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Must a CD Cost $15.99?
scionite0 sends us to Rolling Stone for an in-depth article on Wal-Mart and the music business. Wal-Mart is the largest music retailer selling "an estimated one out of every five major-label albums" in the US. Wal-Mart willingly loses money selling CDs for less than $10 in order to draw customers into the store, but they are tired of taking a loss on CDs. The mega-retailer is telling the major record labels to lower the price of CDs or risk losing retail space to DVDs and video games. (Scroll to the bottom of the article for a breakdown of where exactly the money goes on a $15.99 album sale.) "[A Wal-Mart spokesman said:] 'The record industry needs to refine their business models, because the consumer is the ultimate arbitrator. And the consumer feels music isn't properly priced.' [While music executives are quoted:] 'While Wal-Mart represents nearly twenty percent of major-label music sales, music represents only about two percent of Wal-Mart's total sales. If they got out of selling music, it would mean nothing to them. This keeps me awake at night.' [And another:] 'Wal-Mart has no long-term care for an individual artist or marketing plan, unlike the specialty stores, which were a real business partner. At Wal-Mart, we're a commodity and have to fight for shelf space like Colgate fights for shelf space.'"
I thought all you guys stole all your music.
Hardly news considering the article was posted on Oct 12th, 2004!
Who the hell approved this?
Proposed new budget (in my opinion):
:-)
$0.17 Musicians' unions - keep this, someone needs to be a voice for the artists
$0.80 Packaging/manufacturing - eliminate some of the paper involved, betcha I could find a dime there so now 70 cents
$0.82 Publishing royalties - first thing to go, we'll halve this to 41 cents safely I imagine
$0.80 Retail profit - Wal Mart has to do it's share, take 60 cents per CD
$0.90 Distribution - that's fairly tight...transportation and all with oil prices being what they are, no change
$1.60 Artists' royalties - mega artists can get skimpier - down to $1 a CD even
$1.70 Label profit - worse than the artists, 80 cents a CD now
$2.40 Marketing/promotion - do we really need so much hype $1.20 a CD
$2.91 Label overhead - pinch a little, 2.60 cents a CD Now
$3.89 Retail overhead - pinch a little, 3.70 a CD (retail is tougher to save overhead, they run thin as it is)
New Cost: 11.35 (though double check my math) Well better than 15.99 but maybe someone here can be more creative still and get it below the $10 mark, I'm sure someone here will try
...in bed
And you expect sympathy somehow? I mean, let's be serious: the music industry did all it could to make music a "commodity and throwaway product". I sorry, but what did you expect? You wanted to sell a commodity product, then you live by the rules of commodity products. Geez.... These people are obtuse...
Ahhh...the great dumpster continuum. Many a free computer will be found there. -- sowth (748135)
They cost much much less used.
Doing business with Wal*Mart is inviting death.
The World Wide Web is dying. Soon, we shall have only the Internet.
$0.17 Musicians' unions *Typical
$0.80 Packaging/manufacturing
$0.82 Publishing royalties *e.g The rights to the song itself
$0.80 Retail profit *Poor bastards. No wonder they're going out of business.
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit *Hmmmmmm.
$2.40 Marketing/promotion *So why don't 20 year old albums cost any less?
$2.91 Label overhead *Upgrade your equipment, jesus.
$3.89 Retail overhead *Because if it weren't for music, they'd be selling crack in that space.
Oh yea...No scam here. I'm not sure if it's just the bloated nature of the business or what, but this is a steaming pile of crap from my perspective. It's a fricking dollar seventy to make it and get it to the store, but the "price" is fifteen bucks?
Breaking down the rest, we notice that all the combined "profits" amount to twice the cost of manufacture and distribution, and that the combined "overhead" is equal to more than all the profit, cost, and distribution combined...I imagine that's calcuated on the costs to maintain the machinery, the retail space, etc, that makes all the stuff possible.
The whole thing screams bloated industry to me. Overhead is 50% of the cost? There is something wrong with your model. Fricking newspapers do better than that.
Nice to see the evil of Wal-Mart being turned to a good purpose (subjugating the recording industry). Something nice about the world when two wrongs do make a right. One choice quote: "For the music industry, having such a dominant retailer is like being stuck in a bad marriage." Doesn't that sound like everyone elses relationship with the RIAA?
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
[A Wal-Mart spokesman said:] 'The record industry needs to refine their business models, because the consumer is the ultimate arbitrator. And the consumer feels music isn't properly priced.'
I am on the same side as Wal-Mart about something... I think a flock of winged pigs just went by outside.
I personally think an CD costs way too much. When a movie with multi-million dollar production costs can be sold for the same amount, that's one big indicator that they are charging too much. I currently buy my music pretty much only on eMusic, because it comes down to about $4 an album, which is what I consider fair. A CD (or download of) really should cost less than $5, in order to bring it into the point where it's an impulse buy, and people just buy them without even considering if they are getting a good deal or not.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
Of course it has to cost so much! How in the world would RIAA bosses have the money for cuban cigars if they didn't?
[A Wal-Mart spokesman said:] should read [A Best Buy VP said:]
If a very large retailer prices something at a loss for a very long time, consumers expect that will be the "market value" and will balk at paying more. They will assume, usually correctly, that if it can be sold for $10 over the long haul, it can be sold for a profit at that price or that anyone selling it at that price can continue to do so indefinately.
You see this with cars and "free with rebate but only once or twice a month" computer software, where consumers won't buy when incentives are removed.
When is the last time Joe Sophisticated Consumer paid full price or for that matter anything more than sales tax for Acme Antivirus?
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
no way!
Let us price it like one. Whoever thought that it would be Wal-Mart to break the industry.
Somehow its odd and appropriate to see the RIAA that has been hounding consumers find itself the "Big fish in the small pond."
On the other hand, what does it say for the future of ANY goods producer when WallMart wields that much muscle in your sales chart?
This space for rent. All reasonable inquiries will be entertained at proprietors discretion.
OK. The article is old news, but it's a good topic for anyone interested in the industry's future to consider, and most of the points are still relevant.
Consider this:
Production costs should be down with the advances in tech and refinement of manufacturing.
Wal-Mart *is* a distributor, so distribution costs should be lower.
Promotion costs *could* be lower if more of the music industry understood new media rather than treating it as somewhere between anathema and tolerable evil.
So, real CD costs should be falling. They probably are *somewhat*, given inflation, but in context of the given advances, it really doesn't seem like enough.
The costs in the article are also interesting. Some of 'em look on, but others don't:
$0.17 Musicians' unions - Unions get royalties on CDs? That's interesting. I've never heard that before.
$0.80 Packaging/manufacturing - You can get smallish (2000-5000) runs for near this cost. A major label release really should be benefiting from an economy of scale here.
$0.82 Publishing royalties - if it's cover songs, sure. If this is original material written for a contract or under licensing from a signed artist, this cost shouldn't be this high.
$0.80 Retail profit - $.80 ain't anything a profit I'd begrudge the retail establishment.
$0.90 Distribution - See Wal-Mart *is* the distributor.
$1.60 Artists' royalties - Given the information available about industry accounting practices, is anyone else skeptical that the artists are getting this money?
$1.70 Label profit - I'm OK with this.
$2.40 Marketing/promotion - Since this is what a label is really supposed to do, I'm not surprised it's this big a portion, and maybe that's OK.
$2.91 Label overhead - What exactly is supposed to be here other than production costs and everything else on this list? I suspect this is really one of two big issues.
$3.89 Retail overhead - And this is the other one.
Those last two numbers pretty much tell the story of why disintermediation is going to continue to be a strong trend for the music industry. Slash them numbers and you're down *below* Wal-Mart's sale price and certainly competetive with prevailing online retailers. Fail to do it and you're not. Especially if you're acting like you're entitled to it in the meanwhile.
Tweet, tweet.
is still pretty slimy if they're walmart, but someone's gotta take on the record companies, and walmart's got the power to do it.
When you do business with Walmart, you should know that you're going to be asked to reduce your price. When you stop supporting mom-and-pop shops by not giving them the volume discounts you give to Walmart, to the point where Walmart has a potentially sufocating grip on your retail pipeline, then you're in trouble.
This is what happens when you dance with the devil... you find out he's clumsy and steps on your feet, and has bad breath to boot.
There's an op-ed piece written by the founder of Snapper that sheds a lot of light on why/how a manufacturer should choose not to do business with Walmart. Too busy to dreg up a link, but well worth the read, for anyone who cares enough to do a google search.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead
With the breakdown like that, is sure seems like a better idea to pull a radiohead/trent reznor and just drop the album your bad self online. Instead of $1.60/cd they get to keep it all!
Prediction: The real iPhone killer is going to be sex robots from Japan. Think about it.
Memo to record labels: What's wrong with having to fight for shelf space like everyone else? Competition? Has it occurred that maybe Wal-Mart would like to sell even more?
C|N>K
Am I supposed to feel sorry for the music labels? The article wanks them off and swallows every last drop.
Tough shit if they have to do business with a smart retailer- if people wanted to pay $16 for CDs at Tower Records and Music Land, those places would still be in business.
RIAA, wake up to the internet already. There's a reason iTunes sells songs and Amazon sells lots of books- they can have a huge catalog without the need for retail space, you don't have to pay that $3.89 retail overhead charge to stock independent artists that only five people want to hear.
This is the way all brick and mortar is going- stores are a convenience. They keep the latest and biggest in stock and you can pick up and buy something there immediately. Otherwise, you go to the net and buy it for cheaper. The problem is their model, not Walmart.
No. This number is created arbitrarily by the label, based its marketing costs and its desire for profit.
Remove labels from the equation and watch the prices fall to levels set by the will of the consumer.
Take a look at Radiohead 'In Rainbows' and tell me how well that sold by allowing consumers to set their own price.
1. Where is walmart going to go for whatever content the media distribution cartel is pushing this week? Oh that's right! To the media cartel!
2. Could Walmart find a more profitable use for the CD shelves real estate? Not likely. The media cartel pays them well-enough. Don't forget the cartel members pick the artists they promote, so the cartel members not only provide over-priced media, but pre-packaged "CD of the Week" kind of promotion that Walmart would never want to get into.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
One word: Wah! About time THEY get it in the backside! Turnabout is fair play!
Logic is the beginning of reason, not the end of it.
Or the artists won't be able to have gold cutlery in their private jets (/me remembers south park episode)
"Thanks for all the money you paid to us. We've used it to buy off ISO among other things" -Microsoft
In my opinion the key difference between music distribution and movie/TV distribution is that the latter has access to multiple revenue streams.
You make a movie and you show it at the theatres and get money. You sell the cable/free-to-air TV rights and get money. By the time you release it on DVD you've (hopefully) made back most of your production costs or are even showing a profit already.
You make a record on the other hand and when it's played on the radio (the equivalent of free-to-air TV distribution) you don't get any money; in fact it costs you (in marketing or other incentives) to get airplay. You have to make back all your production costs via CD sales. Granted, it doesn't cost as much to cut a CD as to make a (Hollywood) movie, but then there are only limited ways to get your money back, necessitating a higher unit-charge.
