Music Industry Compared to Movie Industry

tgibson writes "The Denver Post has an article comparing the missteps of the recording industry to the movie industry's success with DVDs: 'The best-selling "Chicago" movie soundtrack is available on CD starting at $13.86. The actual movie, with the soundtrack songs included, of course, plus additional goodies ranging from deleted musical numbers to the director's interview and a "making-of" feature, can be had for precisely $2.12 more...'"

Comments

Get Off Me!

[inertia187]

They're nickel-and-dime-ing the consumer to death, and no one will do anything about it. What, do they think we're made of money? The surcharges and the "Artist" tax for all CDR related equipment has to stop. When will people take notice? (fp)

DVDs

[dzym]

I don't buy CDs at all, yet I regularly go out and spend $20 each (or more) on DVDs nearly every week.

Simply put, in my sole estimation, DVDs are worth my money--music CDs aren't.

Re:DVDs

[ichimunki]

Great. So it sounds like you're actively funding the other half of the anti-consumer crusade. Last theater movie I went to (Seabiscuit) they had an anti-piracy blurb at the beginning of the film. MPAA are also the people going after Jon Johansen and the other DeCSS folks. So Hollywood knows how to price DVDs... this is not as great as it sounds. The profits on movies are front-loaded at the box office, so the residuals from DVD sales are largely gravy (although admittedly they are spending a lot more on films, hoping to make it up on home releases... and the DVD does have additional material you won't see in theaters).

Re:DVDs

[ScrewMaster]

Yes. Part of it is the investment made in producing the product. For example, how much does it take to produce a typical audio CD? $50,000? $100,000? $250,000?

Contrast that to a major motion picture which might have cost the studio a hundred million dollars or more to create, and I can buy a copy of that production for the price of a music CD. That, to me, is not a bad value. Sure, I dislike the encryption and region coding, and frankly the DMCA is almost enough to keep me from buying DVDs at all, but really there are some damned good movies out there nowadays. Honestly, I don't mind paying $17 or so for a copy of The Hulk or Spiderman or any of the other major motion pictures in recent years. And, I find that there have been thousands of releases of older films that I can buy at Walgreen's for three bucks.

On the other hand, the music industry may or may not be in financial trouble (hard to say, they lie so often.) If they are, I can tell you this: it has nothing to do with anything they say it does. Rather, their problems are a direct result of providing a poor quality product for too much money. This translates to not being a good value for the customer, and is a typical outcome whenever monopolies are involved. What has happened is that the customer base has been exposed to alternatives (all the way from "free" music from online applications to purchased music created by independent (non-RIAA aligned) musicians) and has begin (slowly, to be sure) to wake up to what a rotten value the major music studios actually deliver.

Re:DVDs

[kryonD]

Actually, the article is not brilliant by any stretch of the imagination.

Let's take your average Summer Blockbuster. Average pricetag with good actors and good special affects and some reasonable marketing seems to be around the $100M mark. But that was just the cost of making the movie. Now we need to make it into a DVD.

Lets add another $20M for:
* The cost of converting 35mm Kodak into digital form.
* Editing time to get a seperate made for TV "Full Screen" version.
* Paying spanish and french voice artists to do some dubbing.
* More editing and remastering time for the "Making Of" mini-feature.
* Interview time with important cast members.
* Various royalties associated with having DVD player software come bundled with the disk so you can just pop it into your computer and watch it.

Now that you have this $120M master disk, how many copies do you make? How much money are you going to invest in packaging and additional goodies to make the DVD more tempting? How much do blank DVD's run in uber-bulk quantities? How much does the distribution chain cost to get the DVD from your warehouse to the self of the local Wall-Mart in Bum-F*ck, Idaho? If sales are slow, how much is your warehouse space costing per day because you made too many copies?

