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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."

10 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.

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    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 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.

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    4. 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.

    5. 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.

    6. 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.
  2. #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

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  3. 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.

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  4. 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.

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