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RIAA Says CDs Should Cost More

Posted by kdawson on from the when-bandersnatchii-fly dept.

EatingSteak writes "The folks over at Techdirt just put up a great story today, with the RIAA claiming the cost of a CD has gone down significantly relative to the consumer price index. The RIAA 'Key Facts' page claims that based on the 1983 price of CDs, the 1996 price should have been $33.86. So naturally, you should feel like you're getting a bargain. Sounds an awful lot like the cable companies saying cable prices are really going down even though they're going up."

56 of 540 comments (clear)

  1. My eyebrows are raised.... by BWJones · · Score: 5, Insightful

    Funny (not as in ha ha) because as I recall back in 1983 the record companies acknowledging that CDs *were* expensive but that the price would come down as the number of CD sales went up. Back then a record album ran around $7 US and CDs were anywhere from $13-18 US and I could as a 13 year not afford many CDs, but did I ever load up on all those punk 45s, likely outspending what I would have on CDs over time. What the record companies can not apparently figure out is that if priced affordably, some sales are money in the pocket versus no sales and no money in the pocket. Judging from the precipitous fall in music sales and revenues over the past few years from lousy music, over priced music, DRM and bad will from the RIAA, they obviously just don't get it. Now, if they were smart.... record companies would *give away* music from bands just starting out and from the biggest bands out there and make money from tours. Bands in the middle of the spectrum could be the "middle-class" of the record companies that could provide the most profit after small bands graduate into the middle class and start selling their music, touring as they want.

    --
    Visit Jonesblog and say hello.
    1. Re:My eyebrows are raised.... by sk999 · · Score: 5, Insightful

      Well stated - matches my recollections as well. The price of CD's has NEVER come down since they were first introduced, and it is only because of inflation that their relative price is now on a par with that of record albums from yon times of yore. Taking 1983 as a reference point for what CD's OUGHT to cost, when CDs were a new technology, is just insanity.

    2. Re:My eyebrows are raised.... by dtfinch · · Score: 5, Insightful

      You can bounce a CD off a wall without scratching it. It's not until they land on the floor afterwards, spinning as they slide across the rough surface, that you have to worry about scratches.

    3. Re:My eyebrows are raised.... by omeomi · · Score: 4, Insightful

      Just like everything else, CDs are subject to supply and demand market forces. If they really want to try to get record companies to sell their CDs for $34, let them. They'll quickly realize that the loss in revenue caused by the huge drop in sales is not worth it in the least, and the price will come right back down. The RIAA is just making noise because they know they'll be totally irrelevant within the next 10 years...

      --
      ZuluPad, the wiki notepad on crack
    4. Re:My eyebrows are raised.... by carninja · · Score: 3, Insightful

      $100? If that. We're already seeing DVD players that are actually retailing cheaper than an MPAA DVD itself. You get DVD players with you Cocoa Puffs nowadays, so it's easy to imagine that HDDVD/BVD players will be comprably priced.

    5. Re:My eyebrows are raised.... by NormalVisual · · Score: 5, Insightful

      They'll quickly realize that the loss in revenue caused by the huge drop in sales is not worth it in the least, and the price will come right back down.

      Or more likely, they'd blame the drop in sales on piracy and direct their wholly-owned subsidiary members of Congress to push yet more ridiculous legislation through in support of their dying business model at the expense of the citizenry.

      --
      Please stand clear of the doors, por favor mantenganse alejado de las puertas
    6. Re:My eyebrows are raised.... by kfg · · Score: 2, Insightful

      Now, if they were smart.... record companies would *give away* music from bands just starting out and from the biggest bands out there and make money from tours.

      Oh, great. Just what we need, the record companies owning our live performances as well.

      No thank you. That is where the band makes its money (ok, most bands don't actually make money at that, because expenses overrun profits, but it's the idea that's the important thing; and bands that don't owe their souls to the record company figure out how to watch the bottom line on tours if they want to actually make a living. That's why Big Bands gave way to the Combo).

      Please, lets us keep the recording industry out of the live performance industry as much as we can. I've got an idea how we can do that too.

      Don't sign up with the record companies in the first place. Make your own recordings and give them away yourself as promo items to drive attendence at live shows.

      KFG

    7. Re:My eyebrows are raised.... by Lars+T. · · Score: 2, Insightful

      Funny (not as in ha ha) because as I recall back in 1983 the record companies acknowledging that CDs *were* expensive but that the price would come down as the number of CD sales went up.
      They were still saying that in 1991-1992 when record stores were knocking vinyl down to 80% to 90% off to clear space for CDs. While albums on Compact Cassettes were still slightly cheaper than CDs. Now think about how much it costs to build something like a cassette and how lonbg it takes to get the music on it - compared to a CD.
      --

      Lars T.

      To the guy who modded me down from perfect to terrible Karma - Apple haters still suck

    8. Re:My eyebrows are raised.... by Znork · · Score: 4, Insightful

      "Make it cheap and I will buy much more of it."

      The RIAA corps arent interested in you buying more music. They're interested in you paying lots for _their_ music.