If labels would be able to charge radio stations to play their music (something highly unlikely to happen, by the way) I believe CD prices would likely fall.
a world in progress...
This is how they can sell CDs for $9.72 and make $90B in profit - by saving $400K in medical insurance costs http://www.cnn.com/2008/US/03/25/walmart.insurance.battle/index.html
The record labels are just a bunch of whiners. They grew accustom to fat margins stemming from power over the distribution channel. Their pricing doesn't work for Walmart's value proposition but like always they blame their customers, in the case the next one in the value chain, the retailer. Blaming the customer is their favorite tactic. They blame the end customer for piracy.
The record labels will die before they realize their business model longer works. Nobody wants pay $15.99 and no amount of wishing by record company execs will make that different.
The artists should be making the most profit. If it's not like that, then the system is broken. The producer of an item should always make more money than any other person involved in the process.
Colin Dean Go a year without DRM
I'd be curious to compare this against the breakdown when the CD was introduced. I vaguely remember something like, "Sure, it's $16 now, but if everyone gets on board the economy of scale will reduce the price closer to the record prices you are used to paying! (~$8)". I think these misc. overhead costs are probably just fudge factors to avoid listing them under profit, like how movie production companies make up data to keep their net profits artificially low.
I remember back when CDs first came on the scene and the record industry was talking about how much cheaper they would get as production ramped up. Back then the average CD was about $11-12 where I bought my music. It has only gone up ever since. By the mid 90s, after getting burned WAY too many times on the "one good track and eleven awful tracks" scam, I was doing all my music buying at used CD shops, and barely bought anything new. Once Napster came along there was a great deal of payback for all those bad tracks.
Nowadays, I only buy the CDs of artists I like enough to see in concert, and even then I wait until they're down to $10 or so on Amazon. Everything else gets illegally downloaded, with zero feelings of guilt.
I hate to be the curmudgeon that wonders why this made Slashdot, but really: what makes the relationship between the recording industry and a retailer "news for nerds"? Does every story that implicates the greed of the RIAA become newsworthy, even if it has nothing to do with technology? Even if it's four years old?
Sincerely,
That Guy
For all we know the moon may be as conscious as a poet or a realtor, and extremely weary of its monotonous round. - HLM
In 2003, Universal had already announced it would be cutting prices to $12.98 per CD.
Maybe you think that; but that is virtually never the case.
I am pretty sure that you would not see something vastly different. In fact I am not surprised how much is lost to "marketing/promotion", packaging, and overhead.
The problem many consumers have is they don't know all the variables and grossly underestimate many of them. The company I work for sells to both consumers and businesses. We have different price structures based on who we sell to. In my position I see the distribution centers cost and the prices they sell at. That cost is already significantly over the price is actually cost us to buy it from someone as we have all those costs you listed embedded as well BEFORE it gets to the store.
In fact some of the costs you listed is simply because many items before reaching retail are affected by multiple groups and each of their costs affects the final. When someone breaks it down like you have it may fail to take into account that some categories comprise multiple companies in that final cost
Do I think CDs are overpriced. Damn right, most are just overpriced simply because its one or two good songs and twelve items which are filler.
What about DVDs, let alone Blu-Ray. Thirty for a blu-ray version compared to 14.99 for the regular? Is there really that much more in cost in making it? After CDs we need to DVD/Blu-Ray. I won't even touch game cartridges. Then again I don't know all the people who have hands in the chain for these items so some may be justified
* Winners compare their achievements to their goals, losers compare theirs to that of others.
But prices for CDs are still cheaper than other countries.
Japan: 3100yen ($31) http://www.amazon.co.jp/CANT-BUY-MY-LOVE-%E9%80%9A%E5%B8%B8%E7%9B%A4/dp/B000MZHT7U/ref=sr_1_2?ie=UTF8&s=music&qid=1206475131&sr=1-2
Germany: 13.95 EUR
http://www.amazon.de/Spirit-Leona-Lewis/dp/B000ZNW6VS/ref=sr_1_1?ie=UTF8&s=music&qid=1206475335&sr=8-1
UK: 8.99 BRP
It's just the way it is. Get a better job if you can't afford it.
It should, though we have to agree: writing and singing a song isn't much compared to all of the processing that has to be involved to print thousands of CDs, handle all of the stuff with the retailers (thats one of the worse parts), all the marketing, etc. Its 1 person's work vs hundreds, who will also most likely spend douzans of time more man hours on it than the artist.
That being said, they are still pushing it a lot, as artists don't even get that.
Also a note of interest, in other fields, such as the gaming industry, the developers/artists get a lot more. But there's also WAAAAAAAY more people involved in making a videogame, than there is making a song. (Same deal with movies). So there is something to keep in mind here.
15.99 and they complain that people are illegally downloading their music.
Also, who in their right mind buys CDs from WalMart. Maybe if you don't like naughty swear words...Then I guess its ok
For every one band that might have possibly been successful this way, there are 1,000 that got successful through big-budget creation and media cartel promotion and distribution.
I was old enough to be around when Minor Threat and the like was (literally) making their own records including gluing the jackets. There were at the time lots of bands doing the same thing. There's a few bands still selling records from that era, but just a few. When the RIAA finally found some tools to pass for punk rock bands, they applied the same amount of resources they would any other act.
My point being, media cartel music production is roughly analogous to a big commercial video game.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
I've been loading up on CDs at Walmart. 8-10 each for the same thing the music store 100 feet away is selling for 18-26$.
Wal Mart is an awful lot like the RIAA - they're horrific price gougers.
Read this.
When Wal Mart tells you to lower their prices, that means lower them or get outta my store.
Weaselmancer
rediculous.
Walmart's new pricing stance on music isn't new or unique to the music industry. They do this to all their suppliers and its part of the reason so much manufacturing of American goods has been sent overseas. They squeeze and squeeze and squeeze until their supplier can't supply anymore.
Here's how it works:
Then someone is making far to much money off it, and its not the artists.
---- Booth was a patriot ----
Go back to producing music that is not overcompressed shit that sounds worse than an old cassete tape , and maybe, just maybe, I'll consider ever paying for music again.
Circumcision is child abuse.
I call bullshit on the numbers.
$0.80 Retail profit
$3.89 Retail overhead
So Wal-Mart makes $4.69 on each CD. That's their gross profit. Sure, they have expenses like light, heat, employees... but they have that for everything. They bought a CD for $11.30 and make $4.69 on it - that's a 41.5% markup, which is not bad at all.
Plus, why is Wal-Mart selling CDs for MORE than MSRP? Take the Killers CD "Sam's Town"...
MSRP (according to Amazon) = $13.98
Amazon.com price = $ 9.97
Wal-Mart price = $14.88
The Amazon.com price makes the article's numbers look questionable as well - if the CD costs Wal-Mart $11.30, how can Amazon.com sell it for $9.97? I'm sure that Wal-Mart has just as much buying power as Amazon, if not more.
The problem with the cost plus model for pricing is that prices aren't fixed.
... greed. If a label is selling a CD at $15.99, it means that they think pricing it a penny higher or a penny lower will cost them net profits, either through inflating per unit costs (which trims profit on each unit sold), or cutting into volume.
One of the biggest determiners of cost is volume of sales; for the most part your costs go down as you sell more -- you share fixed costs like your factories over more units sold of course, but even your unit costs tend to go down with sales volume. Of course in special cases you may have per unit costs go up with volume, for example when you've bought all the plastic available at a certain price for your CDs...
When it comes to pricing, what keeps greed in check is supposed to be
At least that's the way it's supposed to work.
I think the problem with the music industry is not greed -- or at least it's not just unenlightened greed. The problem is imagination.
Think about this: people sashay into Starbucks every day and plunk down $3.99 on a cup of coffee. Not that has anything to do with the price of tea in China, but it means that people do have money to throw around $20-$30 bucks a week absolutely mindlessly. In that context a $15.99 music CD is one of the greatest bargains imaginable provided that you like it enough to play it quite a bit. I have CDs from a decade ago I still play quite a bit.
The problem is in the market demand end of things. People aren't plunking down $15.99 for CDs on a whim, even though they very well could. They can blame it on P2P if they like, but if they can't manage a half dozen or so impulse buys for the average consumer over the course of a year, they've got a serious marketing problem. Even in the world of widespread "piratical" downloads, people will fork over $15.99 for a CD if it contains music they really, really want to listen to. It's not enough money to deter fans from buying a physical token of ownership. It's true that houses burn down, but people lose computer data much, much more often. If music has to be free for people to listen to it, something is wrong with the content they're selling.
So we have a marketing problem, and that includes pricing, but it also includes product definition and promotion. If $15.99 is the wrong price, but $11.35 is the "right" price, they industry is either failing to promote music people want to hear, or failing to reach people who want to hear the music they are producing, or both. I suspect both. I suspect that $11.35 might be more "right" than $15.99, but only because the industry doesn't know how to find, produce and promote music that people want to hear. It's really important to keep people in the habit of buying your product, and that's where the music industry is falling down. They'll have to accept that its not as profitable a business as they imagined it to be, at least until people are back in the habit of buying.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
But the artist doesn't produce the CD...
I'm not sure why a tape which has at a minimum:
2 case sides, two 2 part spindles, a tape leader, the tape substrate, the electromagnetical coating that actually records the data, 2 rollers, the metal thing to push against the read head and the sponge to not scratch the tape, and 2 clear windows, possbly 5 screws if the case doesn't snap together, possibly 2 inserts if the case is clear
is easier and cheaper to manufacture than a CD, especially know that CDs get more economies of scale than tapes. The fact that AOL switched from floppies to CDs probably also shows that CD manufacture is cheaper (though i'm sure it wasn't the only motivation in the switch.)
As far as the CD being an arbitrary price point, i remember when Public Enemy came out with "There's a Poison Going On". Their album was $8 for a download, $10 for an autographed CD. Once their label imploded (they were true pioneers in internet distribution, though a bit too early and the infrastructure wasn't ready for them yet) the same, non-autographed CD was sold in Virgin for 17.95. I'm not sure why virgin deserved the 7.95 (or more, depending on the value you put on the autograph) price delta.
As an aside, people don't recognize that Public Enemy was one of the first bands to really use the internet. They have several blogs and websites, released Bring The Noise 2000 on the internet for free (before the label made them take it down), released the single Swindler's Lust for free, and for Revolverlution, pre-released some tracks and asked for the remixes to be sent back to them, and included a pretty good remix (plus the original of course) of "Give the Peeps what they Need" on the Revolverlution disk.
RIAA v. Walmart? Can't they BOTH LOSE somehow, both of them have business models that represent screwing over the producers and eventually the consumers.
Why do you imagine the cost to manufacture a plastic disk should be the bulk of the cost to get music from a recording studio to a convenient store in your neighborhood? You might as well complain that the price of a new car exceeds the roughly $1600 price of refining the steel in it from iron ore by a factor of 15 or more.
In the modern industrial economy, the cost of almost everything is dominated not by the cost of manufacturing the basic material from which it's made, but in the services that are absorbed in assembling the product, controlling its quality, and transporting it all over the globe in such a flexible and clever way that it's available pretty much anywhere, anytime, without having to have massive inventories sitting around just in case. That's just reality, and it applies to everything from food to autos to MP3 players to music CDs. The major costs in your loaf of bread are not the cost to grow the wheat, and the major costs of your MP3 player are not the plastic and aluminum and electronic parts it contains, and so forth.
