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RIAA Says CDs Should Cost More
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."
Correct. The 1983 price of CDs reflected the costs as an immature technology. Production costs for digital music have plummeted, as have the costs associated with pressing CDs. Similarly, in 10 years, the cost of an HD-DVD/Blu-Ray (whichever wins) will be a lot lower than current prices. It won't cost $500 a player, it'll cost more like $100.
why does it seem like every week the riaa has some new, bizarre claim about the cost of music, or some completely inane justification for them to charge us all more money for our cds? i spend a good portion of my life in studios, and while it does cost quite a lot of money to record / produce / master a big commercial release, there's no way that a cd would ever cost $33... but then again, i don't work for the riaa, so i probably don't know the 'real' truth...
now is the winter of our discotheque
FTFA:
For every album released in a given year, a marketing strategy was developed to make that album stand out among the other releases that hit the market that year. Art must be designed for the CD box, and promotional materials (posters, store displays and music videos) developed and produced. For many artists, a costly concert tour is essential to promote their recordings.How about you all agree to stop marketing the CDs and just let the people choose what they think is good, rather than trying to tell them? We'd all save millions.
If they should cost more, they would! It's simple supply vs demand!
No it is not. Ask what happens to unsold CD's at the local music store. Prices are artificialy high by created shortage. Surplus is returned, not sold on a discount. Ask your local retailer what happens to unsold titles that waste valuable floor space.
The truth shall set you free!
It's clear that no one would pay $1300 for a C64 these days because computers have gotten so much faster for the money. But what's the comparison with music? You cite an example of how old computers aren't worth much because new computers are so much better, so what are you implying, that old music was worth a lot more because new music isn't anywhere near as good? Is new music so much worse than older music that it's not worth paying that much anymore, and the price had to fall on the new stuff, like prices fall on old computers? Obviously not, because a lot of these CD's being sold now have the same music on them that they had in 1983. The march of technology and Moore's law doesn't really say anything about the price of music over time.
The only reason I expect a CD to be inflation-adjusted cheaper today than in 1983 is that in 1983 they were still selling primarily tapes and some vinyl, and the only people with CD players were mostly audiophiles and early adopters, and the CD players had cost them a fortune and were part of premium stereo systems. No one had CD players in their cars, or portable ones, CD players were big, expensive components for rich high-end audio enthusiasts, who were clearly willing to pay a huge premium for the CD experience. The price of a CD in 1983 should be inflation adjusted and compared with the price of an SACD today. CD's are now the lowest-common-denominator standard format for the masses and should be priced as such. Had the price of CD's not fallen dramatically since the 1983 price, they would never have gotten popular and remained inaccessible, which would be an example of the RIAA companies shooting themselves in the foot, reducing profits trough overly high prices and small unit sales.
So pricing changes since '83 are a silly comparison, because the product's placement in the market changed entirely since '83. CD's have been the de facto audio standard now since at least 2000, I'd like to see what inflation adjusted prices have done from 2000-2007. That would indicate what CD prices have been doing.
Can anyone tell me how to set my sig on Slashdot?
I agree, but for a slightly different reason. I want the RIAA to jack prices through the roof. Our wonderful market economy would then allow indie record companies and artists to undercut the "cartel". That would actually be the best scenario I could think of.
As it is, many of the indie artists I have worked with, and in some cases, recorded, price their records below the RIAA retail range of $16-$22, so they can sell more. A huge number of indie CDs are $10-$15, which is much more in line with what the market will bear.
The RIAA will not make good decisions. They want the market to react to it. They don't want to react to the market. As long as they view the industry that way, they will continue making bad decisions.
So let them.
Sig (appended to the end of comments you post, 120 chars)
"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?"
It's real simple:
+$16.00
-$12.01 (75% cut for recording label)
-$01.33 (8.33% cut for artist)
-$01.33 (8.33% cut for retailer)
-$01.33 (8.33% cut for manufacturing & distribution)
-------
$0
Studio-time is trough the floor. It used to be just a few decades ago that a studio capable of producing comercial-quality records cost on the order of a house. These days you get superior signal-handling from gear that costs literally 2-3 orders of magnitude less. Hell, $10K will buy you equipment good enough to win awards with your records, I know because my co-worker across the hall did 2 weeks ago. (Spelemannsprisen, the most prestigious Norwegian music-award)
the price of labor for the guy(s) running the boards), artist payments (in theory, this should also go up with inflation),
Actually, it should go up proportionally to average *salary*-increases in a society, which is *MORE* than inflation if the society is getting richer. This is however in this particular case more than offset by two facts. One, modern equipment is *much* less labour-intensive and two, the lower leads to increased availability, which leads to more people capable of dealing with much of it. Many bands even do a lot themselves. Yes they'll need one or two (preferably good!) sound-technicians for the couple of days the actual recording takes. But let's face it, that works out to paying an engineer for a week. For well-selling records its down in the noise.
Marketing costs whatever you want it to cost. You can spend $100 or $100million promoting a single album. That was always so.
Fact is, the RIAA is just whining. There's nothing whatsoever stopping them from selling an album for $35. I encourage them to try. People are then, offcourse, free to simply not *buy* that. But that's a free market for you. I guess they're too used to monopolies and dictating terms.
> this is a classic example of supply and demand.
No, it is only half the supply and demand model. The demand adjusts to the price, the supply does not. The supply and demand model describes an equilibrium price that would happen in a perfect market. Most recordings are covered by copyright, making their production state granted monopolies, which is as far from a perfect market as you can come.
Supply and demand can be used to model what happens with recordings whose copyright has expired.