      If you buy _more_ music, the revenue stream gets diluted. The cost to produce per unit sold becomes a larger part of the total revenue of each unit sold, and they get less profit. More music means more varied music taste and music exposure, in turn leading to less per-unit income off radio stations, etc. Less revenue per unit means less marketing capital, means less power to push independents off the air and off the shelves. Less control. Less money to those who control the market channels, and a larger piece of the pie to more of the actual artists and composers.

      Not at all in the RIAA corps interest.

      "Basic economics."

      Basic free market economics. But the intellectual monopoly industries are nothing like a free market.

      The fact is that the digital revolution has cut production costs for professionally produced music down the level that basically anyone who can afford a halfway decent used car can afford to make their own professionally produced album. The internet revolution has cut distribution costs down to zero. On a free and competetive market, the pricing of music would reflect that, and the prices would fall down to maybe a dollar per CD, and far less for the most widely produced CD's.

      As long as we allow the monopoly rights to remain, this gain of wealth will remain unrealized, and we'll see far less music than we should, far more marketing (and its even less savoury accompanying corruption a payola and lobbying) than we should, and a much poorer culture than we should.

    9. Re:My eyebrows are raised.... by dubl-u · · Score: 5, Insightful

      Just like everything else, CDs are subject to supply and demand market forces.

      Well, no, they aren't, not entirely.

      If one sugar producer decides the "true" price of sugar is $15 a pound, then you can buy sugar from somebody else. But if you want to buy the latest Weird Al or Madonna album, there's only source. It's a monopoly, an in theory limited but in practice eternal one called "copyright". If they double the price of the hot Madonna release, there are a lot of people who won't think that Weird Al is just as good, and vice versa.

      It's also important to note that RIAA is a trade association of major music producers, not a single producer. If the major labels (heaven forbid!) were to get together and, say, fix prices then market forces would also not apply. Not that they would do such a thing; RIAA is here to help us. I'm just talking hypotherically, you see.

    10. Re:My eyebrows are raised.... by indifferent+children · · Score: 4, Insightful

      It also strikes me as absurd, that I can buy a DVD of a movie in a store for $10-$20, and look over to the left and see a CD of the soundtrack for that movie for $18. Did all those people who took the pretty moving pictures cost nothing? Were the actors free? How can the soundtrack be considered to have equal value to the entire movie?

      --
      Censorship is telling a man he can't have a steak just because a baby can't chew it. --Mark Twain
    11. Re:My eyebrows are raised.... by AxemRed · · Score: 5, Insightful

      I don't think that it's their business model that is failing... Rather, they are failing at their business model. Granted, the current system needs some tweaks. But the main problem is that the record companies are just not doing their job. Their whole purpose is to go out and find music that people will like and then market it to people. They are doing the opposite though... They are trying to TELL people what music to like instead of finding music that people WILL really like.

    12. Re:My eyebrows are raised.... by Kookus · · Score: 2, Insightful

      They won't raise the price to $34. What they're trying to do is establish a higher value associated with their cds so that when they sue people for copyright infringement they can get more money out of them.

    13. Re:My eyebrows are raised.... by zotz · · Score: 4, Insightful

      "Well, no, they aren't, not entirely."

      and

      "But if you want to buy the latest Weird Al or Madonna album, there's only source. It's a monopoly, an in theory limited but in practice eternal one called "copyright"."

      Bingo! Mod parent up.

      There are no free markets in goods protected by copyrights and patents. These goods are covered by government granted monopolies. It should also be obvious that these monopolies distort the markets or people would likely not bother with them. I mean why go to the trouble to get a patent if it is not going to give you an advantage in the market? Why push to hve copyright terms extended if it is not going to help you in the market?

      One quirk though, even without copyright, there is still only one source in the first instance for the work of a particular artist.

      all the best,

      drew

      --
      FreeMusicPush If you want to see more Free Music made, listen to Free
    14. Re:My eyebrows are raised.... by Gr8Apes · · Score: 2, Insightful

      Heck, they're not only trying to tell people what music to like, they're trying to CREATE the "music" they're telling people they like.

      --
      The cesspool just got a check and balance.
    15. Re:My eyebrows are raised.... by jfengel · · Score: 2, Insightful

      It depends on how you define the commodity. They have a monopoly on Weird Al's song, but they don't have a monopoly on music. If they raise the price of the Weird Al song to $99.95, you'll buy something else. If they raise the price of CDs to $34, you'll shift to other forms of music, or other forms of entertainment.

      The same thing can happen to sugar: if an organic sugar producer decides to charge $15 per pound, he can get it if the cost of substituting conventional sugar is too high for people in non-economic terms (i.e. they really want organics). Or they'll switch to honey, or Nutrasweet, or whatever price point holds their fancy relative to what they want.

      In other words, the law of supply and demand still holds in setting prices. Demand curves are always about substitutions: at which point will you decide to get something different? Comparing music to sugar is a bit of a red herring because sugar is an amorphous white blob with ready substitutions. The substitutions for the Weird Al music exist as well: they're other songs and other forms of entertainment.

      What's breaking that curve from this point of view is the ease of file trading, because the supply is essentially infinite, which drives the price down to zero. This worries them, because the price is lower than the cost of production (which is larger than zero).