I don't know why you think they should be. Are you thinking you live in the 18th century, where instead of tripping down to the grocery store at 11 PM on Sunday evening to pick up a loaf of bread, they'd harness the team and drive out to the miller's twice a month to buy a sack of flour, which they then had to turn into bread themselves? It's only in a barely industrialized economy that the price of goods typically has very little price of services in it.
The producers of an item? I thought the record producers were making more money than the artists. ;-)
Hi! I make MS Windows. Should I make more money than all of the people who use Windows to make money?
The analogy with DVDs doesn't really hold true, though. A movie like Casino Royale makes $200M 'profit' in the theatres and on pay-per-view before it winds up in the video store for $30. After 1.5 years it makes its way to the $10 bin - By then it's made all its money and now it's just gravy. The model is different with a CD. We don't all pay $15 (+ $20 in Junior Mints) to go listen to the CD in a theatre first, then buy it later.
anyone who disagrees with me I will sue until their knees are bloody stumps
do I hear any objections to the price of $15.99/CD now?
didn't think so
see? who needs reality when you have legions of attack dog lawyers? silly consumers
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Sorry, the person who risks his own money should get more reward than everyone else. In this case, the record labels pay to produce records that may not make any money. The artists risk nothing. In more familiar terms, the artists are employees and they don't get to make the rules. If they don't like their deal, they can try to negotiate a better one or take out a loan and produce their next album themselves.
The burden of risk is the most expensive thing thing in the economy. It is more expensive than talent, education, good looks, and everything else. In my opinion, the system is broken if the people taking the risks don't get the most reward.
because I buy all my music on 8 track. And its DRM-free to boot!
I Heart Sorting Networks
Ok, first of all the way the music industry was setup, and remains setup, recordings were/are not considered to be an artist's profit center. Recordings are setup to be promotional material. The artist is supposed to make their money from performing (concerts, gigs, shows, appearences, whatever you want to call it) under the original and existing plan. The problem is since the recording industry coam into being, the music industry as a whole has been trying to make this "continental" shift into making the recording the profit center and the concert the promotional method for the recording. Unfortunately (or fortunately depending on point of view from which side of the whole arguement you are on) the recording industry has continued to structure costs and profits around the original intended model.
The end result is you now have artists who never, or rarely ever perform live who want to make all their money on the recordings. You have artists who do short when we feel like it tours for a total of 20-30 dates every few years. Again do do these tours to support the recording. The model was setup the other way around.
In the last 10 to 15 years we have seen the original true promotional vehicle of the "single" fade away. This as the tie breaker in the recording company artist tug of war. It wasn't ideal, the company still saw most of the profit, but it gave the artist someplace to make money. Now its all centered on the album sale, and that album sale wasn't structured to be the profit center for the artist, and was originally supposed to be the upsale from the single, which no longer exists.
The up shot in th end is that the industry is s mess and we the consumer are getting cheated two and half times, high recording prices with attendant limited availability since older recordings can be had only at high prices due to not being available at the easiest to reach retailers. And we are being cheating in that artists don't perfrom as often. My fater tell stories of the acts when he was growing up 50's/60's that would perform multiple times a year at multiple local venues, not once every 3-4 years at the central huge mega stadium or ampi-theater which is what we have now if they perform at all.
I don't know the answer just stating the view I have developed. I definately think that artists should be performing more often, I see coming around on tour as thier job. Just as I go to a job every day they should be either working on the next album, or coming on by to perfrom in my town. I do also think that labels need to lower the price of CD's since they are still the promotional material for that tour I think the artist should be on, and lacking the singles that used to fill a larger protion of that roll the CD needs to fill some median space between old full album perpose, and the old single's purpose.
Power Corrupts,Absolute Power Corrupts Absolutely, leaving one person(group)in charge is absolutely corrupt.
Some of the listed amounts in the cost breakdown just seem off to me. How is it you used to be able to buy tapes for $8 back in the mid 90s (while CDs were still $15)? Seems to me the only fee difference should be the physical production of the media and even that should not be that much. I understand there is a cost adjustment due to inflation every year but it seems like CDs should have gone down in price.
That's where they should come from...Not from every single CD sold. How they copped that deal, I'll never know.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
What I would like to see explained is why for the same music a cassette tape would cost $9.99 and a CD would cost $15.99. Royalties, marketing, etc. should be the same for both. A CD costs LESS than a tape to produce.
For that reason, unless their break down has "$6 of inflated profit" for record label, I don't believe their break down at all.
Think Deeply.
Surely you're not insinuating that the creative process is easier than turning on a machine that spits out 100k copies of one CD?
No sig for you!!
A little more math: An average of 12.54 tracks per CD. The $15.99 breaks down to $1.28 a track:
$0.01 Musicians' unions
$0.06 Packaging/manufacturing
$0.07 Publishing royalties
$0.06 Retail profit
$0.07 Distribution
$0.13 Artists' royalties
$0.14 Label profit
$0.19 Marketing/promotion
$0.23 Label overhead
$0.31 Retail overhead
So when you download you can cut out some of of the overhead. (IE: Packaging/manufacturing).
The Distribution cost is almost nil. I hope the Retail overhead associated with an online store is significantly cheaper. Mind the artist claim they get less per song for a download (but at 13 cents a track it is not like they get more of the pie anyways) - The LABEL bills on all there overhead and then tacks on profit (which is more then the Artist!). Also does the LABEL alway do Marketing/promotion - if you audited there books for a particular album would they have spent 19 cents per track for each track sold? Do you think they spend $26.2 million Marketing/promotion on the 11 Million Albums Sold of Sgt. Pepper's Lonely Hearts Club Band?
But it tells me the label makes way more than any artist and the only people I am hurting is the label by downloading a copyright infringement MP3. I can put $5 in an envelope and mail it to my favorite artists (that should cover me for a long time 13 cents a track).
Ah now I can sleep well tonight.
My Sig indicates the end of the comment I posted.
Vlasic, Snapper, Levi's, we've seen this all before. Only this time, the companies Walmart has bent over in the basement with the ball gags deserve to be bent over in the basement with the ball gags.
It seems the best way to make some profit through a partnership with Walmart is to park yourself in front of one of their stores and prey on their customers' sympathies.
Hell, I'd be half willing to go back to tapes if we'd be looking at a sufficiently low price... my only concern would be if I could rip to mp3 at a decent quality; I've only tried this with a rather jerry-rigged setup and a very old tape, so I don't know how it would sound after doing it properly with a fresh tape.
Anybody with experience in copying lots of tapes to mp3?
Klingon programs don't timeshare, they battle for supremacy.
I like to buy CD's. I like reading the album notes, I like the artwork, and I like the smell of a freshly opened disc. I hate the music companies and don't like shelling out $15.00 for a disc. But the one thing I hate more than that is Wal-Mart censoring and altering the original work *without* placing a warning sticker on the label. And until they stop doing that, I will NOT buy any CD from them for any price. I live in a small town and as such I end up buying a lot of stuff at Wal-Mart; music CD's are not on that list.
Never argue with a man carrying a water buffalo
oh noes! is someone strong-arming the record industry? Hang on let me get my violin...
Of course not. CD's only cost about 1/100th that:
http://www.newegg.com/Product/Product.aspx?Item=N82E16817132027
Of course, that's CD-R, not CD-RW, so if you accidentally go and fill them with some crap from the record companies, then they're ruined and you'll need to buy new ones.
If I am to buy that the overhead for something the size, weight and value of a CD at Wal-Mart is $3.89, then I can not see how they manage to sell so many items that cost even less than a CD.
IAIMI (music reviewer)
.40 per album on average. Look at how much marketing you see for artists in the racks at wal-mart, seriously there is almost none, for all the hundreds of albums (marketing for concerts doesn't count here). This is a major problem in the industry (right behind the RIAA). The main problem is that the people who make the decisions in the large companies are so disconnected with what people want, and their surveys (which cost money) are so poorly designed and executed, the end up hurting even more.
;)
decent ideas...I'd add the following:
> Marketing - this one can be reduced to about
> Packaging - you're right, itcould definitely be done cheaper, but it's the retailers that resist it. They don't think consumers are willing to buy something 'non-traditional'...which is a complete joke. There are several packaging options that protect the CD just as well but are cheaper. This one is Wal-Mart's fault
> Publishing royalties - I guess this must be some kind of average b/c this number varies widely among the artists you'd see in the racks at Wal-Mart. Majors can afford to give up alot, smaller indie lables deserve much more
> Distribution - I'll agree with your unchanged, but there is room here for some innovation (I read in NYtimes that Wal-Mart saved millions by adding a switch to their long haul trucks that allows the driver to use the battery (ACC) without starting the engine)...Bush admin. gets the blame for the high oil prices
> Artists royalties, Label profit - again, this varies by over a dollar...the big guys definitely could deal with less than they're used to, indies deserve more
so yeah, depending on the artist, we could take it to just at 10 depending on the artist/label (much less for some)
Thank you Dave Raggett
The producer of an item should always make more money than any other person involved in the process.
Your argument breaks down in so many ways. Here is one suitable to slashdot.
Take the sale price of a computer. At what stage do you class someone the "producer"?? - who you say is the most important.
* The miner who dug the silicon out of the ground
* The refiner who turned that into wafers
* The chip designer
* The chip fabricator
* The assembler
* etc.
It's not easy to assign who should get 'the most'. In fact it is impossible without arbitration.
[% slash_sig_val.text %]
I'm pretty sure the record companies would be able to sell CDs a lot less if they just sold music by talented musicians and songwriters instead of propping up a bunch of photogenic morons with overpriced producers.
if you compare the price of a cd to the value of the dollar, the cd is the only thing I can think of that cost $16 in 1995 and in 2008.
When was the last time you felt like a CD was worth $15?
I can tell you when it was for me. It was buying Factory imports in the early 80s, in a specialty shop that only sold CDs. Stuff that was not made in the US. Stuff I had to have.
But would I pay $15.99 for a domestic release of some of the crapola that the major labels are releasing? HELL NO.
OTOH, $10 to NIN for Ghosts I-IV, downloading the bits for near instant gratification, the CD (with liner notes) to come in the mail, with the artists receiving the bulk of the money -- this is something I can live with.
there are 3 kinds of people:
* those who can count
* those who can't
No, im implying that the creative process of a select subset of the artistic market is easier than getting the the darn things on the shelves.
Pesonally, I wouldnt mind paying 15.99 or more for an album. However I do not feel that I am provided any value over any other method of distribution.
It the most simple of terms; Many modern albums come with roughly only 10 songs. I, like most tech savy individuals and likley most of the general public in the near future, feel simply that I am provided a better value downloading songs at less than $.99 cents apice resulting in more music for the same amount of money. One additional added benefit is that I get to pick and choose what I want to hear and am not paying for what I don't. In otherwords, I dont think its not the cost of the media itself, its the value provided therein. Most people would be willing to pay that price, given an incentive to do so, other than lining the record labels pockets.