According to IRS.gov, there are approximately 130M individual income tax filings. Let's make a conservative estimate that 10M of these are teenagers or newly married couples who chose to file seperately, but live in the same household. That gives us 120M households who may want to purchase your $120M masterpeice. Let's say it's really popular and 10% of these people decide they need their own copy. 12M copies at $10 a pop would barely cover the cost of making it and you still haven't covered the packaging, storage and distribution costs....plus you want to make a little money in profit because your a well adjusted capitalist like the rest of us. $20 a copy should make this work, but then there's the little issue of your last movie that sucked and lost $70M. Then there's the reality that it's a fat chance that 1 in 10 people would purchase a movie for $20 that they can easily rent for $2.

The reason why DVD's can afford to exist on a $10 to $20 price range is because 12M people already went to a theater and shelled out $10 to see it on the big screen and most of these costs have already been covered. The music equivilant would be a live concert which you just can't do on that scale.

I'll be the first to say that the RIAA needs to find a new way of doing business, but I'll also be the first to admit that it's not as simple as most folks would think.

In the case, the article was trying to compare apples to oranges.

Re:DVDs

[iocat]

You've vastly overestimated the costs to make a DVD from a movie. Many movies *only* make money once the DVD/video sales are factored in. I believe the original Austin Powers movie was a mediocre success at the box office, but so huge on DVD/video that it spawned an entire (unfortunate) franchise. Movies make about 50% of their profit from overseas and video $$. So the DVD isn't just gravy, it's an integral part of the business structure. As for cost of goods, in the quantities they manufacture, COG for a top of the line DVD is probably well under $2.

Re:DVDs

[letxa2000]

Obviously the music and movie industry are different. I'll also agree that DVDs can be competitive because they've already made quite a bit of money (hopefully) at the box office.

However, you need to realize that the customer doesn't care. The question is "I have $20 to spend... What should I spend it on? Chicago DVD with the music for $15.98 or just the music for $13.66?" A heck of a lot of people are going to go for the DVD.

It's not our problem that the RIAA has a broken business model. In fact, that's exactly the problem. That's why they are suing their customers instead of selling to them. They're trying to defend a broken business model. It's unsustainable.

They have to compete for a customer's limited entertainment budget. That budget may be split over seeing movies in the theater, buying DVDs, going on a vacation to Cancun... and maybe buying CDs. Their most direct competition is DVDs and in that area they are NOT competitive.

All they can do is lower their prices DRAMATICALLY and hope that's enough. I'm not talking $10... $10 for a music CD or $15.98 for the same music on a DVD is still a hard sell. I'm talking drop the price down to $3 - $4.99. And even there it's a crapshoot as to whether or not they'll make it. Music is free now because they've overpriced their product and driven tens of millions of customers to get their music for free online. The cat is out of the bag and it's going to be hard to put it back in--even if they lower the price of a CD to $5, a price which might have prevented the original exodus to P2P music sharing, it might be too late for that to bring people back.

Animatrix example

[Txiasaeia]

Here in Canada, the Animatrix DVD was about $25. For $30, you could get the DVD as well as the CD soundtrack. This makes *sense*; I don't own a single soundtrack in my CD collection of which I don't also own the DVD.

On the other hand, not everybody (*gasp*, I know!) has a DVD player, and moreover I'm not even sure how easy it is to rip music from a DVD. Never mind the fact that it's probably evil...

Re:Basic Comparison

[selderrr]

MPAA: Not the RIAA
that's nonsense. Wait until the day we have gigabit ethernet in every home and we can copy an entire DVD in
They've just have less enemies cause there's less easy ways to steal/copy. That's all.

Nonsense

[Stargoat]

The industry has placed a large tariff on new CDs. That is, you are not paying for the music, you are paying for: worthless artists who don't create art, executives, CDs that don't have anything special in them as vinyl used to have, and the RIAA. If anything, Congress should be looking into the music industry for collusion.

Buy CDs used. They're a more reasonably price, even if still over priced.