      The curves haven't settled out yet: people still don't get all of their music through file trading, even though the economic models predict that they eventually will.

    16. Re:My eyebrows are raised.... by BenSchuarmer · · Score: 2, Insightful

      Not quite.

      Even though music producers have control over specific products, they're still subject to the laws of supply and demand. A big part of the law of supply and demand is that if prices get to high, customers will find alternatives or do without.

      That goes for the the latest Madona song, Big Macs, trucks with Hemmy engines, etc.

      With the latest Madona song, you can also chose to "pay" for it by listening to commercials on your local radio station.

      Of course, if the CD-Player makers used the RIAA's logic they'd be charging $1000 for a CD player.

    17. Re:My eyebrows are raised.... by MojoRilla · · Score: 5, Insightful

      I don't think that it's their business model that is failing...
      Their business model is definitely failing. Their business model includes the following features:
      1. Find up and coming artists.
      2. Sign those artists to highly unfair contracts because there is no other way to get music distributed.
      3. Front artists seed money to record albums, and spend lots of money on studio magic making things sound better, all of which is recouped before artists actually make any money off royalties.
      4. Promote those artists through radio, which they control through payola.
      5. Control the distribution channels. Distributors won't work with non RIAA music.
      6. Sell full CDs even when people only want one song. Include three good songs and seven filler cuts.
      7. Rotate media every 10 to 20 years and re-sell their back catalog over and over. They successfully did this with records, tapes, and CDs. They have been unsuccessful with products like eight track and minidisc. The jury is still out on SACD and DVD-audio, but it isn't looking good.
      8. ...
      9. Profit!
      This is failing in the following ways:
      1. As you point out, they are not doing a good job of finding artists. They are trying to manufacture artists.
      2. Unfortunately, the RIAA's monopoly on distribution is ending. The internet is now a better way to distribute music.
      3. The cost of recording has been drastically reduced due to affordable computer recording software. The RIAA no longer has a monopoly on well recorded music.
      4. Radio is no longer the only way to hear music. The internet is making inroads here as well.
      5. Brick and mortar stores are no longer the easiest and cheapest way to distribute music. The internet is more convient. The RIAA resisted selling music on the internet, perhaps because their monopoly distribution system was threatened. So because convenient music wasn't available, people started sharing files.
      6. People are fed up with having to buy an entire CD when they only want a song. The internet makes it possible to only buy the tracks people want.
      7. People are fed up with rotating media. They are largely satisfied with the quality of CDs. They don't want to rebuy media.
    18. Re:My eyebrows are raised.... by shark72 · · Score: 4, Insightful

      "1) there are plenty of us who were around and remember the initially massively over-priced CD and promises of huge price drops once the technology took hold,

      Which they have; they've dropped about 60% in constant dollars since launch.

      "2) pretty much everyone of any age already knows that CDs are a lot more expensive than they should be, not a lot less."

      Yet nobody is able to exploit this. Even Magnatunes, which pushes the cost of the music production onto the artist, still sells CDs for $8 each, direct. CDBaby, another cool company, sells CDs for $14. And there are hundreds of really cool indie labels -- run by people who are musicians, or who really and genuinely care about the music -- that also sell their CDs for typical pricing.

      "This is yet more panic-induced, ill-conceived **AA FUD, when will these people learn how to die with dignity?"

      ...then why don't you become the one that kills them? I'm 100% serious. If everybody knows that there's this amazingly huge profit margin built into CDs, then there must be somebody out there who can figure out how to find artists, produce their work, pay them fairly, give their stuff proper promotion, and sell a reasonable number of copies at $3 or $5 or even $7. The record companies clearly don't -- they still only manage to net around ten points at the end of the year. From what I read on Slashdot, it's a market that's ours for the taking.

      --
      Sitting in my day care, the art is decopainted.
    19. Re:My eyebrows are raised.... by carpeweb · · Score: 2, Insightful

      I agree with the mods, but remember that copyright was developed in order to create markets where none might exist because creators had no good way to capitalize their creations. Copyright may be waaaaaay outdated, but it wasn't developed just on the off-chance that it would piss off a lot of Gen Xers a few hundred years later ... though that might have been a good rationale for it, too.

      Fix copyright; don't ignore it.

    20. Re:My eyebrows are raised.... by mstahl · · Score: 2, Insightful

      What I find interesting is that now the price of pressing vinyl is equal or greater to the cost of pressing CDs for precisely the reason that CD technology has progressed so much and vinyl pressing technology hasn't changed really since the 1970s. If you're just going on straight-up inflation of currency, EVERYTHING is "supposed" to be more expensive in dollars than it is, but the fact of the matter is that so many other things change with time than just the value of currency.

    21. Re:My eyebrows are raised.... by Rary · · Score: 3, Insightful

      "2. Unfortunately, the RIAA's monopoly on distribution is ending. The internet is now a better way to distribute music."

      I think you misspelled "finally".

      --

      "You cannot simultaneously prevent and prepare for war." -- Albert Einstein

    22. Re:My eyebrows are raised.... by Rary · · Score: 2, Insightful

      "One quirk though, even without copyright, there is still only one source in the first instance for the work of a particular artist."

