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Universal Music To Cut CD Prices
phlack writes "CNN Money has an article about Universal Music Group's plans to slash their CD prices to $12.98 SRP, in an effort to combat piracy and bring consumers back into stores. It makes me hope the other giants will follow suit, and wonder if the music industry is finally listening to some of the consumer's complaints."
So they are finally going to match their competitors (Best Buy, etc.) in CD prices? I still don't understand how those big chain stores, who charge $17.95 for a CD, stay in business. Maybe they should take a survey from their consumers, about what they're actually willing to pay for a CD. $12 is about the tops for me, and it better be darn good for that much money.
Most slashbots are probably familiar with price wars in computer hardware....perhaps we'll see some with regard to CD prices.
Would be an interesting situation where one could get an artist's release from two different labels, so there would be real competition between them.
If you can't see the value in jet powered ants you should turn in your nerd card. - Dunbal (464142)
You have already proven you wish to screw your customers at any given moment. You have been hostile to me, you know the guy that paid for your wares, for far too long.
I left and am not coming back.
(Manufacturer's) Suggested Retail Price. It reflects the price point that the manufacturer suggests the retailer offer to the end consumer, and includes the margin for that retailer.
The MSRP values are based on various fudges and calculations, with a good bit of over-the-thumb thrown in for good measure. In this age of Internet comparison shopping, I can't remember the last time I paid MSRP for any consumer goods (except software like PS2 games, where Sony has a very tight rein on the supply chain).
Come play at the only online poker room with a Mac-native client
It's not all the way. It *is* however a step in the right direction. A lot of people, myself included, would prefer to buy our music legitimatly. Buying a CD is still the easiest way to get high quality, consistant MP3s onto my iPod.
I'm thinking that the studios will absorb a lot of the difference and artists won't be too affected.
Cheers Koz
I've never been to a concert in my life and don't understand why I should care to
Let me help you. You may want to see a concert if you think you'd enjoy:
- the feeling of 'never stepping in the same stream twice' -- go see artist X every year for 5 years, and each performance of any given song will 1) be different than the CD version, 2) be different than the previous year, 3) be different than the previous night!
- hearing unscripted improvisation between artists -- many musicians claim that the set they're most proud of playing was NOT the one recorded in the studio for the CD
- the little live mistakes and recoveries of talented artists -- you'll rarely get that on a CD
- experiencing the energy of dozens or hundreds or thousands of like-minded people simultaneously grooving or interpreting or dancing or just chilling to the same music you love
- to experience the artist -- 16 bit stereo samples @ 44.1kHz captures audio quite well -- but it doesn't capture dance, facial expressions, stage antics, synchronized light/lasers/visual effects, costumes, etc.
Recorded music is here to stay, obviously, but live performance is different. It's not necessarily better. If you like any given artist though, it's enriching. More times than not, if I've appreciated an artist before going to see them live, the live experience made me respect them even more.
Some (not all) artists are multidimensional. CD is great for the car or bus or office, but CD doesn't do many artists the justice that live performance can. And of course, some artists suck live. Explore.
I'm talking about the majority here .. there will always be people who steal, but ....
In post-capitalist 17th century UK, people couldn't afford bread. Rather than storm the bakeries and steal the bread, they stormed the bakeries and demanded a fair price.
People are happy to pay a fair price. Thats the very definition of fair value. A value people will pay.
Between overpriced and free, people choose free. But when they sense that a fair price can be obtained, ie, when the bakers (ie, the RIAA) are actually willing to come to the table and discuss the price, people will choose fair price over free because we require our socialeconomic systems to exist in order to benifit from them.
If we can't benifit at all, we might as well get for free. When we can benifit, we're smart enough to support that system rather than torpedo it.
Its the survivalist instinct that makes us choose between not and all and illegally free, and the same instinct that makes us choose fair price over damaging suppliers by aquiring their goods in a way that will put them out of business.
"Old man yells at systemd"
Here's the reason.
Hypothetical: you purchase a popular mainstream CD at a store such as Best Buy.
You would pay about $12.99-$14.99 for this CD.
This CD almost certainly retails for either $17.98, $17.99, $18.98, $18.99, or $19.99.
Incidentally, Best Buy tends to make less that $0.75 per popular CD sold, and frequently less than $0.50 on the ones in their ad. They sell only items they believe they can make huge volume on, with the hopes of drawing you into their store so that they will buy their other products which have sane profit margins.