Not to mention the fact that CDs are simply an ageing media, that is not only more difficult to carry, but offers signifigantly less storage value than modern flash based media players.
I think Trent Rezor, with his online release of his new album, Ghosts, has a refreshingly modular approach to music distrobution. I for one would like to see others follow the same path, and would definately be willing to pay for the added value.
Your idea that the producer/manufacturer should automatically get the most money in the value chain is commendable and idealistic but demonstrably wrong. Music is a commodity product when you sell through a channel like Walmart. The physical product (the CD) is effectively identical regardless of artist and there are easy substitutes for most popular music. Brittney Spear may be popular but there is lots of other bubble-gum pop if her album isn't there. I know, you're thinking "but ArtistX is unique" which is true from an artistic standpoint but all it does is reduce the substitutability of the product slightly, never completely. You might like ArtistX better but you'll listen to ArtistY and ArtistZ.
A popular way and in my opinion good way to begin to understand how different parties can capture part of the value chain is to look at Porter's Five Forces. A firm's strategic position relies on a lot of things besides who made what and the music industry is no different.
On a more fundamental level, it is notable that since no big label company does offer significantly lower pricing than any other label on a new release is this a case for an investigation into monopolistic business practices?
For example if supply and demand and *fair* market forces was in effect then one Country Music CD is going to be priced lower than another Country Music CD from a rival label in some kind of price war until an equilibrium is reached at what the consumer is prepared to pay vs cost of manufacturing and profit..... (I use Country music CD as an example as they all sound the same so are of equal "value" IMO).
On a more serious note, shouldn't releasing a new album at price much lower than normal cause a larger then usual sales figure which would push the music up the charts and encourage new buyers because of its "popularity" which in turn could generate greater overall profits than a higher price alone?
Movies seem to suffer the same lack of dsicounting (both at the moview theatre and on DVD release). The only time I have seen a price war in action for movies or music is the recent discoutning of block buster movie releases in the Hd-DVD vs Blue-Ray war.
If the record companies just decided to agree to tell Wal-Mart to go fuck themselves, what would actually happen? Do they matter SO much that that is not a possibility? Do people buy music at Wal-Mart just because they saw a CD there (a CD they wouldn't have bought otherwise) or would they actually go buy that CD elsewhere if it wasn't at Wal-Mart.
Even though record companies are by no means my favourite, they would gain some tiny bit of respect if they decided to just drop Wal-Mart. A way of saying "we only do business with people who care about music". Though we know that it's not true.
The only costs that matter are the royalties and the manufacturing, packaging, and distribution, as every other cost -- marketing included -- is variable based on the music being recorded and how heavily the particular CD is promoted. The major labels systematically cheat most artists on everything else, and if an act gets pennies on the dollar they are lucky.
...Open Source isn't the only answer -- but it's almost always a better value than the alternatives...
The breakdown in cost is quite misleading: what is the cash flow? Are the labels getting 80% of that money, and then portioning it out to their "marketing", their "overhead", etc, etc? I mean, all these breakdowns are just BS that the labels use to justify their bloat.
The biggest thing that I see? The artist makes 10% out of the total sales price of the album, and I assume that is a "generous" deal for the artist. You know, this isn't unusual. Think of the cocaine farmers in Columbia. Think of the factory workers in China. I mean, this kind of stuff *does* happen.
The comical part about this is that artists, who are a wealthy, well connected, and thus should be a powerful group, haven't staged a coup against the labels. Sports players, for example, get FAR better deals than artists. Looks like technology will save their asses, but they should have saved themselves long ago.
The producer of an item should always make more money than any other person involved in the process.
I sort of agree with you, but how would that work for software?
suppose I write 100% of the code but the company I work for makes all the money and I get NO profit sharing (not really) from it.
things aren't so obvious. it sounds good, and in music, yes, the artist SHOULD get way more than some middleman; but in the software example, I consider myself the artist and not the company who hired me; yet they see all the profits, not me.
(in fact, I'm 'rewarded' by having to complete the code and then prolly train someone in india to replace me once I'm done!)
--
"It is now safe to switch off your computer."
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead
Okay. I've bolded all the amounts which basically belong under the heading "Money collected by the Record Label for the Record Label". That total is, $7.83. --50% of the price of any product generally goes to the retail/distribution system, and 50% to the supplier, so insofar as that goes, this chart is probably accurate.
The other thing I will say for this cost breakdown is that the distribution fee looks accurate. A box of CD's contains 50 units, and at 90 cents per CD, this works out to $45 dollars. For shipping and sorting a box of 50 CD's, $45 is about right.
But the Artists' royalty is $1.60?
Heh. --I've known several band members, some quite successful, and after they've paid off their debt for the production of their CD, (yes, THEY pay for that little privilege), the average amount they received from the sale price of a CD was about 12 cents per unit. So this little price break-down is a little misleading in that respect; if they're going to itemize all the costs in a way which makes the reader think, "Oh, well, look at how our $16 dollars is being divided up by legitimate takers", then why not include the music production cost? As usual, the artist gets the short end. And who exactly is this market-research firm, "Almighty Institute of Music Retail" which provided this list anyway? I bet their research invoices are not paid for by the bands but rather by the labels.
Okay. Enough of this nonsense. Ciao for now.
-FL
The breakdown costs on the label side are nuts? Are any of the costs below realistic?
$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.90 Distribution
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
Don't the labels charge artists most of these costs and fees?
Here's the obligatory link to Steve Albini's breakdown of music costs - http://velcroman98.googlepages.com/albini
Kevin
Irrational Diversions
damnit, i didn't want it to be wal-mart :(
Ok. CDs cost money to produce, but the article is dated, and I think a more interesting question with respect to the cost of music is "how do the costs translate to online sales?" I am clearly guessing here, but if anyone else has real numbers, please reply. Given that everyone likes to talk about Radiohead's "In Rainbows", I'll base my estimates on that. The album has 10 songs, so...
Online Distribution (10 songs / CD)
$0.17 - Musicians' unions - no change
$0.22 - Packaging/manufacturing - 2% of revenue to license mp3 format for content distribution, AAC is free for distribution, don't know about Fairplay DRM.
$0.82 - Publishing royalties - no change
$1.00 - Retail profit - 12 @ $.10/song
$0.10 - Distribution - Bandwidth ~5MB/song (downloaded from Radiohead) = 50 MB * 0.0005/MB=$.025 (the estimate is for Video on Demand, but that's all I could find). I bumped it up a little to cover hardware maintenance.
$1.60 - Artists' royalties - no change
$1.70 - Label profit - no change
$2.40 - Marketing/promotion - no change
$2.91 - Label overhead - no change
$0.00 - Retail overhead - not sure
Total: $10.92
Apple sells "In Rainbows" for $9.99. Amazon sells it for $7.99 as a download. I don't believe Apple loses money on downloads. I'm not sure about Amazon. While this is strictly hypothetical, it would seem the difference between a $15 CD and a $10 downloaded album is more than just the cost of production and distribution of the CD. Assuming I'm not totally off on my numbers, and the numbers that aren't related to production and distribution do not change, it should not be possible for Apple to sell the record for $10 or Amazon for $8. I believe the pricing model must allow for online retailers to make a profit, so what makes up the difference? Are the labels giving up profits? Are they operating more efficiently than they used to?
I read the article in Rolling Stone last night. If I remember correctly, the pie graph showing the breakdown of music sales showed WalMart as the single largest seller of music with 16% of sales and the iTMS at number two with 14% of sales. How long until the iTMS is the biggest single record "store" in the country?
I am a believer of momentum and curves.
I recall there was a Congressional hearing sometime back during the 1980s when several CEOs from various music companies were forced to testify as to why the cost of compact discs were so much higher than audio tape.
/haven't purchased a new CD in over seven years
//have no plans of doing so anytime soon
///expects the music industry to shrink by over half within the next decade
One lady in specific stated that it was due to the higher manufacturing costs associated with digital mastering and compact disc pressing. She continued to state that as the technology became more mature, it would fall in price.
Back then, a compact disc was often between $10 and $12. Today, they are often between $12 and $18. While adjusted for inflation, the real cost of an audio CD has come down somewhat, that cost has not dropped at the same rate as the technology needed to create a disc. In short, we are getting ripped off.
Furthermore, as the article states near the end, most of the costs are due to "fuzzy" expenses as opposed to manufacturing and the costs associated with "brick and mortar" retail outlets. So again, while some prices have come down, others may have gone up.
This is precisely my conclusion after I started working in a corporate IT environment. That's the theory. The practice is that your marketroids/bureaucracy create a buffer between the craftsman and the consumer. They then quickly realize that they can use that buffer as an information wall. All of a sudden, you have very little knowledge about the details of contracts with your consumers. The marketroids then start siphoning off the money for themselves or whatever uses they see fit. Soon, you end up with a front office composed entirely of obscenely-paid people moving up within the bureaucracy while the craftsmen are treated as an autonomous "labor box."
If the trend continues, the company's leadership becomes so disassociated from its product and market, then it starts to rot from the top down. Not to say that everyone in that sphere works the same way, but I've seen the pattern repeat itself frequently.
I swear to God...I swear to God! That is NOT how you treat your human!
They cost the equivalent of $26 in the UK.
http://xkcd.com/313/
I was thinking about the whole Trent Reznor thing the other day. Now Trent's not really been my thing ('Head like a hole' excepted, but that was waaaay back).. But he is absolutely right and I think what he is doing is very exciting for the future of the music industry (read:artists, not labels). My particular favourite band are New Order. Yes, they have had their day, I know.. But if they released a new album tomorrow, I would actually be prepared to pay $200 - without actually hearing it - simply because I am a big fan of theirs and always have been. OK this will need to scale down to lesser artists (who don't have the fan base desperate enough to hear their new tunes for that sort of cash yet) but in this whole micropayment climate I'm sure it would somehow if more took the risk/adopted the model.. It's the old piracy argument - Just because I might rip something for free, doesn't mean I would ever have paid for it in the first place. But there's been many times I have liked something I have had as a taster (say on a mix cd) that's led me to buy from an artists I may never have heard of, or thought I might like before. We get a whole load of TV for free, but plenty of people keep the DVD market alive because people will always pay for the things they like best. And if they like them a lot, and the quality is there, they might just pay a lot.
$15.99 Retail sale price (Retailers mark distributor price up almost 2x to pay for air conditioning, shipping, shelve space, employees, stocking, etc)
$8.45 Distributor price (Distributors mark the wholesale price up to cover their overhead [shipping, handling, sales team, etc.)
$6.50 Wholesale price record label gets for each album
What makes up the $6.50 that record labels get:
$1.50 - Packaging & Shipping the product to the distributor
$1.14 - 12 songs * $0.095 writer royalties
$3.86 - Left to split up between label and recording artists
Walmart is complaining that their measly $10 sales is at a "loss". Oh, boo, hoo... At $10 they're still making profits because they have their system totally controlled between their distributors to there shelves. They're trying to squeeze the labels to make less than $3.86 per album. Do you guys have any idea how much these albums cost to promote? Labels are investing hundreds of thousands to MILLIONS into each album. Not every album sells 35 million albums so asking labels to take even less is ridiculous. This doesn't hurt the big albums, but it does end up hurting everyone else. Sure it's easy to cut costs on an album that sells a few cool million albums, but on the albums that are solid that don't have huge budgets, every penny counts.
