Slashdot Mirror
Canadian Recording Industry Claims Drop in Sales
tyrann98 writes: "The Globe and Mail reports that the Canadian record industry has experienced a 6.4% drop in CDs and cassettes overall (not singles) in the last year - plus a 7% drop in the first four months of this year. They don't know who is to blame, but they have their fingers pointed at you guessed it: Napster. Canadians are one of the world's most connected societies (mainly due to cheap high speed Internet access) and may reflect the direction the Internet is headed. "And indeed they are. Canadians have embraced the practice of downloading songs from the Internet faster and more intensely than most other countries. The surveys show nearly six in 10 of those between the ages of 18 and 34 go to their computers rather than a record shop to acquire songs. There are as many as five million Napster users who sign on to the Web site an average 6.3 days a month. It's about twice the reach the Web site has in the United States.""
My High School economics teacher performed a cute experiment to determine the best price to set for your product and make the most money at it. The term was "market price".
Anyway, the teacher took a survey of the class as to how many CDs they would buy per month if set at a certain price. Obviously, people would dozens if they were a dollar apiece, and significantly less if they were $40 apiece. You graph this, and select the price where # of units sold times price is the highest sum of all of the other samples.
So, what's the target price for 16-18 year old high school students in New York City? About $8.
Why are CDs so expensive you ask? Because teenagers aren't the target market. Adults are. If every teenager in the country stops buying CDs, they'll raise the price for adults who are probably much less net savvy (ie, less inclined to Napster) to compensate.
If Napster consumes their Adult market too, they'd either raise their prices even more to try to capture whatever's left of the non-net market, or cut them sharply to make them more appealing to the general public. I might just warez a CD if it costs $20, but it doesn't seem worth the effort for $5.
Can they set their prices to $5 and make a profit? Of course they can. They may have to tweak their business model a bit (uh oh, we can only blow 5 million on "promotion" instead of 10), but I wouldn't cry for them.
Just because it's illegal doesn't mean people won't stop doing it. May as well legalize it and try to make money at it. :)
>$2.15 -- Marketing and Promotion
>$1.08 -- Signing act/Producing Record
These are all manipulated costs with huge profit margins built in to them. This is the same kind of accounting that lets almost all movies being classified as losing money--such as _Coming to America._ On that one, Art Buchwald won the royalties litigation finding the "accounting" used to be a sham.
hawk
Around here you have studios sprouting like mushrooms. Any DJ with a moderately successful single can build one and many do. We have the same IP laws as the US but vary rarely bother to enforce them.
This isn't about Napster and pear to peer either. It's about dance mixes. Essentially you have a cassette produced by taping the output at a party or nightclub. This is marketed as a mix by selector Bar or sound system Foo. The actual artists are not mentioned and most people can't keep track of who is involved. I.e. It's not uncommon to have parts of 20 songs on the same rhythm played in a 6 minute period. that's just a few seconds each.
How dose this affect artistes? They do not make 1% of what the major hit makers do in the US. In dead they make far more than 1%. At 2.7 Million Jamaica has 1% of America's population (pending the census which starts this summer). BTW: "jedi as religion" probably won't work in a country with less than 1% Atheist and Agnostic combined.
You see people even buy large volumes of Vinyl still. We make copies of everything. We pirate music like there was no tomorrow. the end result is that the typical Jamaican spends a whole lot of money in music shops buying original songs.
we also tend to judge music on it's own merit. This way Steven Segal's Reggae album (Yes, The actor) is a monumental flop. We like the guy (despite "Marked for Death") and give him good reason to love coming here but troth be told his singing isn't that good and his songs don't sell.
By contrast Buju Banton had a number one hit before anyone knew or cared who he was. All this without any real marketing.
What's the point? If the Music industry in North America was as deep in the society as it is in Jamaica more people would take the time to randomly listen to vast numbers of new artists. Publishers would be less able to actually make people buy pore songs and little independents who produce good stuff would have a chance.
the problem is Americans (and Canadians too) mostly just buy what the marketing people tell them to buy and when money isn't available they pirate it. here we pirate everything and then buy the stuff we actually like.
--= Isn't it surprising how badly I spell ?