Re:Nonsense

[uncoveror]

Yes, used CDs are good. The RIAA and affiliated labels get nothing from them, as royalties were paid the first time. This is called the first sale principle. When the original owner bought the CD, it became his or her personal property to resel. As no new copy was made, copyright was not involved in the transaction. The RIAA, and pretentious entertainers like Garth Brooks want to abolish the first sale principle, and grab ill-gotten booty from used CD sales. To hell with them! Other than used ones, don't buy CDs.

Re:Yeah but downloading movies still not easy

[jarda]

The problem with CDs is that you usually pay for one song you want to and 15 others you're not interested in. With movie DVD, you just pay for what you want.

Overlooked point

[big_fish]

Although I agree with the author on most topics. Heck, my household doesn't buy music anymore on principle, but we still buy DVDs. The price point is right.

Buy one factor is not considered. A CD of music is more readily conveted to mp3s and shared over the internet than a DVD. The shear size of a movie (800-1600+ MB) make them more resistant to on-line sharing than music (for the moment).

I do have to applaud the movie industry for trying to make the DVD format more attractive with special content: the making of, choice of widescreen or scaled, alternate endings, etc.

If they further lowered their prices, people would buy more dvds as a matter of convenience. Everyone likes a nice box and cover art instead of two cdrs and a handwriten index card in the case where someone downloaded a movie.

The article has a nice junxtaposition bewteen the music and movie industry.

Re:Basic Comparison

[ergo98]

How absurd to see the MPAA cast as the "good guy" on here: Wasn't this the same MPAA that was cast as Satan-in-the-flesh when the whole DeCSS fiasco took place? Indeed, the only reason why the MPAA isn't more on the Slashdot hippocrisy-hitlist is due to bandwidth constraints making it a tad onerous to download DVDs (and compressing a 9GB movie down to a CD or two makes for a vast quality difference, quite unlike CD rips where a CD rip that's perceived as the same quality is an easy download). Soon enough, as bandwidth increases, these same jokers will be yipping about how the movie business model is broken, and they should put out movies for free and make money on toys, or some such moral justification.

Re:So what?

[notque]

Seriously. A DVD might have 3 hours of content on it while a CD might have 1 hour of content, but I can bet you 99.9% of the time, the CD is going to be listened to way more than the movie is watched, and therefore is the better value.

I can't watch a movie walking down the street or on my commute to and from work (or at work for that matter), but I can sure listen to music. These arguments are pretty stupid, IMO.

Because when I'm about with a group of friends, I say, Hey... Wanna listen to my cd collection? .... Half the time music is something to listen to en route to actually doing something. Music is not in itself usually an activity. A DVD, or movies in general are much more entertaining.

Also, music takes less money to make than a movie. I.E. I will pay more for a movie.

They're owned by the same companies!

[techmuse]

Most record companies are owned by a company that also owns a movie studio. Warner music / Warner Bros. / AOL Time Warner. Sony Pictures / Sony music. Universal music / Universal (studios) / Vivendi Universal. They even tie in CD releases to movie releases and book releases. They're competing against themselves.

Remember, if the MPAA had had its way...

[kaltkalt]

We wouldn't have had VCR's at all, and there would be no movie rental/purchase industry today. They were legally forced into allowing this industry to develop, which today they earn 60% of their revenue from. If they had had their way, the only way you could see a movie would be in the theater or on TV (and you couldn't record it as you'd have no VCR).

The music industry can follow suit. Embrace file sharing, don't try to stop casual non-commercial copying, and sell CD's for $3.99 each. They'd make a fortune.

The problem in both situations is that, when confronted with technology that seems potentially threatening, suing it until it goes away seems less risky and more economical than embracing it and trying to develop a new business model around its existence. Fortunately for both us and the MPAA, they lost. Now they make a fortune in the video industry. Unfortunately for both us and the RIAA, they have not yet lost (better lobbying) and are suing themselves into oblivion, while hurting end-consumers as well. Especially the 12 year old ones.

Nothing new for the movie studios...