MSRP of $12.98 means a Best Buy price around $8.99 -$10.49
Additionally: cost is not $0.02/CD.
Cost works something like this:
Production: $0.03
Royalties to Musicians: $0.05
Royalties to Songwriter: $0.08
Retained by retail store (covers costs like distribution, plus profits) $3.00 - $4.00
And this does not include the cost of producing the very first CD, generally on the order of $10,000 - $100,000 (varies greatly depending on artist and what all is going on) Amortizing this across all copies sold (lets assume 500,000 -- a pretty good amount for one disc) means that cost is between $0.02 and $0.20
Note that the numbers for royalty per album sold were real numbers I got from folks inside the music industry, but that they are about a decade old. IIRC, they have increased slightly lately, so it might be $0.10 / $0.16 instead of $0.05 / $0.08.
Anyhow, the total minimum cost per disc is on the order of
$3.36 / disc.
I have left out many of the costs involved in the production, distribution, and marketing of music because I don't have any decent numbers, so I'd just be guessing.
Even if the other costs are forgotten, $3.36 / disc cost vs. $12.98 MSRP means a profit of:
286%
instead of:
435% for a $17.98 CD
In short, yes the music industry can afford this cut, and it was a good idea, but IT IS SIGNIFICANT
Like I said, expect to spend on the order of $8.99 - $10.49 per new CD you buy at the discount stores (from Universal anyway)
Expect others to follow suit.
In my opinion the "Best Price for an Album" -- as in, the price the CDs should retail for to maximize record label profits is $9.99.
This is because this allows price ranges in discount stores to be on the order of $7.00 - $7.99 and I think that this is the highest price that most people will be willing to spend and still buy every CD from most of the artists they like.
That's just my opinion though. I want to know, really, what do you all think the "Best Price for an Album is" remember, the idea for this number is to maximize RECORD LABEL profit (NOT sell the most music or decrease piracy the most, just make the label the most money)
Funny. I would consider myself better off with $1.00 for someone buying my CD than I would be with $0.00 for somebody downloading it of Kazaa. (I would also probably be righteously annoyed if that somebody then had the gall to claim that he was helping me out.)
How can we continue to believe in a just universe and freedom to eat crackers if we have no ale?
4.95 may be hard to compare with 0.00, but I bet a lot of people would go back to CD's. P2P is cheap, but it takes time and bandwith. If you can find what you're looking for quickly, then it'll take you a LONG time to finally get the entire CD. For most people, the $5 wouldn't be too much, would be faster, and then you get the warm fuzzy feeling of being 100% legal.
Of course, ripping and then reselling the CD is a copyright violation.
Which we do care about, don't we?
- jon
Ganymede, a GPL'ed metadirectory for UNIX
too many musicians think that they are artists. The reality is that the vast majority of popular music is performed by those that would be more aptly called artisans than artists. Picasso was an artist, the guy down the street painting lettering and cartoons on a billboard is an artisan.
That reminds me of the boss who, in declining to give an employee a raise, says "Well, most of it would have been taken up by taxes anyway."
Of course, that's a poor excuse for declining a raise -- the employee would have seen some increase, after all. By the same token, even if artists aren't making as much as the labels per-CD, they're still making some amount.
Alex Bischoff
HTML/CSS coder for hire
Sure, most pop stuff is like this; but you've not looked -nearly- hard enough if you believe that. And, with a name containing "punk", you'd think you'd know about some of those indie bands (Or indie-bands-gone-mainstream) that are damn good. AFI, Stutterfly, System of a Down, or Millencolin anyone? How about Dashboard Confessional? Or how about The Offspring? Bright Eyes? Thursday? Glassjaw?
Not paying for -good- musician's music is a crime, both morally and legally. No matter how little of the money goes to that musician, they've worked hard for it. And they deserve to be paid it if you listen to it.
If it's cheap and mass produced, don't listen to it. If it's good, and you like it, then pay for it, enjoy it, and support the artists.
Complaining that it's cheap mass-produced advertising, and then listening to it is pure hypocritical bullshit. Why, may I ask, are you listening to it if it's so bad?
Yes, but their argument is that if you bankrupt the big 5, the artists will still exist, and can get a better deal with an "indy" label.