And as far as it goes with feeling sorry for the artists that they don't make money, get real. Artists make deals with labels with cash dangled in front of them. They have attorneys, they have managers, they have various other things to help them make a decision on what deals to make. The reality is artists don't have any ability to make money without the labels. They have no connections, no money, and nothing to give their music legs. So it's a love/hate relationship. They love the connections and money of the labels, but they hate that it costs them money in the end. Well, sorry charley, but the artists COULD find their own investors, hire their own producers, hire their own studios, and make the album themselves if they wanted to. I don't fell bad at all for them.
Umm, I don't know what you're talking about, because it's that difficult NOW. I'm not sure what you are buying, but if you go into a big box store, heck, if you go into Target (because I just went shopping for DVDs a few days ago), you will find that most popular titles are around 20 bucks. You are guaranteed 15. Just take a look at any Disney/Pixar release, no matter how old, and regardless of popularity. 20 bucks. And that goes for most other Popular titles as well.
If you get really lucky, you might find a 13 dollar version of the base movie in a store or online (which is all I want anyway), but for the most part, every store just sells the "collector's edition", and you pay about 7 dollars more for all that worthless commentary that no one watches anyway. It appears that every DVD made today is "collectible" or "special".
Even Amazon is in on this garbage, because I left Target without buying anything, planning to go to Amazon and buy them cheaper, and I found that Amazon, for the most part, had the same prices. Therefore, I did not buy from Amazon either.
Beware of bugs in the above code; I have only proved it correct, not tried it.
The money in the union line doesn't go TO the union, it means it goes to the musicians who played on the album.
I don't think I've ever found a band that I listen to that's carried at Wal-mart. I never even look anymore. That being said, I'm not buying from local stores, independent or not. It's all about the internet... there's a guy in California who runs a brisk mail-order with just my music, and he's even knowledgable about it. http://synphonic.8m.com/
"Sometimes a woman is a kind of religion, she can save your soul & set you free from all your sins" - Bad Examples
Conversely Walmarts largest supplier (P&G) accounts for less than 2% of Walmart's sales. Who do you think has the upper hand in this relationship? (17% vs 2%) Walmart doesn't have to drop their products entirely to REALLY hurt any of these suppliers.
Not so sure about the retail overhead--isn't that an expense to the retailer, not the label? And yet it's the biggest item on the list. How can they charge Walmart for Walmart's own expenses?
At Wal-Mart, we're a commodity and have to fight for shelf space like Colgate fights for shelf space.
The RIAA should get out of the record business and compete with Home Depot. They have more tools than anyone.
Edith Keeler Must Die
Ah, so that's why factory workers make more than management. Oh, wait...
>I agree that Walmart is the "hero" of this particular story, but to me, the real villain is the record buying public.
How is Walmart the hero? This is another story in Walmart's long history of pushing competitors out of the marketplace and then squeezing suppliers. Walmart is the ultimate middleman in that they have more leverage than either producers, consumers, or even their own workers. That said, I don't even really think that Walmart is a villain exactly (most of the time), they are just an extremely well run business optimizing their profits.
What I think is very wrong is the interpretation that anyone that screws the record industry, the movie industry, or the software industry is somehow a hero. Somehow the slashdot crowd has gotten the impression that these industries are composed completely of useless middlemen who don't deserve to make any profit from their work.
However, this is less and less true since now artists can sell their work fairly independently. This was probably never true with the software industry, where even smaller publishers like Stardock can make it onto Walmart shelves, and the movie industry where actors, writers and directors all get paid pretty handsomely.
The truth is that you can't take money out of the "record industries" pockets without taking money out of artists pockets, especially now that artists have access to smaller or self created labels and the ability to sell their stuff over the internet.
Personally, I buy products at the lowest price I can get them, but I don't go around cheering when the producers get shortchanged.
Forget "should." That word has no place in capitalism. You have it backwards. Production does not determine profit, profit is how you figure out who produced what proportion.
The person who adds the most value to an item is the person who makes the most. By definition.
Then why don't musicians pay for their union membership themselves out of their earnings like every other union? Effectively Artists get $1.77 and then have to pay 10% to their earnings to the union. Hmmm...now I see why the union doesn't want it presented like that!
These independent firms are always suspect, but here are some more versions of the breakdown.
Most artists do not get the marketing/promotion buck spent on themselves. Labels constantly invest in their best artists, and once the albums are out, they're already eying on what's next. What's more, it isn't new music that always sells the most. Past albums still sell, and obviously marketing/promotion is not a factor for them, and overhead is minimal.
Big label's only help big artists. The current industry does not help artists in general, period. They make big artists bigger, and make more money for themselves in the process.
Yet they are the ones complaining.
The "small" artists aren't complaining because they are too busy working their day job.
You are aware that the artist is billed by the label for studio time, promotional costs, etc...right? The label "loans" the artist the cost of producing the album and if they really want to screw the artist over they can ask for additional collateral like your house or your car or whatever else they can think of to secure the loan. So the studio takes some risk in loaning the money to the artist, but the artist does not receive a salary from the music label (or at least not generally), but rather a portion of the sales . The loans have to paid out of the income of the artist by the artist (it just like a mortgage or car payments from the point of view of the artist) and the difference is the income which they have to live on. Artists are contractors NOT hourly or even salaried employees.
You need a special device to read the tape!
The Kruger Dunning explains most post on
I worked at a startup that was the flipside of your example. It had tons of cool technology and no salespeople with sales experience. In the end it went bankrupt and we all had to find new jobs.
Technical folks like to think that the technology matters, and to an extent it does. However, Microsoft is proof that salesmanship matters more.
http://slashdot.org/articles/06/03/28/2235246.shtml
I really should get an account so I can start whoring karma...
But sadly, most of us are just too dumb to know better.
Are you kidding? Tell me again why Tower Records shuttered stores. Correction.. A few of us are jut too dumb to know any better. There fixed it for ya.
P-P is a great deal, even when you have to buy a 30 Gig iPod to enjoy it. The Labels are too stupid to market back inventory into price points that will enable bulk sales. Bulk sneakernet transfers are the norm instead.
The truth shall set you free!
>What is label overhead? And why is it way more than the artist gets, even in a best case scenario?
What do you mean what is overhead? What kind of question is that?
Where does the overhead in selling a boxed copy of your favorite video game go to, if you take out the salaries for the programmers and artists? Where does the overhead for a box of wheaties go, once you take out the cost of production. Remember, there's non brand name wheato's right next to those wheaties and there's a big price gap between them.
The answer is that the money goes to marketing and numerous support functions. If the artists doesn't want to pay for that, then they can sell on itunes and pretty much keep all of that overhead money. There's nothing *forcing* anyone to sign with a label, and arguably some people shouldn't, but those who do obviously think it is worth the cost.
Again, I don't think Walmart is a villain here. The idea that there are such things as heroes and villains is childish. The real world is a lot more complicated than these comic book archetypes are. The news, especially disreputable news sources like slashdot, like to rewrite the news so that it becomes a story that fits into a simplistic world view where there are a bunch of guys without flaws fighting a bunch of guys without redeeming character traits, but the truth is that doesn't represent anyone in the real world.
That sorta seems to support this push to get higher pricing on iTunes tracks is just a cash grab (surprise) by the labels.
isn't that the phrase? I think they figured out that Apple customers will pay whatever Apple charges.
No, I buy almost all of my albums for $6-$7 per disc (counting shipping and handling). Admittedly, that's from BMG, which means the album choices are sometimes painfully limited, and apparently there's some link to Sony (hello rootkit) that's making me seriously rethink my practices.
But the main point is that no, obviously a CD does not need to cost $15.99, or else BMG wouldn't be able to sustain this practice. Of course, as a mail/internet vendor, their brick-and-mortar costs are tiny, but let's guess-timate some costs. Feel free to poke holes in my numbers:
A blank compact disc costs the average consumer less than $0.50. Record labels save by buying in bulk more directly from manufacturers. Producing the CD is handled almost entirely automatically. Small office-level automated CD burner/label printers cost about $1-2K and can crank out thousands of CD's. So machine costs are on the order of $0.50 per CD and ink cartridges cost perhaps as much per disc, but almost certainly the commercial versions are much more cost-effective. Still, we'll be generous and take these numbers. Jewel cases are another $0.25 each, and I'll guess $0.25 for artwork. Add in packaging labor at $30/hour (fully accounted) capable of packaging 300/hour (gotta get those back covers in the jewel case) and there's another $0.10. So we're up to a very generous $2.10 for manufacturing.
Media mail costs $2.49 to mail individual discs to individual houses, but we're talking bulk shipping rates to bulk recipients. I think I'm being extremely generous in estimating $1 per item considering Staples can sell a similarly sized notebook for about that much, including all costs, not just shipping. Just for fun, they can have $1 profit. So it looks like $4.10 covers costs from manufacturing downward more than amply. Now lets look at costs upstream of the plant.
I'll suppose a 200:1 studio time/album length ratio, and a 50:1 engineering time/album length ratio at $100/hour each. That's $25,000 for a decent album. Let's pay a starving artist $5000 to spend a month to create the cover and booklet artwork.
It's long been claimed that most bands (the non-gold album types) make most of their money off of live shows, but hey, let's give each of four members $100,000 for creative awesomeness (or at least ability to fit the rock-pop mold) anyway. Their agent gets another $100,000. The marketing gurus say they'll be a small hit and predict 250,000 sales. So from our $530,000 creative costs we incur an additional markup of $2.12 per disc.
Holy money-grubs Batman! We've produced a hypothetical album from scratch to putting it in the consumer's shopping bag for a total cost of $6.22!
Surely we must have missed something? We've got $2.44 million (at $9.77/disc surplus) left over to spend on promotions and management costs and account as profit for an album that ultimately only sells to 0.08% of the US population.
$15.99 Retail sale price (Retailers mark distributor price up almost 2x to pay for air conditioning, shipping, shelve space, employees, stocking, etc)
$8.45 Distributor price (Distributors mark the wholesale price up to cover their overhead [shipping, handling, sales team, etc.)
$6.50 Wholesale price record label gets for each album
What makes up the $6.50 that record labels get:
$1.50 - Packaging & Shipping the product to the distributor
$1.14 - 12 songs * $0.095 writer royalties
$3.86 - Left to split up between label and recording artists
Walmart is complaining that their measly $10 sales is at a "loss". Oh, boo, hoo... At $10 they're still making profits because they have their system totally controlled between their distributors to there shelves. They're trying to squeeze the labels to make less than $3.86 per album. Do you guys have any idea how much these albums cost to promote? Labels are investing hundreds of thousands to MILLIONS into each album. Not every album sells 35 million albums so asking labels to take even less is ridiculous. This doesn't hurt the big albums, but it does end up hurting everyone else. Sure it's easy to cut costs on an album that sells a few cool million albums, but on the albums that are solid that don't have huge budgets, every penny counts.