      Without copyright, there's only one source for the initial creation of the content, but multiple sources for purchasing it once it's released. The only thing preventing me from being able to legally burn a Madonna CD and sell it to you for cheaper than the official distributor is copyright law.

      --

      "You cannot simultaneously prevent and prepare for war." -- Albert Einstein

    23. Re:My eyebrows are raised.... by Myopic · · Score: 2, Insightful

      Is your question hypothetical? (/irony) Or do you really not see the obvious answer to your question?

      The answer is that far fewer copies of the score will be sold, so even though the score is far cheaper to produce, the price reflects both the cost to produce as well as the projected sales volume. Well, sort of, surely there is still some guesswork involved, and a tendency to price all CDs similarly.

      I'm not saying this makes things "fair" or whatever. Ask yourself why do all movies at the theater cost the same to see? Why aren't famously-inexpensive movies like Blair Witch really cheap to go see? Why doesn't it cost a little more to see CGI-intensive films like X-Men 2?

    24. Re:My eyebrows are raised.... by darth_linux · · Score: 1, Insightful

      I think you're right. They see their business as an entitlement. In their minds, the world can't have music without them. That's a bad mindset for business. There will always be some other company willing to get paid by your customers.

      --
      Power to the Penguin!
  2. What a joke by n1000 · · Score: 4, Insightful

    If they should cost more, they would! It's simple supply vs demand! I mean, the RIAA are cartel for all intents and purposes. Who are they to be complaining?!

    1. Re:What a joke by feyhunde · · Score: 4, Insightful
      More complex then that. What's the physical cost of a CD? Blank media from staples works out to a few cents. Before staples, it's even cheaper. Now burning data on a CD does cost money. A red laser in 1983 that can burn media would cost in the tens of thousands, if not hundreds of thousands of dollars. Now it costs less than 100 USD, again retail.

      So yah, if it cost the same amount to actually make the CD in 1983 as it did in 1996, or 2007, there might be some validity. But the physical cost of the CD fully packaged is 10 cents or so.

      So we're expected to believe the majority of costs in that same article are related to booths. When a 6$ record is replaced by a 14$ CD, the price works out the same. Nothing got cheaper, they just want us to believe a CD is magically as hard to make now as a LP in 1983.

      --
      I'd say more, but my guild is raiding.
    2. Re:What a joke by Fulcrum+of+Evil · · Score: 1, Insightful

      Buddy, we're talking about pressed CDs, not burned discs. Last I checked, in 1000 disc quantities, CDs cost roughly $0.90 - $1. That includes packaging and cover art.

      --
      "We returned the General to El Salvador, or maybe Guatemala, it's difficult to tell from 10,000 feet"
    3. Re:What a joke by EatingSteak · · Score: 4, Insightful

      "It's simple supply vs demand!"

      I don't think I'm the first to say, but it really isn't supply vs. demand at all.
      "Supply & Demand" implies a free market, ie, one with (theoretically) infinite suppliers and infinite consumers. In practice, we just say "many" suppliers and consumers, both of whom are price takers. Emphasis on takers.
      Even with the concept of monopoly pricing "creating a shortage", that is more like OPEC (a large group acting as a monopoly). OPEC, believe it or not, is a price taker. They do not say "ok I will sell you this many barrels of oil at, say $60/barrel. They can only set a goal price of $60 by restricting supply.

      Retails sales are a completely different ball game. Of course, by the definition of copyright, and the fact that the record label holds it (as opposed to the artist), that label has a monopoly on selling that artist's music. To prevent competition from similar artists, they have a cartel going for them.
      So, one could say that the labels have at least a partial monopoly. But here's the kicker: they are price makers. In a market (such as the market for futures, where you get quote "oil prices"), a monopoly would set supply. In retail/wholesale, the label sets prices (well, wholesale prices). There is no market to buy whatever's there at whatever price will make it move.
      Rather, the labels set a price (at least a wholesale price), and the public buys however many units they feel like. The supply is theoretically infinite... it'd be a tough case to argue that they would stop printing additional CDs as long as they keep selling. Basically, they set the price (retail is $12.75 IIRC), and the public buys or does not buy.

    4. Re:What a joke by krotkruton · · Score: 3, Insightful

      I'm not trying to refute anything that you've said, but I think you missed the point. It seemed to me that the parent was saying that the price to make a CD goes down over a reasonable amount of time, so the RIAA can't just use a function of the worth of a consumer's dollar to determine the price after x amount of years. How the price of a CD is divided up isn't really the point. The point is that it costs less to make a CD now then it did in 1996, so that needs to be factored into the pricing of CDs, instead of just the consumer index that the RIAA used.

    5. Re:What a joke by Technician · · Score: 2, Insightful

      It is not the consumer's problem regarding what happens to unsold CDs

      If the unsold CD's were sold by adjusting the price, they would not be unsold. How many unsold DVD players get sent back to be destroyed? They are discounted and sold anyway. I can buy a DVD player for about the price of 2 CD's. Production and developement and IP property value is much higher in the DVD player than in the 2 Cd's.