Not saying I agree with them, but that is how they managed to come up with "An artist is better off with $0 than with $1/cd"
Basically, what it comes down to is "I care enough about you to hurt you...but not enough to hurt me." If they REALLY cared, they would make a sacrifice themselves and NOT LISTEN TO THE MUSIC, rather than ONLY imposing a sacrifice on the artists.
Optimally, what you would want to do is download the songs, and then mail the artists a nice crisp $2 bill (Or coin, or whatever) along with a letter explaining WHY you are mailing them money. That way you get the music, the record company gets boycotted, AND the band makes money...more money than they would if you bought the CD.
ASCII stupid question, get a stupid ANSI
I guess $5 is a fine price for CDs where the artist is signed to a RIAA label that can afford to punch out 10,000 copies of said CD at pennies per disc. But for independant artists, it's a little different.
Let's just ignore the $5,000 to $10,000 investment in a home music recording studio, the $400 mastering fees, and just look at the actual CD manufacture. It costs $2.50 a CD to have Discmakers (http://www.discmakers.com) print up 1000 CDs in shiny plastic cases with professional full color 6 panel insert graphics and on CD printing. (And if you want quality CDs in any reasonable amount of time, you don't go with Joes Bargain CD Duplication.) I mail out 100 to radio stations around the country, with press kits, at an additional cost of about $2 per kit. I give away 25 to local DJs in clubs and my indie label gives away another 25 to a distro house, all for promotion. Now I'm down to 850 CDs that can actually be sold, and I'm out $2700.
Now assuming that I sell all of these myself and get 100% of the profit (I don't, but we'll keep this simple), I now need to sell 540 CDs at your ideal price of $5 each just to break even. This leaves 310 CDs which I can sell for a net profit of $1550.
$1550 for a years work writing 12 songs, performing them, recording them, mixing them down, and making them available to people on the widely available CD format, which most non-geeks use and enjoy. Can you see why no sane person who wants to eat or pay rent would ever charge so little for a CD?
And I've never once been contacted about being paid directly for MP3 or other downloadable copies of my songs. No one has ever offered some fair price for a non-CD version of my music. But plenty of people have told me that they downloaded my music off Kazaa or WinMX and thought it was pretty cool, thanks for writing it, but no I won't buy a CD, hey, why are you getting mad at me?
The RIAA, sure, they scam the artists who sign with them. But the little guys get screwed too.
I remember back in the day when LPs (aka vinyl) were common, cool stuff was included by the cool bands. The four KISS solos done in the 70's each had poster that were a part a larger one (I had all four). My "Face Dances" album had a cool poster. A band I bought a couple of LPs by called the Feederz, had full jacket sized double sided sheet with cool anarchistic cartoons and sayings. This just a few of the cool things that would come with LPS.
I don't see any of this with today's CDs. Of course I do understand the spatial problems with packaging, but the media companies need to give people an incentive to buy the CD rather than a monetary one. Entice the people into buying the CD so they can get a T-shirt, poster, or something else from the artist. Folks are going to choose free over any price if they can get the same thing.
Wow, somebody at Universal must have taken an introductory Economics course, learned about supply and demand curves, and realized you don't maximize your profits by continuously raising your price -- especially so on non-essential items like music!
"Freedom means freedom for everybody" -- Dick Cheney
What you are seeing is the normal life cycle of a monopoly. When the public gets mad the price goes down, for a while. Then the price goes back up. Usually even higher.
Consider the price of gas. Remember when you thought to yourself that if it went over a buck a gallon you'd stop driving and take a bus? People get upset, the price goes down, and then starts creeping up again.
If you have a capital market, ie not a monopoly, then the price stays down. There are what 7 major lables, and they cooperate on the price. It's a monopoly.
You can claim your tiny victories, but as soon as you buy one CD you've given the victory away. I buy maybe one cd a year (if that). (I don't fileshare either). Basically the whole system has turned me off, I now just play my own music, or listen to the radio.
Oddly enough, many employees think this as well, and I've known more than one person who turned down a small raise because they thought it would actually throw them "into the next tax bracket".
:)
Up here in the great cold north, higher tax brackets only apply to income ABOVE THAT BRACKET. It's not like the rest of your salary gets taxed higher because you got that $500 raise.
YMMV in other countries, of course
Endless arguments over trivial contradictions in books written by ignorant savages to explain thunder in the dark.