Last time I was in Montreal (not even a year ago) The average CD was about $16 Canadian.. that's about $10.50 US. That's pretty cheap for a CD
If you're up from the US to buy CDs in Canada it's certainly cheap. Our (the .ca) dollar has (approximately) as much buying power as the US dollar in our country. Trips to the US cost us much more as the exchange rate is a killer.
Remember that when we buy a CD for $16CA, it's still costing us $16.
grubTrolling is a art,
Lie with numbers! Fun for the whole family.
Where the cost of a USD 17 comes from:
Cost of CDs
$6.23 -- Retail Markup
$3.34 -- Company Overhead, Distribution, and Shipping
$2.15 -- Marketing and Promotion
$1.99 -- Royalties to artist and songwriter
$1.08 -- Signing act/Producing Record
$0.85 -- Co-op advertising and discounts to retailers
$0.75 -- Pressing album and printing booklet
$0.59 -- Profit to label
This is all via Billboard Magazine (and CNN)
It should be noted that the Label makes the least money (the RIAA members) and the retail stores make the most (Coconuts, Sam Goody, CDNow)
Anyway.
-gleam
this
Of course, it's to the record industry's advantage to speak of doom and gloom - this is a tired political response to get the artists and retailers and government to support this "important" industry in their "time of need". This has been part of their business model since the advent of the cassette.
... and Wall Street wouldn't like and stock dips or the possibility of new competition.
The music industry hasn't changed. It's been 20 years since the advent of the CD, and the CD didn't change how their business works. The industry failed to take advantage of new technologies to deliver CD compilations defined by the customer in the store. And the industry failed to take advantage of the advent of the Internet beyond a marketing exercise.
And so now, let's legislate. It can be cheaper to buy some laws than to have lower profits for a couple years while their business model is repaired. The retail chains wouldn't it if the business model excluded them
Clearly, the industry needs to upgrade it's business model - one that has not changed since the introduction of music video - which is, humerously, less "art" and more "marketing vehicle " (despite the MTV Video Awards).
It won't happen. None of the players in the music industry want to lose their profits - not the artists, the labels, or the retailers. And they'll all fight hard to keep their future profits.
Its easy for anyone to point the fingers at Napster when this situation comes into play since news media outlets always depict a single sided view of a Napster user. It seems every single story the refer to users, those interviewed are almost always some sort of unemployed type (mainly young user). As I've stated before, when I use Napster I use it to find a name of a song that I'm unsure before I buy it, or a song someone else mentioned to me, etc., and almost always if I find something I want I purchase it. Look I'm sure there are thousands more who use it with similar intentions, and it's those users you never see interviewed, not because it doesn't exist, but because it doesn't make a juicy story as compared to someone who they pass of as a thief.
Now taking a look at the entire scenario going down, one could also say music sales are down because tech jobs are down, and many people are trying to save in a slumping economy as opposed to spending dot-com-like dollars on music.
If people don't realize how twisted media distorts issues here's my example. About 3 weeks ago some guy emailed me from Yahoo Magazine wanting to do a story about the China/US hax0r war between script kiddies that was overfabricated. Well I was more than happy to speak to him when I saw it, however when I received the phone call the entire interview seemed to go the route of "Well give me some juicy examples of h4x0rs" not the truth about the entire situation. It sort of left a bad taste in my mouth to see that all media really wants to do is sensationalize the issues.
So is Napster to blame here? No. When TDK, Maxell, Sony came out with cassettes companies most likely expressed the same gripes, and as time has shown nothing big came out of it. Now I know not all Napster users are angels in fact I know some do rip and burn mp3's however I would never settle for the quality of an MP3 versus buying a CD since I get the case with information, it sounds clearer, and if I were an artist I would hope someone would extend the same courtesy to me and buy the cd.
Fuck the media
Want Root?
So the RIAA makes 1/4th what the artist makes per CD. However, they make it an ALL artists they have signed. So if you have 4,000 artists total wha make 100,000 a head, that's 400,000,000 they make. The RIAA makes "only" 1/4th of it, about 100 hundred million dollars.
It's a smaller pice of a bigger pie. So it very much balances out, especially when you add the tax on all blank media.
--
--
Internet Explorer (n): Another bug -- that is, a feature that can't be turned off -- in Windows.
can drown in a river that averages 12 inches deep.
A look at RIAA sales statistics 1991-1999 reveals that CD sales do not always increase. The data shows growth in the early '90s, but nearly flat sales in the mid '90s, actually decreasing from 96-97.