      --
      The truth shall set you free!
    6. Re:What a joke by krotkruton · · Score: 2, Insightful

      It has never been the principle cost driver for the medium? Even when the medium was brand new and there was no such thing as a CD pressing company so anyone who wanted to make CDs had to buy equipment that would be capable? The first CDs cost a lot to manufacture when compared to CDs today. I doubt that that was the majority of the cost of a CD, but it was more signficant then as opposed to now.

      But that really wasn't my point either. I don't think we need to debate any of the costs of creating / manufacturing / marketing / selling CDs, only that we need to recognize that the change in consumer index is not the only factor in CD pricing, which is what the RIAA was arguing should be the case. In other words, the RIAA thinks that we should be happy that CD prices haven't followed the consumer index, to which I say that there are other factors that go into the pricing of any product, and no one should just be content with prices that do not raise with the consumer index without taking those other factors into consideration. I think we can both agree on that statement?

  3. Because it's not like production ever gets easier by Anonycat · · Score: 4, Insightful

    I suppose we should have to pay $1300 for a Commodore 64 nowadays, too?

    You don't even want to hear how much the RIAA thinks you should have to pay for a machine capable of a billion calculations per second...

  4. Please, do raise the prices by orthancstone · · Score: 4, Insightful

    Seriously, jack them up. That way, when less CDs fly off the shelves, they'll start making some good decisions on how to run the industry and actually attract customers. Throwing us tons of garbage every week for a "good price" doesn't mean they are doing us any favors.

    1. Re:Please, do raise the prices by TheUni · · Score: 4, Insightful

      If less CDs fly off the shelves, they'll blame it on rampant piracy. Always something with these guys.

    2. Re:Please, do raise the prices by Grishnakh · · Score: 2, Insightful

      They can blame it on piracy all they want, but that's not going to keep the revenue flowing in to support their business and pay their staff and rent. Eventually they'd have to make a change.

  5. It doesn't matter by yotto · · Score: 3, Insightful

    I still won't buy them.

    --
    Pulp Audio Weekly - Geek News and Reviews
  6. Re:Because it's not like production ever gets easi by ZachPruckowski · · Score: 2, Insightful

    Yes. This is a fundamental intersection between two economic concepts - Inflation and Moore's Law.

    Inflation indices imply that prices have risen over the last few decades. However, those numbers are averages across a wide variety of (generally non-technical) goods. There are numerous causes of inflation, and I won't discuss that here.

    Moore's Law is not strictly speaking an economic law, but with the benefits of Moore's Law, we see electronics and machines become more affordable. In all likelihood, production costs have plummeted for the actual music, and I assume CD error rate has gone down. As a result, the cost to make a CD, from start to finish has seen the price of its components fall (as measured in utility/cost). Therefore, the price of CDs don't have to rise.

  7. Pricing and inflation?!? by wall0159 · · Score: 4, Insightful


    Also, the cost of international phone calls has declined markedly since 1925. Based on inflation, we should now be paying $500/min for international calls. Don't tell the telcos!

    Similarly, the cost of motor cars has come down since the Model-T Ford - they should cost $1.5 million each (based on inflation - discounting better performance these days)

    Or... perhaps technology and economics has some influence on the price of things too..

  8. How Ironic by argoff · · Score: 3, Insightful

    It is the ultimate irony. The record industry is trying control information in the form of content, and the US Federal Reserve Bank is trying to control information that refelcts itself in the form of money and markets. So now the Fed is lying to us about the value of our money, and long behold it has the effect of destroying the pricing power for those who are lying to us about "protecting" artists, and branding about other lies such as saying copyrights are "property" rather than a personal regulatory monopoly.

    Well, guess what. As society enters the information age, that means that information is becomming commoditized and the service value of information starts to exceed the control value. So liars who control information like Hollywood and the Fed (and Microsoft) are in serious trouble. How ironoc it is that, unlike the service sector, they will have no pricing power as they destroy each other.

    1. Re:How Ironic by Planesdragon · · Score: 3, Insightful

      So now the Fed is lying to us about the value of our money

      The fed says jack and shit about the value of my money. Price Chopper, McDonald's, and Wal-Mart are where I discover the value of my dollars.

      All the fed does is set a price for new money put into the system, which is after all the Fed's job. It can't lie about the "value of money" any more than McDonald's can lie about the value of the ice scraper I bought at Wal-Mart.

      Well, guess what. As society enters the information age, that means that information is [becoming] commoditized and the service value of information starts to exceed the control value. So liars who control information like Hollywood and the Fed (and Microsoft) are in serious trouble. How [ironic] it is that, unlike the service sector, they will have no pricing power as they destroy each other.

      Amazing, how you can use so many words and not actually say anything.

      The "Digital Age", or "Information Revolution", or even "flat-earth effect", is pretty well set upon us now. And you know what? Controlling Information is still the best way to make immediate wealth. Google makes their money allegedly enabling the free flow of information, but they control their means and methods with a zeal greater than Coke ever used for their soda formula. The Chinese are building industrial powerhouses, but they're very careful to control the knowledge of the real cost and value of their operations from anyone.