[mpthompson]

Over the last 80 years the movie studios have had their business models dramatically disrupted on numerous occasions. In the 40's the movie studios lost anti-trust suits which forced them out of the exhibition business leaving them only control over movie production and distribution. Revenue and profits plummeted within the span of a single year and started the end of the "studio system" of stamping out movies on a weekly basis. Additional jarring changes came in the 50's with the advent of television, the rise of independent studios and actor/producers in the 60's, purchases by multinational conglomerates in the 70's, and then the introduction of the VCR in the 80's. While it is natural to resist change to the status quo, the movie studios have repeatedly demonstrated an amazing adaptability to change when left no other recourse. Learning to cope with disruptive change may be one reason the industry has been able to turn movie video/DVD sales into greater revenue than the actual exhibition of movies.

Only time will tell if the recording industry can demonstrate similar adaptability to challenges of their traditional business model or go the way of the Dodo.

Music vs. Movies

[Esion Modnar]

When I buy a DVD, I might watch it one or two times, but I am certainly not going to watch it again, and again, and again...

A music CD, on the other hand, I could easily listen to the music on it hundreds of times, if the songs are good.

So even for the same price, music vs. DVD, the music gives me more entertainment value. However, I am refraining from buying either, partly due to economic reasons, and partly due to the fact that I hate the RIAA and the MPAA.

Re:Josie and the Pussycats better example...

[fdiskne1]

And the most ironic thing about this post is that Josie and the Pussycats movie is all about super-mega-corps brainwashing the public into thinking they need to buy into the latest pop music fads.

Re:Quality

[The-Bus]

No, the general quality of entertainers (notice I did not say "musicians" or "artists") on MTV (a channel you watch) has decreased.

STOP COMPLAINING! Who cares what MTV has to offer!

Artists on MTV / ClearChannel radio might constitute the majority of music industry sales but it's only because of people like you perpetuating these idiots. DON'T BUY CRAP MUSIC. That's the best way for music to improve.

I've spent plenty of money on Radiohead, Coldplay, Kronos Quarter, Placebo, John Coltrane, DJ Shadow, Turin Brakes, Goldfrapp, Money Mark, Yo La Tengo, Spiritualized, Royksopp, MC Paul Barman, and countless others. Why? Because I haven't allowed myself to be marketed to by the major labels or Viacom's television network or magazines, and I pick up stuff based on what I like, not what I am told to like.

Now, this might be a revolutionary way of thinking, but I'm sick and tired of people complaining they don't like artists that are being marketed to them. Go get yourself some taste in music and free will and discover artists on your own and stop complaining about the newest Creed album.

Re:DVDs should be $3.00

[WIAKywbfatw]

If the movie was any good it would have made a reasonable profit in theatres and the DVD should be able to be released at $3.00 a copy 18 months later. Anything else is a rip off. At least CDs have a production cost to recoup. DVDs have recouped by the time they are released.

You obviously have no idea about how much of the pie is taken up by the retailer, distributor, manufacturing, etc.

Typically, 25-40 percent of the price you'll pay in store goes to the retailer. So, on a $20 DVD that's $5-$8, which pays the rent, the wages, the electricity bills, covers shoplifting losses, etc. Turn that $5-$8 into $.75-$1.20 and watch stores go bankrupt in weeks. That's assuming that you could make and distribute a DVD title (whilst covering the cost of DVD extras, advertising, royalties, etc) for around $2 to acheive your mythical $3 price point.

Frankly, even large scale DVD pirates (who obviously don't have to worry about half the costs the original publishers have to deal with) would struggle to make any money selling DVDs at $3.

Time for you to come back from never-never land and learn that there's more to making and selling a DVD than you realise.

Re:Brilliant Idea # 1023

[forkboy]

I think this is where the recording industry is slowly heading. There are already standards for DVD-audio. I'm sure once portable DVD player tech becomes a lot less expensive and is integrated into Walkman-like devices, you'll start seeing albums get released with a ton of extras. As it stands now, there isn't a whole lot of room for extra material on a compact disc.