Computers are a bad example because its hard to compare apples with apples (or even Apples with Apples). The specifications of computers have gone up exponentially while the prices have, at least, failed to grow with inflation. Meanwhile, the specially designed low cost "home computer" (a la C64, Sinclair etc) has been replaced by bargain bucket versions of "office PCs" essentially built from surplus components from an overcrowded industry...
In the case of CDs - which are still the same product as in 1983 - what should have happened is that the initially high "early adopter" price should plummeted in the first few years until it hit the old LP price point, then followed inflation.
Personally, I don't have any great problems with the current price of a CD (although it would be nice if much more of the profit went to the artist) - but they were overpriced during the 90s.
Big problem for the music industry is that they would love us to all "buy the white album again" on SACD or some new format, but the pesky techies have decided that the 12cm optical disc is "just right" and keep making the new players backwards-compatable, then MP3 comes along and is huge, but (whimper!) you can just convert your existing CDs! Oh, the humanity!!!
In a survey of 100 programmers, 111111 thought that duck-typing was a good idea.
I have two CDs from around the original release times and they WERE pretty indestructable. Kinda...compared to what we have now.
Every year, they seem to make these things cheaper and lighter. The last batch of CDRs I picked up were $5 for 50 and I thought they were damaged because they were nearly transparent. I would have taken them back, but it would have cost me more in time than it was worth. Sat on my shelf for a couple weeks and then I ran out of the good stuff and grabbed what I had. I was surprised -- it actually worked.
Its a far cry from the first disc I bought, which looked like a copper mirror and felt like a piece of plasticized metal.
What are they smoking?
Almost every newsagent and bookshop has a photocopier. Yet people don't commonly "pirate" books and newspapers. Why? Well, because it's cheaper to buy than to pirate. It's my reckoning that if CDs cost about £3.00 (€4.55 / $5.88) each, then it would not be worth most people's while to go to the effort of copying them. Nor would anyone think twice about buying a CD at that price. The record companies could easily afford to sell CDs at for £3.00 if they didn't spend so much pursuing failed copy-prevention schemes and paying fatcats to do nothing useful. And they'd probably sell enough units to be earning more than they were before. People would be more willing to take a gamble; if it turns out to be shite, it's not such a great loss.
Now I'm going to tell you a story. It's a sad story. About music, and greed, and the Perversity of Human Nature.
There was a bar I used to drink in once. They had a juke box in there. An NSM Prestige, played 45s, 160 selections. 10 pence a song, six for 50p., and it was always playing. Everyone who came into the place used to walk up to the machine, look at the records, drop in a coin and put on a tune.
Actually, the juke box wasn't always playing. For one hour a fortnight, it would be silent, while the man from the amusement machine hire company emptied the coin box, changed the records and cleaned and serviced the machine. And the bar was closed sometimes. But you get the general idea. It was a popular machine. It also played the records in the order they were arranged in the magazine, not the order in which they were selected (that way, it used only 20 bytes of RAM to store all its selections; which is important when your brain is a single-chip micro with just 64 bytes of RAM), and it was quite possible that you'd have to stay awhile to hear your track if there were a lot of selections from the other end of the machine to be played. That meant the bar sold more beer and food, since the Perversity of Human Nature is such that someone who has paid to hear a song will gladly spend a few pounds on refreshments rather than waste ten pence by leaving before the song comes around on the record machine.
All that changed one sunny afternoon. The man from the amusement hire company came round as usual; only this time, as well as merely emptying the coin box, changing the records, cleaning and servicing the machine, he also tweaked the price up to 20 pence a song.
After that, people just used to walk up to the machine, look at the records, and walk away again.
And the moral of the story, if you're really choking for this story to have a moral, is that if you charge too much then people won't pay it.
Je fume. Tu fumes. Nous fûmes!
All I can say is, be glad you don't live in Japan. CDs here generally sell for around ¥3000-3500 ($25-29 at the current exchange rate of ¥120:$1). Singles are generally ¥1000-1600 ($9-14). What's worse is that the prices are printed on the back label, so pretty much every store has the same price- you don't get those "Virgin Special Price $9.99" stickers anywhere.
Then again, practically every high school girl has a $5000 Louis Vuitton purse (god those things are fugly), so it's not like there's a big bargain-conscious consumer base. And there's always the rental stores like Tsutaya, which seem to have more CDs than DVDs, so the thrifty can rent a CD for a couple bucks & copy it to their minidisc/MP3 player.
All I can say is, be glad you don't live in Japan. CDs here generally sell for around ¥3000-3500 ($25-29 at the current exchange rate of ¥120:$1). Singles are generally ¥1000-1600 ($9-14). What's worse is that the prices are printed on the back label, so pretty much every store has the same price- you don't get those "Virgin Special Price $9.99" stickers anywhere.
On the other hand, we also don't generally get DVD's packaged as a bonus on a regular basis. Japan does. Japanese inserts are also usually much thicker than ours, with tons of photos - heck, several of my "regular" (non-SE) CD's from Japan came with a whole separate photo book (as does the random CD I'm linking to above). Even the CD cases themselves are thicker and better made. In short, you get what you pay for.
The RIAA's problem is they've been downgrading the value of their product for years, which of course is going to drive both demand and prices down along with it. Imagine if every big new release here came with the first couple singles (including b-sides), a live DVD, and a photo book - and that was the regular edition! That's akin to the situation in Japan much of the time. So it's no surprise that CD's there cost $25 or so and that people will pay it - they'd pay it here too if there was actually that much value in the product being offered.