      So what if you can now buy music from China, software from Europe, or outsource your Russian McDonald's drive-thru to Utah. People still need to eat, sets still need to be built, and governments will still collection taxes. The "Information Age" might be as big a shift as the introduction of the counting machine and the photocopier, but it's not as big as you think.

  9. #include <derisive_laughter.h> by ewhac · · Score: 5, Insightful
    Fact: The unit cost of a single CD, silkscreened, in a jewel case, with six-page four-color liner notes, quantity 5,000: USD$0.91.

    Quantity 10,000: USD$0.79.

    Explain to me again why these fsckers cost $16.00?

    Now then, what was the per-unit pressing cost, quantity 10,000, of a CD in 1980? If we calculate MSRP as a percentage multiplier of the raw pressing cost, what should music CDs cost today?

    Schwab

    --
    Editor, A1-AAA AmeriCaptions
  10. Cost Of Production Is A Very Small Amount by domukun367 · · Score: 5, Insightful

    Ben Woods' argument is correct, if we are talking about a piece of electronics, where, say, 90% of the cost of that piece of electronics is in the production. However, only a very small amount of the cost of the cd (less than 1% if 1c for the CD and 3c for the case/cover) is in the PRODUCTION of the CD.

    Most of the cost of a CD is in the marketing and (of course) profits for the record company. Sure there are a few extras, like the pittance they give the artist, but the majority of the cost is MARKETING. This gets more and more expensive as they get more and more ridiculous in their marketing and the cost of marketing increases over time.

    Another spin might be that CDs are now more expensive to produce due to all the non-redbook copy prevention measures that they keep trying to put on "CDs" now.

    --
    Please don't send a Word document when a text file will do the job.
  11. Pure BS by soren100 · · Score: 4, Insightful

    This is one of the most laughable things I have ever heard.

    CD prices were always higher than the equivalent cassette tape, which was much more complicated to produce and had the same production and marketing costs.

    FTA: For example, when you hear a song played on the radio -- that didn't just happen! Labels make investments in artists by paying for both the production and the promotion of the album, and promotion is very expensive.

    The only thing that gets played on the radio is the latest Britney Spears bubblegum crap-ola. In fact, Mandy Moore recently apologized for making such bad music

    So we have to pay for all the payola in getting the radio stations bribed to play the songs on the radio.

    And then when a CD gets scratched, broken, or stolen, do we get a free replacement? Oh no, we have to pay the full retail cost all over again even though the RIAA wants us to think that we have somehow "licensed" the music from them.

    I am glad that they are sweating, which they must be in order to be trying to play the "victim" game. The days of the Internet are here to stay, and bands can finally distribute their own music without getting shafted.

    In the linked article it says that only 10% of all CD's make a profit. The other 90% of CD's put the bands into debt to the record companies, making it a really bad deal to sign a record contract. Courtney Love does the math.

    The RIAA sounds desperate, and I hope they are -- it would serve them right.

  12. Post-scarcity needs getting used to by Glowing+Fish · · Score: 5, Insightful

    If you look at most computer or home electronic prices, the trend has been downwards over the past twenty years. Not only downwards when adjusted for inflation, downwards when adjusted for performance, but downwards in absolute prices. I wish I had stronger memories and figures to back this up, but I do remember as a child, (I was born in 1979), people just had a wildly different attitude towards electronics. A VCR, cable television, a microwave oven, color TVs...all of these were important luxury items. This could be just a artifact of me growing up, but a color television set was on par with say, a grand piano as far as how expensive it seemed.
    I do have better data for computers. I have a 1994 price guide to computers when bottom line computers, 386s cost around 1500 dollars, twice as much as a midrange new desktop would today.
    All of this is stuff most readers here know. (Although I am expecting at least a few people will correct my specifics.)
    What I have noticed, however, is that many people have not psychologically adjusted to this, even when they intellectually know it is the case. I have noticed this most at my work at Free Geek, where often people come in, with a Packard-Bell Pentium, and explain at some detail that the quad speed CD Drive works, if you just wiggle it around first. Or that their 14 inch monitor still works, but it might blink off every few minutes. Meanwhile, we get truckloads of P-4 systems every few days.
    The point is, I think many people (often older people, but not always that much older), still have a mindset that computer and electronics are rare and valuable, instead of being the mass-produced, quickly obsolete, pieces of junk they are. And I think that many of these people are honestly confused about how valuable their product is. Of course, the RIAA people know that AOL mails out millions of CDs a month (do they still do that?), and that CDs cost "under 1 dollar to make" ( wikipedia on CD manufacturing). Of course they know these things intellectually, but I really do think they have a mindset that they are producing a rare and valuable resource, and that they aren't asking for much in that they haven't raised their prices with inflation.

    Post-scarcity takes some getting used to. I consider the entertainment industries inability to come up with a more financing method that doesn't involve creating false scarcity to be one of the less harmful inabilities to adjust to a new paradigm. I consider the fact that the US political and industrial leaders really don't understand (even though they know) that the US has lost textiles 50 years ago, consumer items 40 years ago, vehicle manufacturing 30 years ago, electronic manufacturing 20 years ago and computer manufacturing 10 years ago (numbers somewhat generalized), and that all of those things are now produced overseas for a fraction of a US worker's hourly minimum wage, to be a much more dangerous symptom of the same disease.

