15 bucks.
- Bob O. speaks the truth. The way I see it, like Evian selling water, CompUSA selling air, etc., (lots of stuff that is available at no cost gets re-packaged and sold at a profit with the right marketing), the music industry has to create a more compelling product.
Old 28th December 2005
  #68
Here for the gear
 

One thing I haven't seen mentioned is the fact that DVD's cost between $13-22. To a consumer (like me), I know it costs _way_ more to make a movie, and I see a 2 hour movie with all the extras as having more value than a $15 cd with 2 or 3 really good songs and some filler. Granted I still buy a lot of CDs, but I am the exception these days. Sure, make the arguement that movies made their money in the theater and the rest is icing, but most people don't see it that way. Its about the value of what is in your hand now and what the consumer sees as a fair price. Most people I know own more DVDs than CDs. They buy and receive more movies as gifts because its easier to pick a good movie out in the store than to figure out if a new CD, even by an artist you know, is any good.

The fact is the record companies would have to cut the price AND increase the quality (both of the songs and the recordings) to have a hope of recovering. Albums should be $10 for a 24-bit CD (or whatever format they come up with). And this format needs to work in my CAR and on portable devices and computers. They failed to realize this with SACD and DVD-Audio and the lack of portability hurt. Its not that biggest reason for sure, but it helped keep people away from the format.
Old 28th December 2005
  #69
Gear Addict
 
DC11's Avatar
 

That may be because it's also easier to d/l an album then a movie.
Old 28th December 2005
  #70
Lives for gear
 

The DVD comparison is important, but music and movie distribution and profit aren't the same thing.

As you say, movie studios make money from day one in theaters domestically, then foreign, then airplanes, then PPV, then cable, then DVD... music companies make money from selling the CD. They may own parts of publishing, etc., but they basically make money selling the CD.

Even though the up-front production and marketing costs are far greater for a movie, the potential for a successful movie to be highly profitable is great. The potential for a music release to make some profit is much better, but hobbled because the music industry is so top heavy that it probably will topple before significant change can be made.

Let's not forget that the movie industry and the music industry are generally the same companies. Sony, etc. have profited as consumers have drifted toward spending their discretionary funds on DVDs instead of CDs, and will continue to profit if they are ahead of the game as consumers drift to new attractions.
Old 28th December 2005
  #71
Lives for gear
 

Of course it can be done.

I can go to a studio, throw down 100,000 to make the album, and get my money back in 20,000 CD's. Lots of bands can do this if they have the balls.

Record companies can't though. They are the equivalent of Wall Street traders. They throw their money out like water. They have to hedge their bets. They sign and fund 100 acts they know will likely sell diddly on the anticipation that one of them might be a hit or that the genre as a whole will do well when their current investment in Blonde Sensation 23 has negative returns.

Just like a hedge fund, the buy in price to this game is staggering. This is how all the small companies got eaten up. A well hedged fund on Wall Street can create tons of cash, because as long as SOMETHING is making money SOMEWHERE, they are OK. A small firm has to be choosey as hell.

The hurdle for the $10 CD is that there's no e-trade for bands. You can't get good distribution, so your 20,000 units per above is hard to sell.

Now really, decent music can be had at 1/5th of the cost I quoted... with good musicans. Here too though, big record companies have ****ed everything up. They have too many talentless bands that cost way too much to produce a product for, raising the cost. Before Pro-Tools and Autotune, these investments didn't exist.

Anyways, the problem isn't any reasonable cost. It's the result of how our industry CHOOSES to do its business.
Old 28th December 2005
  #72
Motown legend
 
Bob Olhsson's Avatar
 

My question is why do stores choose to take much lower margins on DVDs?
Old 28th December 2005
  #73
Gear Addict
 
DC11's Avatar
 

Probably cause it's much easier to d/l music then movies. Hell, you can even email an album.
Old 28th December 2005
  #74
Lives for gear
 
Synth80s's Avatar
Quote:
Originally Posted by Bob Olhsson
My question is why do stores choose to take much lower margins on DVDs?
Music and movies are often used as loss leaders (sold at or below cost) at big box retailers. Consider Best Buy: the goal is to get you in the door so you buy other high-margin items like blank media, cables, printer supplies and consumer electronics with service contracts.

Music stores like Tower also have sale racks (you know, the racks full of $7.99 "Best of Otis Redding" CDs) to bring customers in the door.

-Synth80s
Old 28th December 2005
  #75
Lives for gear
 
Synth80s's Avatar
Quote:
Originally Posted by WidgetNinja
Anyways, the problem isn't any reasonable cost. It's the result of how our industry CHOOSES to do its business.
E X A C T L Y ! ! !

The same oligopoly owns the means of production and the primary points of distribution and promotion (TV, Radio, Movies), essentially precluding non-major label acts from succeeding beyond 20,000 or so CD sales.

As WJ says, the record companies are structured to lose money on all but the biggest multi-platinum releases, thus reinforcing the idea that an artist capable of selling a consistent 50,000-100,000 albums isn't worth the effort and investment.

Remember when Mariah's bomb of a movie and album ("Glitter") essentially caused EMI to take a huge loss which, along with other contributing factors, eventually resulted in layoffs at the company? (http://www.iht.com/articles/2002/01/24/carey_ed3_.php) Sure, the album and movie may not have been great, but the real issue isn't the quality of Mariah's album, but rather the poor business decisions EMI made in putting that many eggs in one basket.

-Synth80s
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