And as far as it goes with feeling sorry for the artists that they don't make money, get real. Artists make deals with labels with cash dangled in front of them. They have attorneys, they have managers, they have various other things to help them make a decision on what deals to make. The reality is artists don't have any ability to make money without the labels. They have no connections, no money, and nothing to give their music legs. So it's a love/hate relationship. They love the connections and money of the labels, but they hate that it costs them money in the end. Well, sorry charley, but the artists COULD find their own investors, hire their own producers, hire their own studios, and make the album themselves if they wanted to. I don't fell bad at all for them.
Well, I agree with your conclusion, but it's not quite true that artists risk "nothing".
- Record producers put up their own money -- that's their risk. What do they get out of the investment if it succeeds? More money.
- Artists put up their own creative work and personal reputation -- that's their risk. (You go on stage sometime, singing your own song, and tell me there's no risk!) What do they get out of the investment if it succeeds? More reputation.
So each participant gets returns primarily in the same currency as their ante. Sounds pretty fair to me.
Since musicians know this, if they want to make more money, they should put up some money, i.e., get into the business of producing records. You don't hear producers complaining about how they're not as famous as Metallica.
There's no way Wal-Mart is taking a loss on CD's.
If I were to press up 10K copies of a CD with artwork and all that, it'll run me $.74 per CD buying from Discmakers. I will then turn around and sell that CD to indie distributors and one-stop's for about $5 or $6 per unit, but I have to accept all returns (gotta take a risk somewhere). The distributor will mark it up to about $8 or $9 per CD and sell it to the retailers, who will then sell it to you for $16.
A major label own's it's own distribution channel, so you cut out the middle-man immediately. They also press CD's for FAR cheaper than my $.74 per unit (somewhere around 25 cents per unit, even with artwork overhead, for a 100K+ run). Even after they pay everyone, you're still looking at only a couple of dollars per unit. The label is going to sell to a retailer like Wal-Mart for cheap, so about $5 or $6 per unit is what Wallyworld is really paying. Mark that up by 80-100% and you're at their 9.99 price point and still profitable when you take into account their own overhead.
They're not losing on those CD's. Not by a longshot.
Fifty watts per channel, baby cakes.
From the article:
Almighty Institute of Music Retail shows where the money goes for a new album with a list price of $15.99 (October 2004):
$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead
CNN's breakdown according to Billboard Magazine for $16.98 CD (no date found):
$0.59 Profit to label
$0.75 Pressing album and printing booklet
$0.85 Co-op advertising and discounts to retailers
$1.08 Signing act and producing record
$1.99 Royalties to artist and songwriter
$2.15 Marketing and promotion
$3.34 Company overhead, distribution, and shipping
$6.23 Retail Markup
Costs should be distiguished amongst fixed costs (the overhead of releasing a new album and maintaining a store), variable costs (per-unit costs such as the media, case, packaging, selling one item), and contractual costs based on the selling price.
The royalties, profits, and union fees may be based on the unit or the price. Does the artist receive $1.60 whether the album is sold for $5 or $25? (The royalties are lower on the second list.)
Retail overhead seems high. The $0.90 for distribution includes similar expenses (truck driver vs. cashier/stocker, product tracking); why is the retail overhead so much higher?
Does anybody know which of these costs change with the price?
How would the costs be allocated if the retail price was $9.72?
I spend my life entertaining my brain.
Would it not be a better idea for Walmart to make its price point by having a CD maker at the store, that could burn the songs you want, in the order you want and then print the case cover, and sell it to you? There is no need for distribution, just move manufactoring to the store.
uh, whats the difference between a CD and sheet music?
A movie and its script are two separate works of authorship; likewise with a record and its music. See Music publisher.
$15 today is worth a heck of a lot less than $15 20 years ago. Instead of dollars lets go by gallons of gas, a CD today costs 5 gallons of gas where it used to cost 14 gallons of gas. Since most of the cost of record production is human labor you can't really expect the price to go down. Also don't forget that when CDs first came out they were pegged at 45 minutes which was the same as a single LP, now they usually clock over 60 minutes, so you are also getting more music for that money. (Don't tell me that there is only one good song, because if so you are listeneing to and buying the wrong records, and there are plenty of web radio stations available for sampling deep tracks from all over the world)
You're not really making $7.50/unit, because you're not accounting for production, distribution and marketing. If you leave those out, then of course it'll look cheap.
And don't tell me that you can do your own production, distirbution and marketing, because that just misses the point: of course you can do those things, cheaper than the labels would, and maybe even decently well (and I certainly think more musicians ought to do it); but the numbers you're giving don't account for the cost of the time you spent, unless your time is free. You didn't make $7.50 of profit per unit; you made $7.50 minus the value of the time (and equipment, materials, etc.) that you spent on making and selling your CDs.
Yes, I'm absolutely sure many people can make more money as indies than with a major label. But come on, be honest with the accounting.
You know, the other thing is, really, the concept of physical media must just die and people who fetishize physical media need to understand that there is nothing stopping them from burning a CD, then downloading the artwork in PDF and printing it out at Kinkos.
It is interesting to me that the discussion about CDs continues. One of the biggest reasons I don't buy CDs is *I don't want physical CDs taking up space* when I'm just going to rip them anyway. I have hundreds of CDs in plastic cases sitting in a dark cabinet now for years, doing nothing.
As for the artwork, have you ever scanned in a CD cover, and noticed how..."dotty" it is? A high resolution PDF could potentially give you a much higher quality print - maybe one that would look good the size of a poster, if you wanted to hang it up.
You eliminate plastic (which is nonbiodegradable), save money on shipping, save money on the gas it takes to ship and run the factories (and more pollution). Now obviously, record companies want to be able to endlessly repackage their shit and sell physical media so it's not in their best interest, but if all music was available in FLAC with downloadable artwork, I, for one, would never buy a CD again, ever.
One argument I don't get is the "I really like to feel and touch something I bought." When you take into account printing the artwork and burning a CD, I have to assume that what is left is an unhealthy consumerist habit that can be unlearned.
I wonder if all of these other arguments about why the industry is dying are going to be moot. I wonder if the industry is just going to give up on CDs at some point.
Question for those of you under the age of 18 reading this:
How many of your peers would prefer a physical CD rather than what I suggest above - FLACS+artwork in digital form?
I am curious, among those who want physical media, how it correlates with age - people who grew up in the physical media age vs. people for whom things have always been available in digital form online.
Um, why? Because you say so?
The economics of the music industry are very much against musicians. The record industry provides the following services:
These services are in very high demand, and the supply for them is very limited; a very small fraction of musicians who would take these services can possibly get them. Musicians, on the other hand are in very high supply, and the demand for them exceeds the demand. There's always some musician out there who's willing to undercut you because they'd rather be in a major label than work at 7/11, even if 7/11 pays more.
This is not to say that the major labels provide musicians a good deal; in fact, I think it shows precisely why the major labels are such a bad deal. But the point, again, is that the assumption that musicians should make more money than anybody else in the process is a dumb assumption. People should be paid by the value of their work, and when it comes down to it, playing music really isn't very valuable work on its own.
Notice that musicians who go the do-it-yourself route often make more money, but they don't just play music; they also do on their own the various things that a label would do for them. That's why they're making more money: they're not just musicians, they're businesspersons.
I had a customer who once had a meeting with a Wal-Mart rep. Here's how it went (almost verbatim): Customer (e.g, WM supplier): Hi. How's it going? Wal-Mart rep: You fucked us in June. You fucked us in July. You ain't fucking us in August. This was a supplier for store equipment (the physical stuff in the store, not stuff that is sold) that was well run and was about the only supplier for the items they made for Wal-Mart. They ran efficiently and satisfied very big orders that went into new stores. I'm sure Wal-Mart didn't "ask" for low CD prices. They probably talked to the music companies the same way they talked to my customer. It's how they do business......
-- Fugacity: Confusing chemists since 1908
I remember distinctly being in the Canal Zone with the US Air Force and getting all my LP's for $2.49 - $3.50 or so each mail order thru Record Club of America. In 1971. When gas was about $0.389 a gallon. Now gas is about $3.299 a gallon. Proportionally, a 1971 record at $2.49 would be over $21 now, and there were fewer songs on an LP than there are on a CD. Now, those were some darn good songs - Led Zep, CCR, etc. but... aren't CD's really a bargain at $16 now?
You took that sentence out of context. I was talking about my teenage years, and specifically mentioned new Nirvana CDs. Kurt blew his brains out in 1994, years before the MP3/P2P revolution. But your snarky tone is appreciated! Thanks for making the world a brighter place!
I'm struggling to understand how you got modded insightful when you're wrong. Everything that the music company spends to make the content a hit is charged to the artist, at least under most contracts. If the $LABEL spends a million recording, producing, and marketing an album that grosses $750,000 then the artist is on the hook for the $250,000 shortfall.
That little contractual detail negates your entire argument.
Now I could be wrong but having talked to an artist or three this seems to be pretty common contract stuff.
How many people work on a song? Often only 1. Sometime a few? Compare that to how many people work on a movie. Hundreds? Thats what I meant. Its still one product. One has at most a band working on the artistic part...maybe with a few extras to help with song writing and whatsnot... For a movie or a game, its a totally different ballpark.
And for the rest: I'm not just talking about the packaging process. I'm talking about advertising, entering in agreements with retailers to get the stuff on the shelves, connection networks... It is a heck of a lot harder to have the peeps of walmart/bestbuy/sears/whatever (depending on the field) to sit down and sign a contract, than it is to write a song/make a piece of software/draw some stuff for a pretty simple reason: its anything but fun. No one would DREAM of doing that legal/administrative garbage in their spare time, and to deal with the giants you need to be a giant in the first place, something an artist will (almost) never be alone.
In virtually every businesses, the actual creators of the work generally have the easy/fun part. The real stress and money handling is NOT done by them...so they don't get to be picky when it DOES come to money. (And again: 1 artist vs hundreds of people and companies dealing with all the surrounding stuff... OF COURSE the artist isn't going to get a large percentage).
Again though: music artists ARE getting the shaft. But there's no way in hell they could be more than everyone else put together.
Other than a every few really classic albums like "Tommy" and "Dark Side of the Moon" and a few Beatles albums it's pretty much 2 good tracks and 14 tracks of filler! You can't blame the artists either, if I was locked into a contract that required my band to produce 2 albums minimum, I sure wouldn't want to blow my wad and put all my good stuff on the first album either.
Apocalypse Cancelled, Sorry, No Ticket Refunds
You guys already steal the music now you are going to complain about the price!? $1 per song is just fine.
Yeah its good that there *are* some market forces, like Walmart, that are powerful enough to take on the music industry and put downward pressure on prices, but calling Walmart a hero is like calling Bush a hero for starting wars to ensure cheap oil for us Americans... there *are* and will be huge consequences -- negative consequences. And Walmart is not apply pricing pressure on the record companies on principle, but for its own business model and self-benefit.