    --
    Hopefully I didn't put any [] around my words.
  13. RIAA = Anti-Free Market? by MSTCrow5429 · · Score: 2, Insightful

    Maybe the RIAA doesn't believe in free-market economics, but the price of a product follows the S-curve, and should drop from its introduction price, not stay there forever. Lunacy to expect or whine that a product should remain in the "early adopter" phase of the S-curve for the life of the product.

    --
    Slashdot: Playing Favorites Since 1997
  14. Corporate math by Bullfish · · Score: 4, Insightful

    You have to understand corporate math. That math says that if you made 15 million in profit in year one, and 10 million in year 2, then you have taken a 5 million loss in that second year. That thinking convolutes all kinds of statistics.

  15. Then what about DVD's ? by nighty5 · · Score: 2, Insightful

    How can I possibly pick up a DVD for $10 ?

    The fact is, its all about greed. I think other slashdotters have already covered the whole scales of economy so I won't take it any further than that.

    I can tell you now that I simply don't think a CD is worth $33. They only think its worth that much because its what they think they can get away with it.

  16. Re:Marketing costs by Anonymous Coward · · Score: 1, Insightful
    Hey Wow! You just invented iTunes.


    Which approaches the larger issue maybe. They can't actually charge $33 for CDs, but they can wrest download prices away from that sweet $.99 slot and into the $1.99 or $2.49 range for new releases. "Hey kid, don't you think it's worth 3 bucks?, check iTunes. 5 friends can share it with you"

  17. I agree completely by elronxenu · · Score: 2, Insightful
    In 1986 I paid $660 for a 20 meg hard disk drive. So I should feel happy that I'm not paying over 10 MILLION DOLLARS for the brand-new 320 gig drive which I received today.

    The RIAA treats us like idiots (when it's not like criminals). CD stamping costs only cents in quantities of 10,000+; even in Australia it's only 99c each for a run of 10,000 including a jewel box (ref: www.cdroms.com.au)

  18. Re:Suuply and demand can not be used for monopolie by gsslay · · Score: 2, Insightful
    Most recordings are covered by copyright, making their production state granted monopolies


    Wrong. You only have a monopoly if there are no alternative products. Last time I looked the music industry was positively overflowing with different artists producing both similar and different styles of music.


    If what you're referring to is a monopoly, then every single employee on the planet has both a monopoly of their labour, and on their production. Yet amazingly the labour market shows no signs of being a monopoly.

  19. Ok, then your current PC should cost $50M too! by Anonymous Coward · · Score: 1, Insightful

    Let's think of all the things we can that have gotten cheaper over the same period, yet perform the same or better than in the 1980s.
    - Your PC - by performance numbers alone, it should cost $50M each.
    - Hard disks - i have a 10M Seagate that cost me almost $500, today you get a 1GB USB drive for $20.
    - Gasoline - Everyone thinks gas is higher, it isn't if you do the math.
    - VHS movies were $79, they are now $5 in the bargain bin. DVDs too.
    - High quality audio equipment - you had to spend $10,000 back then to reach the sound quality of a $200 system today
    - FM Radio is still free, but FM radios are given away as company schwag - Thanks Business Objects http://www.businessobjects.com/ and Sun http://www.sun.com/!
    - DVD players were $500 (I have a Toshiba) and now they are $30 http://www.walmart.com/catalog/product.do?product_ id=5270015
    - T-shirts are still $9-15
    - Items that have been outsourced for production are 30%-90% cheaper.
    - I'm sorry that you want a raise, RIAA, I'd like a raise too, but haven't had one since 2001.

    Ok, so this means that CDs should now cost $1 since manufacturing has been completely outsourced and costs have dropped at least 16x over this same period. Get over it RIAA and wake up to competition. You are confused as to which business you are in. You think you are in the art business, when you are in the magazine business.

  20. The RIAA is partially correct ..... by Luscious868 · · Score: 2, Insightful

    The RIAA has a point but what they willfully ignore is that market forces have radically changed since the CD was introduced. Consumers today are literally overloaded when it comes to entertainment options. Hundreds of TV channels via satellite and cable, tons of movies playing in theaters, a huge collection of titles available on DVD, movies on demand, radio, satellite radio, the web, podcasts, video games and the list goes on and on.

    So while the RIAA has a point that CD prices would be a lot more today if prices had kept up with the rate of inflation instead of staying relatively stagnant they fail to take into account the fact that the entertainment market has radically changed since the CD was first introduced. Consumers have a hell of a lot more entertainment options than they had even 5 to 10 years ago and CD prices need to reflect that reality.

  21. Flawed economic argument by UnknowingFool · · Score: 2, Insightful

    If you've read the RIAA's argument, they are not arguing that the manufacturing costs have gone up. What they are arguing is the total cost has gone up. For them they are including things like marketing and labor costs which costs more today than in 1983. On the surface that seems like a reasonable argument but if you think about, it's BS.