The reasons are technological

[Ralph Spoilsport]

Let's look at the basics, and everything else becomes clear:

A redbook CD is about 650 megs (usually less) of uncompressed audio. With audio compression techniques, (MP3, Ogg etc.) the CD becomes about 100megs (at a compression rate that doesn't *completely* mangle the music.) and each track comes out to about 5 megs or so. A CDR can be had for much less than a dollar. The last CDRs I bought were FREE after discounts and rebates.

So, to copy the Original CDR at "full quality" Redbook audio costs nearly nothing and when compressed to MP3, eats 100 megs on my drive.

DVDs are already compressed, and if the movie is over 2 hours, they are often VERY compressed. The DVD eats (usually) about 4.2 GIGs of space on my drive.

Now, until very recently hard drives weren;'t all that cheap. The first one I could afford of consequence was in 1994 when I bought a 1 gig drive for $580 and I got a damn good deal on it. DVDs didn't exist, but even if they did, my computer didn't have a large enough drive to store a movie, unless I wanted to experience it at 180x240 at 15ips and compressed beyond all human imagining. Also, the computers were so slow, that to rip that much data would have taken....a reeeally long time, given I was running a 48 mHz machine...

So, music was the first to get digitised due to its file size. the rest follows, really.

When the $400 desktop computer I pick up at best buy has a 4 terabyte drive, and processes data in the multiteraflop range, and has 7.1 audio built right in, and the video card has a gigabyte of VRAM, Hollywood will be making the same kinds of noises that the RIAA are right now.

Compressed audio sounds lousy, but no more lousy than DVDs presently look. Once the file size for DVDs relative to the hard drives and CPU speeds isn't such a big deal, people will cheerfully rip DVDs and burn them for their friends, and their will be precious little Hollywood can do about it.

When will the bandwidth to my house via (whatever succeeds DSL / cable modems) in 10 years be? No idea, but I kind of doubt that it will be able to move movies around with the rate of speed I can move a title of MP3 / Ogg choonz.

therefore, the bandwidth for trading movies over the internet at a reasonable quality will lag far enough behind that Hollywood won't give a rats ass about it for quite a while.

However, as we all know, the bandwidth for trading music, even entire CD Titles, has been around for quite a while, and hence, the RIAA get their knickers in a twist.

Therefore: Hollywood comes off looking better than the RIAA, because they know that I might have 1000 CDs of music on my 120 gig drive at a quality not very different from the original, but there is no way I'lll have a 1000 movies on my 120 gig drive at the same relative level of quality. Consequently, they toss out DVD movie titles for not that much more money than the MSRP CD title prices...

Now, when I have a 60 terabyte drive in my machine loaded to the gunnels with movies, and the bandwidth is there and affordable for me to P2P a full length MPEG2 movie in 7.1 audio in less than a half hour, and I'm just sitting back and burning DVDRs for friends and fambly, Hollywood WILL hunt my ass down, just like the RIAA hunted down the Kazaalings.

RS

Re:Quality

[dirk]

This is ofcourse totally subjective but, it seems to me the general quality of music has decreased with time while movies have improved.
I feel contempt when I watch MTV while I actually pay attention to movie trailers.
I feel used by ("new") musicians while moviemakers entertain me.

This would be you aging and losing touch with the younger generation. If you ask anyone, at any point in history, they will tell you that things were better "before". Music in the 70s was not all great. Neither was music in the 60s or 80s. It was mostly crap whatever time you want to look at. The difference is that as time goes by, the horrible crap fades and the truly great stuff stays. Look at the top songs of any year and you will see the biggest load of crap that you are thankful you don't remember (top song of :1970-Close to You by The Carpenters, 1975-Mandy by Barry Manilow, 1979-Hot Stuff by Donna Summer, 1984-What's Love got to Do with It by Tina Turner). Music hasn't gotten worse, you've gotten older.