In this case, I REALLY REALLY dislike the Walmart-as-20% of the retail outlet, with their 5000 out of 60,000 selection behavior. I am/was a great fan (and customer) of Tower Records, and their deep-stocking policy -- i.e. stock as great a selection from as many artists as possible. Walmart's position in the market, and stocking only 5000 titles is GUARANTEED to kill off a lot of new, independent and innovative artists. It only accentuates the dominance of the mainstream, which I REALLY, REALLY have a problem with...
So while I want to see CD pricing become more fair and reasonable, I care more that the market allow the new, innovative, NON-MAINSTREAM artists have as good a chance as possible of "making it" (even if it means at somewhat higher prices).
Hopefully at least Amazon will continue to deep-stock...
In fairness to me, I did say that Walmart was the hero of this story. I agree that they're pretty evil in many other regards.
I loved going to Tower too. I used to go with my dad and my brother when I was a teenager. We would talk my dad into spending obscene amounts on stacks of new CDs. A trip to Tower was one of the best things that could happen to 16 year old me.
But we're a lot better off now. Tower offered thousands of CDs - the Internet offers millions. No brick and mortar could possibly offer what Bit Torrent does. Yes, we do need to find better ways to compensate artists. That is happening, albeit too slowly. iTunes has helped, and Radiohead's recent success has been great.
When I was 16, I had a couple hundred albums to listen to. I was lucky to have them. Kids from poor families had to make do with a lot less. But now, almost any kid can have a collection that would have blown my mind in 1987. Humanity is far richer for it.
Selected the wrong option. Stupid AJAX.
Well yeah, much as I never thought I'd say this, you're right, wal-mart is in the right. What's that thing from economics 101 that an efficient free market is reached when the price is about equal to the marginal cost of production? So, computer hardware is probably a pretty good example.
I'm not sure what the marginal cost of producing a CD is, but I strongly suspect that it's under ten bucks.
Now, that said, what the fuck did they expect would result from getting into bed with wal-mart? If there's one thing that they're good at, (aside from union-busting) it's becoming the primary retail distributor for any given product, then once they're in a strong bargaining position, they tell their supplier, "If you don't wanna lower the price you're giving us, I guess you could always find some other retailer to deal with, take it or leave it."
Lie down with dogs, get up with fleas.
They should've seen this coming when they were selling CDs to wal-mart for 12 bucks and wal-mart was selling them for $10. Did they think wal-mart had some magical method of creating money out of thin air?
The plural form of "anecdote" is "anecdotes", not "evidence".
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
Anyone else notice the story is from Oct. 2004?
Ken
No, no, c'mon, let's be fair, depending on who's doing the math, 80 cents per CD is perfectly reasonable.
They just have the same accounting firm that the movie studios use to show that Forrest Gump didn't break even.
This sort of thing is such lovely poetic justice. Wal-mart is just doing to the labels what the labels have been doing to artists for decades - get people to sign a contract with you, not based on a mutually beneficial exchange, but because you're the only game in town. (and the game is rigged, btw)
The plural form of "anecdote" is "anecdotes", not "evidence".
As a visual artist, I deal with galleries, short term contracts and all that crap that has nothing to do with art quite often.
the standard gallery commission is 50%.
If a painting of mine sells for $1000, I get $500, and they get $500.
But, I have to pay for the materials myself, so right there, the gallery is making more than I am off of a sale.
Some gallery owners are also cheep bastards that expect me to pay for framing. That can easly cost me $250 each, a huge bite out of my profit.
But, they do all the promotionm, advertising, even pay for all the food and drinks during the opening. they are the ones paying rent for the gallery space. they deal with all the sales tax. if they want rid of it, and sell it for 50% less, i get all the profits, they get nothing.
50% is a fair cut to me, I make it, I deliver it, and you do the rest, then mail me the cheque. I do not have a problem with that buisness model. I do not want to deal with ANY of that business stuff, and am glad to have someone else deal with it for me. I am not a salesman, but I realize their importance. a 50/50 split is fair. if the artist wants to keep it all, they had better expect to do the business work themselves.
here is where I get confused: the fine art market is tiny, the music market is huge.
but I get 50% of the final sale price.
if an album costs the customer $16, why isn't the artist making $8 from that sale?
The music buisness has far too many middlemen.
Trim the fat or die.
It's that simple.
-I only code in BASIC.-
Hi ppl, here u are calculating costs item by item when one cd costs a lousy 16 USD. I wish it cost that much here! Lets say with non-current EUROUSD conversion rate of hmm, 1,22 dollars per euro (currently it is 1,55) it would mean that CDs would cost here on the old land hmm 13 euros. Do you have any idea what they cost here? Finland 20 euros... that means friggin' 30 USD! Ha!
'Wal-Mart has no long-term care for an individual artist or marketing plan, unlike the specialty stores, which were a real business partner. At Wal-Mart, we're a commodity and have to fight for shelf space like Colgate fights for shelf space.' That just about sum's it up... i wonder if the RI** is going to start bullying wal-mart into selling their products "OR ELSE" heh... i haven't bought a music cd almost eight and a half years now! and with every article i see about the RI**'s screwed up mafia like gestapo business tactics, reinforces my resolve to never touch tainted goods like music CD's ever again! :)
$2.91 Label overhead
Make a smaller label!
Apparently some people do (people buying mariachi or christian albums maybe) - but for the rest of the stuff that I would be interested in buying (i.e. rock), I wouldn't buy it from wal-mart. I certainly don't want to pay full price for their butchered/censored crap. I'd rather d/l it or buy from a different brick and mortar that doesn't have edited songs just because they say "shit" or "hell" or something in it...
I have my music store right here on my computer. Amazon and iTunes ftw!
I cant understand why I should hit a Wall Mart and buy a cd for $15 when I can get it on iTunes/Amazon for much less.
First think Id do is to slap that CD in my computer and rip it anyway (who doesnt these days?).
When in danger, whewn in doubt! Run in circles, scream and shout!
I've had opportunities to buy CDs at shows, and I have to tell you that I never would, and never did, buy a CD for $20. I did buy several for $10. I don't care if its signed by Jimmy Hendrix, I don't care if it is made of solid gold. I just want the music! If it is sold for $20, I feel like the artists are trying to take advantage or the situation (and I understand from your text you indeed are). When I walk out of a show I feel I bonded with the artists. You know when they say "thank you all for coming to see us today" - I believe them. I feel that they are grateful for me coming to listen to them, for listening to their art. I feel we are closer after the show. And I feel hurt when you try to take advantage of this for a few bucks.
But that's just me. No, I bet that's not just me.
The reality is that the formerly healthy music industry includes a distribution chain that includes talent scouts
Those alleged talent scouts must spend their time on hookers and blackjack, because the labels' current product is almost entirely devoid of talent. I refer to musical talent here, as opposed to talent in cavorting half-naked in a so-called "music" video.
The question is whether people still value the product and are willing to buy it at a price that can sustain this mature business model.
And the answer is clearly 'No'. Instead, people want quality music like the 70's material that everyone is playing now, and they want it produced at a price that benefits from new technology. That old "mature business model" is no longer appropriate in the slightest.
I'd contemplate spending $15 on a disc, but it better be the best damn disc I've ever heard.
Does that happen often with stuff on the RIAA-affiliated labels? NO. The majority of it is pretty crappy.
In fact, even if the RIAA labels managed to put out something high-quality, I still wouldn't buy it at this point. I'm pretty pissed with them right now over their blatant abuse of the court system. (I haven't bought a CD from a major record label in at least a year.)
However, what I said above still applies for the independent labels.
It's similar to independent comic books. They often have higher price tags due to smaller print runs. If it's a very high quality comic book, I'm still willing to pay the higher price in some cases. (Unfortunately, you also have cases where they'll try and sell you the sixteen page BW 'preview' book for $3.99, which is highway robbery.)
I normally won't spend a dime at Wal*Mart, but now that I know that they're losing money selling CDs, I will think about buying them there.
Right now all I do there is go in and use their bathrooms. Anything to cost them money.
is already composed and your band it technically up to the
task. But does that happen in studio records (not "live" records whose gimmick is that they sound like a concert) any more often than in movies like Timecode or Russian Ark?
Regardless of the outcome, this is great for walmarts PR. They're seen as this evil empire, but if they're fighting for US, that turns the image around somewhat. Wonder if RIAA will allow this to make it to the main stream news.
I was once offered a "cough" standard contract once as a bass player of a decent regional band -- the label wanted us to pay most of the recording costs, most of our own expenses on a mini-tour, and whether or not we made a dime overall, they'd own the copyrights on the songs. Worse, if the album reached a slightly larger critical mass, we would have been bound to continue with that label for a certain time period whether or not they promoted our group or not, or risk being sued for any money we made elsewhere as recording artists. As the group's major songwriter, I found their offer very non-compelling, and the basic fallout was that they didn't give a rat's a-- about the rest of the group, nor were they interested in negotiating something fair with me -- because I would have forced the issue to protect the whole lot of us. Ethics was not a language they wanted to speak or for me to speak for that matter.
Think about it this way, if marketing were profitable and part of creating a "mega group", then why is the vast majority of the major label's newly promoted artists -- Nashville aside -- are from one hit wonders that are better at trying to stir up controversy (i.e. cheap word of mouth sales) than they are at producing quality music. Is the talent pool so low, or is it more profitable to push crap cheaply than promote quality over a period of time? You do the math.
...Open Source isn't the only answer -- but it's almost always a better value than the alternatives...
The summary attributes this quote to "A Wal-Mart spokesman", but the article clearly says it was a Best Buy spokesman.
"The record industry needs to refine their business models, because the consumer is the ultimate arbitrator. And the consumer feels music isn't properly priced."
The RIAA might as well be trying to sell fresh air right now. Sure there's lots of demand for their product, but (right or wrong) the availability of music for free via P2P completely undercuts them.
The RIAA's only prayer for long term survival is to cease all music sales on CD and move immediately to a new format that includes some form of DRM which for their sake had best be very, very difficult to bypass. That, and they have to start putting out a good product again instead of cookie cutter hits. If they do these two things, then eventually demand for the new music that cannot be easily pirated might just recreate a desire to purchase their products. Otherwise, they will wither and die away.
Understanding is a three edged sword. - Ambassador Kosh Naranek, Babylon 5
In other words, for $150, I can crank out 20+ disks, in jewel cases, with inserts... using nothing that I can't find at WalMart. That's half the price they're asking for the music. The technology is ubiquitous, let's stop pretending the labels are giving us anything of value when they sell us a piece of plastic, in a piece of plastic, with a slip of printed paper.
Now that we know just how much those little plastic platters are worth, even with jewel cases and inserts, it's time for the music industry to catch up to reality, or get lost in the shuffle.
This work is licensed under a Creative Commons Attribution 3.0 Unported License.
Even "cheap" music isn't enough to get me into those trash-filled, disease-infested money-grubbing places. Wal-mart has gone drastically downhill ever since Sam Walton died. I refuse to give them any of my money, and ask my friends not to, either.
This work is licensed under a Creative Commons Attribution 3.0 Unported License.
This article ran in October of 2004 - nearly 3 1/2 years ago. While it may be (and probably is) true even today, I wonder why the story is being brought up today.
Banjo - The more I know about Windoze, the more I love *nix
That's true. "What's good for Wal-Mart, and China's manufacturing industry, is good for America."