    Of course, the most important component of a CD is the artist's effort in developing that music. Artists spend a large portion of their creative energy on writing song lyrics and composing music or working with producers and A&R executives to find great songs from great writers. This task can take weeks, months, or even years. The creative ability of these artists to produce the music we love, combined with the time and energy they spend throughout that process is in itself priceless. But while the creative process is priceless, it must be compensated. Artists receive royalties on each recording, which vary according to their contract, and the songwriter gets royalties too. In addition, the label incurs additional costs in finding and signing new artists.

    Except for a few artists, most artists get the scraps left over after the record companies take their share. If anything the share for the artist has gone down in terms of absolute dollars as the record companies cry poverty.

    Once an artist or group has songs composed, they must then go into the studio and begin recording. The costs of recording this work, including recording studio fees, studio musicians, sound engineers, producers and others, all must be recovered by the cost of the CD.

    I consider this the biggest lie. First of all, the record companies charge the artist for studio time if the artist uses their studios. This cost is not factored into their royalties. So if an artist has a contract stipulating he/she gets $1 an album, that does not include any studio costs yet. Some artists like TLC have claimed bankruptcy after high album sales because their studio costs exceeded their royalties. If the record companies say the price of the CD covers studio time then they are double dipping. Because of this reason and for more creative control, many artists build/use their own studios. For these artists, the studio cost to the record company is nothing because the studio costs are borne by the artist.

    Then come marketing and promotion costs -- perhaps the most expensive part of the music business today. They include increasingly expensive video clips, public relations, tour support, marketing campaigns, and promotion to get the songs played on the radio. For example, when you hear a song played on the radio -- that didn't just happen! . . .

    Yes marketing costs money but the subtext here is that the studios seem to admit the payola scheme.

    For many artists, a costly concert tour is essential to promote their recordings.

    Another case of double dipping. First, the tours are supported by ticket sales. Second, like studio time, concert tours are mostly funded by the artists themselves because they keep all the proceeds. There are tours funded by the record company but those are just another instrument to rip the artist off even more. The company makes more profit off them.

    Another factor commonly overlooked in assessing CD prices is to assume that all CDs are equally profitable. In fact, the vast majority are never profitable. After production, recording, promotion and distribution costs, most never sell enough to recover these costs, let alone make a profit. In the end, less than 10% are profitable, and in effect, it's these recordings that finance all the rest.

    Taking the record companies argument, what is overlooked is not all CDs costs the same to the record company. Manufacturing costs might vary between 100K copies and 1 million but the difference is small comp

    --
    Well, there's spam egg sausage and spam, that's not got much spam in it.
  22. Re:Clothes, tools, and furniture as well by shawb · · Score: 2, Insightful

    I've found that generally, you get what you pay for with extremely cheap consumer products. I used to pride myself on finding cheap backpacks. Except they'd fall apart half way through a semester. So eventually I "splurged" and bought a $45 Jansport. Lasted me five years of college, with often taking the bus, riding a bike, etc. Still use that backpack to carry various things around, although not regularly.

    As my friend who has been in customer sales, primarily home entertainment has often said: It's not that they've learned to make things that much cheaper, it's that they've learned to make them that much more cheaply. A Kirby or similar vacuum cleaner that costs around $250 will last you significantly more than ten times as long as your $45 find. My grandma's Kirby from the thirties or forties is still in serviceable condition (Not working, but needs just very basic maintenance to get going again.)

    However, for many products like consumer electronics and consumer pop music that have a short life expectancy due to obsolescence rather than functional working life, going for cheaply made can be the way to go. For everything else, be wary and understand that you will have to replace it sooner than you would like.

    --
    I'll never make that mistake again, reading the experts' opinions. - Feynman
  23. Re:well not really .... by shark72 · · Score: 2, Insightful

    "It costs less to manufacture a CD than it used to to make an LP ... so if that were true then CDs would cost LESS (inflation adjusted) than LPs did back then."

    I'm surprised at how many people aren't aware that for lots and lots of things that are sold at retail, the manufacturing cost is a small percentage of the cost of sale. It's true for PC peripherals (the manufacturing cost for my products is about a third of the cost of sale), it's true for cars, it's true for clothing, and it's true for items in the grocery store. Selling hard goods via retail is inherently inefficient; there's inventory to manage, and everybody who touches it gets paid; these costs add up fast.

    Either way, CDs do cost less than LPs did back then. I was buying LPs for $8 or $9 in 1983. $9 in 1983 = $17.50 in 2007 money, while the average price of a new CD is around $13 - $14. Did I misunderstand your point?

    "The problem of course is that there's no real competition in the music publishing industry - you don't see competing companies trying to undersell each other with the latest say Rolling Stones CD - copyright laws essentially create monopolies."

    Right, copyright is a monopoly. But supply and demand still apply. How well the latest Rolling Stones CD sells depends on how good it is, and the price at which it is sold. Nobody needs it and the higher the price, the more people will find that they can do something better with their money. If the Rolling Stones were, say, the only cure for pancreatic cancer, then your statement would apply quite well. But any given CD by any given band pretty much epitomizes the idea of discretionary spending.

    --
    Sitting in my day care, the art is decopainted.