As a music fan, I attirbute this (pre-Napster craze) trend to the explosion of new, unique bands in the early '90s, followed by a bunch of bland, industry-generated, me-too bands that lacked any originality or edge.
With Napster, record company executives now have a scapegoat for thier ineptness. They want to paint the picture of always increasing sales and profits, else someone surely is tampering illegally with thier industry.
Now consider that retail sales are down in many industries this year, and it looks like the record industry is trying to get a good PR spin on the combination of incompetence and a down market.
MotoMannequin
MotoMannequin
"With all appliances, and means to boot!" - William Shakespeare
What I want to know, is how much of this is due to the "tax" on blank media? How many people, seeing this tax, now feel they have paid for the privilege to download the music?
That same CD, upon coming to Canada, gets marked as an "Import" and suddenly becomes $40CDN (~$25+ USD). Add to that our amazing 15% sales tax (Ontario), and they're wondering why we choose to download music from the net, as opposed to paying OUTRAGEOUS prices for it?
DJ kRYPT's Free MP3s!
We have seen a 5 % drop in sales, it must be Napsters fault, so we must raise the price to compensate for the loss.
This is absurd.. why do they think people care to search and download music from the net ? Because its expensive! Here (.se), a full cd costs something like 170 SEK, (17 USD). If the raise the price more, its even more profitable to download the music, and they have to raise prices even more.
If a CD cost like 5 USD, i doubt piracy would be an issue anylonger. Napster didnt create the need, the need created napster !
Probable impossibilities are to be preferred to improbable possibilities.
Aristotele
After years of growth they complain when sales growth is not as large as the year before. The record companies need to relize at some point the twelve year girls can only by so many pop albums and angry teenage boys get bored of the same rap/rock sound.
Growth and increasing profits are not a right. A free economy raises and falls. Maybe all those MBA's should take take first year economics over again.
By definition, a government has no conscience. Sometimes it has a policy, but nothing more. - Albert Camus
Just like time, this is all relative. Canadians may see a 6.4% drop in sales, but with the exchange rate, Americans see it as a 4.8% drop.
This figure gets even lower as you approach the speed of light.
Their lawsuits and their paranoia has rubbed me the wrong way. So I personally send the companies a message that they will hear, by not buying their products.
I've never used napster but I have fished for mp3s on the web when I wanted to hear a song. In the past I'd shell the $20 (CDN) for a CD even just for one song. Now I can't be bothered.
I do respect artists and I still buy CDs of music that I think is worth it. But I will never again buy a CD unless I really want it. Or a DVD for that matter.
Now I just rent from blockbuster if I really want to see a movie, instead of considering buying it. Or grab a MP3 from the actual artist's site. I even let my friends borrow my CDs/DVDs and make copies or VCDs. We have some sort borrowing-circle going on. All I care now is affecting the record/movie companies' business.
Companies have to realize that consumers will only take so much and they start walking away.
I was a legitimate and good customer for CDs and I've stopped because the bullish antics of the RIAA. Hell, I'm Canadian, isn't the RIAA an "American" organization which affects my choices?
Hooky1963
POKE 53281,1 POKE 53280,0
Hmmm...Napter does well, CD sales do well. Napster is emasculated, CD sales begin to slip. Now, I realize one cannot prove causation from this, but if they are going to use the "Napster is to blame" game, then they should work it both ways and realize that by their logic, when Napster is rocking their sales improve.
________________
________________
Private Essayist
You can't find anything on it anymore, not even obscure music, because the filters are set to filter just about every song that the RIAA likes or any song that has a title which remotely resembles a RIAA title.
A good working alternative to Napster is KaZaA.
Do you like German cars?
My long term goal is to make a "disc-gun" like the kind you had as a kid that would fling the disc out. Given that the metal content of the disc itself is just sprayed on aluminum in most cases there isn't much for creating something magnetic -- directly. However you might be able to get something to superconduct in order to fling it like a rail gun ;)
Otherwise, some combination of air-cushion (like and air-hockey table concept) could work -- start by spinning the CD up and then kick it out!
the whole apparatus could be mounted on the back of a pickup truck for "urban-assault" -- i think i'm seeing a weapon for Unreal or Quake!
Old age and treachery almost always overcome youth and skill.