Let's face it. There is no way that the US can produce low cost consumer goods in the US. So, it's buy from China or do without. Now I know you can't live without a Chia pet or two, not to mention some type of closet organizer, or food dehydrator.
China and Korea are no longer and option, they can't produce those types of goods economically either. Someday it will be, "What's good for Wal-Mart, and Africa's manufacturing industry, is good for America."
What we do once there are no more underdeveloped countries to exploit is anyone's guess. At that point some sort of true paradigm shift will be necessary. Until then I am going to buy, whatever I have been told that I need, at the lowest possible price. Right now that still means Wal-Mart for almost all of my low end needs.
"In business, overhead, overhead cost or overhead expense refers to an ongoing expense of operating a business. The term overhead is usually used to group expenses that are necessary to the continued functioning of the business but that do not directly generate profits.
Overhead expenses are all costs on the income statement except for direct labor and direct materials. Overhead expenses include accounting, advertising, depreciation, indirect labor, insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone, travel and utilities.[1]"
Advertising has been broken out separately in the list and labor is added, but otherwise those costs and any like them are all part of the "overhead" category.
Talent scouts? Overhead.
Recording studios? Overhead.
Taxes? Overhead.
Accountants, secretaries, and buildings? Overhead.
Remastering, tour buses, venue liasons, band managers, and bunch of other things labels do that I don't even know about and that aren't covered under packaging, distribution, or marketing/promo? Overhead.
Could they do that more cheaply? Probably. I'm just pointing out that there are a lot of costs rolled up into that one term, and many of those costs are for key parts of the process.
Because it covers every single other cost the labels incur.
Your question is a little like "given that we've accounted for profit, food prices, and chef's salaries, why is restaurant food so expensive?" Because, well, it's in a restaurant, and there're a lot of costs that come with that (heat, light, gas, rent, tax, furniture, repairs, insurance,
That you don't know what those costs are doesn't mean they don't have to be paid.
(Ob: no, I'm not a fan of the major labels, and yes, I'd like to see cheaper music. I'm just pointing out that "I don't know about it so it must not exist!1!" is a very poor - and all-too-common - argument.)
I've got about 300 albums in iTunes which I've bought the CD and ripped it so I don't have to worry about DRM. I buy through music clubs and figure I pay about $5 per CD on average. That's a price I'm willing to pay. If I can't get it for that, I'm not going to buy it, except in the case of a merch table at a live show.
Universal's entire catalog of music ought to be for sale at WalMart.
I should be able to select the album, then come back in a maximum of 30 minutes to pick up my burned CD with inkjet cover art.
FLAC-type files for popular music should be cached at the store; more esoteric material should be transferred on demand.
Each label ought to be able to control marketing campaigns that let them target not just regionally, but down to an individual store. WalMart's cut should be a flat $1/disc.
That would be the sensible way to do it. Running pressed media around on fork trucks is foolish and wasteful.
It's interesting that you will choose to buy "whatever you have been told that you need" at a place known for exploiting its workers and customers. I find myself to be a much better judge of "what I need" than anyone else.
My money hasn't gone to fill Wal*mart's coffers in nearly a decade. On the flip side, I don't have a Chia pet, closet organizer, or food dehydrator. I don't need those objects. Now, if you want to talk about things I (and my household) *actually* need, then I will cheerfully explain to you how my household has come to the consensus that spending a few more dollars per shopping trip is perfectly justifiable, in order to keep our money from being in Wal*mart's bank accounts.
As you can see, voting with my wallet doesn't appear to be doing anything to change Wal*mart's policies, but I will continue to do so, just because I'm stubborn.
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It can, and that's why it can kill small music stores. They're the ones with higher overhead costs.
Moreover, overhead is constant, but it's not constant per disc, meaning that one solution is to move a lot of units. Which means stocking only units that sell rapidly. Which means stocking only big hits.
Sure, that'd lead to lower prices, but quite honestly I'm willing to pay for a music store to have a reasonable catalogue so they'll have something I'm interested in. I'd rather shop at a place with a good selection at $15 than a place with no selection at $10.
The problem is that it's hard to have both - if there's a store selling Hit du Jour for $10, nowhere else can really sell it for $15. And if everywhere's selling HdJ for $10, they'll have a hard time justifying charging $20 for a CD that'll take much longer to sell, leading cranky shoppers to go somewhere else. Net result is that they charge $15 for both, and the swarms of hit-buyers subsidize the people with more unusual tastes.
Should stores charge more for less-popular music, since it does actually cost them more? Probably, and I'm sure some do to some extent. Just be clear on how "overhead" works, and what lowering it means.
I'm sure many people agree with you, except regarding which music has "actual artistry".
There's lots of music, which means there's little way to get anyone to find out about your music other than by marketing. Cutting down marketing means cutting down the amount of information listeners get means you find out about less music with what you consider "actual artistry".
Is that a tradeoff you want to make? Maybe, but it's apparently not an economically sensible tradeoff for the sellers. If cutting their marketing in half so they could lower the price by 8% generated more sales than the current approach, don't you think they'd be doing that? We may not like the major labels, but you've got to admit they're pretty well-informed about the business of brick-and-mortar selling of albums, and that's exactly what this is.
How do they restrict your access? By monopolizing a radio station that you're not paying for and not obliged to listen to?
If you think it's free, you've obviously never paid an advertising company to try generating word-of-mouth buzz. They have, with methods ranging from on-street astroturfing to getting mindshare via radio saturation.
Do you really think you know how to advertise better than huge advertising companies full of well-trained, highly-experienced advertising consultants?
Ob: big labels are bad, blah blah. If you think you could make a few simple changes that'd make the CD down at your HMV profitable at $5, though - and it seems like a lot of people here think that - you've got to realize that you're deluding yourself. Don't you think these people are pretty well-informed about how brick-and-mortar sales work?
The world isn't as simple and clear-cut as a lot of people seem to think it is. Lowering any of the costs TFA lists (go read it) involves tradeoffs, and most of the proposed changes I'm seeing here are utterly ignoring the downsides of those tradeoffs. Yeah, the problem looks simple when you ignore most of it - big surprise.
What is even better is that the record industry was busy f*cking the small, specialty stores that where their "business partners..."
Now that the industry is controlled by those few outlets that were preferred several years back, and now that physical music is rapidly coming to be a thing of the past, the executives wax poetic over their long lost fellow soldiers...
You shot them in the back. Payback's a B*tch!
So, this has already been noted, but WTF is a four year old story getting pushed up on /. for? EDITORS - ignore this story!!! (if it's not too late)
I believe you are generally correct. Professional sports athletes generally get about 50-60% of revenues as salary, and they don't have building maintenance, stadium construction, field upkeep, or marketing costs deducted from their paychecks. The music industry is just mobbed up, has mafioso contracts and elements. And competition is severely limited, with 3-4 Family Bosses, I mean corporate CEOs.
But 30 years ago, professional athletes weren't making the kind of money they do today. What changed? The Union, free agency, 20-30 competing bids (teams), and shorter term contracts.
"From DNA to P2P, we are all Copycats now. Go Go Copycat Power! Copycat Powers activate! Form of, a Copycat." --monxrtr
Lets check for a second:
- The record industry is suing its costumers, has been caught red handed in price fixing tactics, has put malware in our computers (thanks Sony), have managed to enact anti consumer legislation in order to protect their revenue, have demonized every single technical advancement only to realize that embracing it actually makes more money for them, is famous for wasting money (check what EMI used to spend in what euphemistically was recorded in the accounting books as "flowers"), has pampered to the stupidest whims of talentless starlets (honestly, check what some of them request to have available on their hotel room or during performances. Nothing is too much or too stupid). I could go on and on, so allow me to say that I fail to see what exactly is positive about these parasites.
- The movie industry has many of the same vices, add to that the presumption that anybody watching must feel morally obliged to become a law enforcement informant on their behalf, stupid insistence in DRM that everybody knows will be broken.
-The software industry. Well, the simple fact that it hasn't lobbied to abolish software patents from the face of Earth tells me the bunch of scumbags many of them are. They know this kills small upstarts unless they come with an idea so revolutionary that are unstoppable (Google) or they are so immoral that even patent trolling can't sink them (MS).
So allow me to say there is little to like about this lot.
IANAL but write like a drunk one.
What a lame example.
If there is a place atypical of Mexico as a whole is Mexico City.
The government there is socialist (gay marriage, liberal abortion laws, legalization of prostitution, cheap public transport, benefits for pensioners, etc) with a strong middle class that actively pursues things like theater, world cinema, performance art, classical music and some others more rooted in humbler origins (wrestling, football) but that now are so expensive that only a middle class of good proportions can explain their commercial success.
This has not changed since there were elections there for the first time around 10 years ago, and if anything, only accentuated traits that had already been there.
The Federal government in contrast is in the hands of people with connections with far right organizations like the Opus Dei and MURO (google it, you will be amused). Most misery in Mexico is found in the countryside, not in Mexico City, which is why most people migrating to the US do so from small localities in central Mexican states and not from Mexico City itself.
People that deride Mexico City is because they don't really know it. Mexico City, in spite of many serious pressing problems, is one of the great towns in the world, up there with London, Paris, NY and some other in that league.
IANAL but write like a drunk one.
In a free country there is freedom of association for most legal purposes. So you don't like unions, being the brightest star in the sky, then just don't join one and allow other people that do not share your insight and talents to mend themselves any way they deem appropriate.
IANAL but write like a drunk one.
How people handle their affairs is up to them, been covered by the help of an union or by insurance is a decision that each individual must make, and others not involved should really mind their own business.
IANAL but write like a drunk one.
To be there to protect the interests of the little men.
The bastards!
IANAL but write like a drunk one.
How do you say no to a monopoly or a cartel?
IANAL but write like a drunk one.
By the figures in TFLA, Wal-Mart could get it below $10.50 if they cut out the middleman (the label), but they're not going to make it down to $10 without taking a (bigger) hit in their own profits. I can see them (or one of their big-box competitors) making a big(ger) push into online sales; no physical media, much lower production/distribution/overhead costs. Do they buy a chunk of ITMS or Amazon? Or go through the pain of setting up their own system? If they did that, with competitive pricing (relative to AMZN/AAPL) and without DRM, I think they'd definitely make a big splash. If nothing else, they'd convince the iPod Generation's parents and other technology trailing-edge folks (who largely overlap with the "typical Wal-Mart customer base") that digital music is "real" and "legitimate", opening up heretofore largely untapped (by digital music) markets.
If only musicians had that choice. It's either join, or don't play. They have no choice if they want to get ahead in the business, they eventually have to pay.
Unions suck the life out of everything they touch. They used to be about the downtrodden, now they are about getting as much as they can and screw the little guy.
Don't believe me?? Go down to your local union plant and talk to the new employees. Ask how many of them have to wait patiently while lazy slackers who have been in the union for years go to the head of every line.
When unions abolish their seniority welfare plans and stick to pure productivity on who stays and who goes or gets promoted, I'll change my mind.
I rarely read replies, it's my opinion and if you thought about your opinion a little more, I'm OK with that.