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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?
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)
$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.
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.
[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.
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?
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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.
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
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.
Seems arbitrary. I notice you stuck up for the union...God forbid they feel the pinch of the industry.
All this tells me is that artists should market aggressively with digital format music, and keep CD sales as a small-time sideline; they could charge 5 bucks plus shipping and handling and make a ~3 bucks a pop.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
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...
What amazes me most about that breakdown, is if you look at it, it's hard to figure out why the labels are whining about the iTunes pricing model.
It seems like they'd get just as much money per track, and cut out a lot of overhead. That sorta seems to support this push to get higher pricing on iTunes tracks is just a cash grab (surprise) by the labels.
Cheers
Lost at C:>. Found at C.
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 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
17 cents per CD...I missed where they contributed anything there...Are they singing backup?
They're certainly not doing ~20% of the work that the retailer is doing, or ~13% of the work the artist is doing...Just irritates me. Artists are getting fricking screwed all the time; why do they even have a union?
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
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 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.
Distribution, $0.90? $900 for a thousand CDs? No way, not for WalMart.
This is WalMart you're shipping to. You ship to them by the truckload, not one CD at a time. Any in-store costs come under retail overhead, not distribution.
The promotion costs need to shrink. Maybe we'll see the labels begging for time on webcasts. Label overhead is far too high. The labels don't really do much today except promote; they don't directly employ artists, they don't run recording studios, they don't manufacture CDs, and they don't do physical distribution and warehousing. That's all outsourced. But management overhead hasn't been cut accordingly.
As the WalMart VP says: "The labels price things based on what they believe they can get -- a pricing philosophy a lot of industries have. But we like to price things as cheaply as we possibly can, rather than charge as much as we can get. It's a big difference in philosophy, and we try to help other people see that."
I printed 1,000 CDs for a personal indie project that I did (*cough*shameless self plug*cough*) and $0.80 / CD is around what I paid INCLUDING what I paid the artist to do the art work.
There's no freakin' way that that major labels are paying $0.80 / CD when they print runs in the tens of thousands. They should be getting WAY better bulk deals.
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.
Musicians unions often give significant emergency aid to musicians fallen on hard times. Were it not for help from the composers union, for example, Bela Bartok would have been dead two years earlier than he was. I see no reason to protest.
Walmart, sucks to be their vendor, great to be their customer. I love it when two things I consider to be evil lock horns. Its why I'm a libertarian.
--- Justin Dearing http://www.justaprogrammer.net/ We're just programmers.
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.
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.
I'd hate to be a small time, MTV2 band without a union to back me up against a major label.
$0.17 Musicians' unions - Dump it, they're obviously not doing a good job.
$0.80 Packaging/manufacturing - Cut it. CD burning is cheap; could be done in the shop on demand.
$0.82 Publishing royalties - Double it to $1.60. This is what actually goes to songwriters etc, which is the actual reason for copyright
$0.80 Retail profit - Whatever they feel they can take; that's free market competition, say it's fair as it is.
$0.90 Distribution - CD's could be printed in the shop on demand.
$1.60 Artists' royalties - fair at $1.60. Again, this part fits in the purpose of copyright.
$1.70 Label profit - Zero. Labels are not in the public interest and should not be supported by government sponsored monopolies.
$2.40 Marketing/promotion - Zero. Marketing is not in the public interest and should not be protected by copyright.
$2.91 Label overhead - Zero again. Not in the public interest. They can compete like anyone else.
$3.89 Retail overhead - Print on demand reduces overhead drastically. $1.50 for amortized print-on-demand machine.
See, I cut the cost down to the $5 range, while doubling songwriter royalties and keeping artist royalties.
I also cut down the amount of annoying marketing, leveling the playing field for independent artists. Much easier to get playtime and gain popularity because people _like your music_ if you don't have to compete against juggernaut marketing machines and payola.
Now, to make it even simpler, dump the exclusive copying right of copyright, reconstruct it as a royalty right and simply put a 50% sales tax on the material going to the artists and writers in question. Wal-mart et al could copy and sell to their hearts content, _competing_ in a _free market_, while the social purpose of copyright is served by the appropriate institution that handles all such social purposes.
$1.60 Artists' royalties - mega artists can get skimpier - down to $1 a CD even
Are you mad? Do you have any idea what castles in England costs these days?
Madonna
Amazon has far less invested in buildings and other fixed costs. Amazon also, while a large company for an Internet retailer, is small when compared to Wal-Mart in terms of staffing, and staffing is the #1 expense for any retailer (unless you count those folks who were selling cheap foreign backpacker guitars for 99 cents on eBay and then charging $16 for shipping). Remember, too, that while their fixed costs are diluted across all of their sales, not all stores are making sales every hour of the day. Wal-Mart doesn't make $4.69 on a CD--that's their gross margin. Their gross profit comes into play later when looking at their financial statements. If you've ever owned a business or been in management, these numbers should not seem unrealistic. I worked for a small, regional fitness club once as an accounts payable clerk. We had an outside audit and consulting firm come in to review our operations. They calculated the cost of writing each check to be $5 (this was in 1996). The calculation of cost seemed rediculous on the surface--writing a check might take two minutes inclusive of the time to log the entry in the books. Yet, if you considered all of the additional costs of having the employee--wages, taxes, benefits, office space, management time, payroll time (et al., ad nauseum)--justifying the $5 figure was very simple.
I use irony whenever I can, but my shirts are still wrinkled...
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.
I agree with that, but it seems that promotion (getting airplay) is the only thing a lanbel can do for an artist.
they don't directly employ artists
Actually they do. Under US copyright law, all phonorecordings are "works for hire" thanks to the RIAA labels buying congresscritters back in the 1950s.
Does Lynard Skynard's Workin' for MCA still have the (intentional) hum at the beginning of the song on CD like it did on the LP? My CD was ripped from an LP.
mcgrew's razor: Never attribute to stupidity that which can be explained by greedy self-interest
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.
Walmart could help out it's smaller vendors (like my father) but buying a giant license of EDI software and giving it to it's clients. When a smalltime vendor has to spend $2-10K a year to keep talking to Wal*Mart, it eats into profits. I'm not saying it's not a good thing, but it hurts the mom and pops who sometimes create jobs for other people. They have a HUGE web infrastructure for managing the EDI relationship, but they force you to use EDI software rather than straight web-interface work. It might be more work for the vendor, but possibly more automatable (think webservices).
I long for the day I can kick Gentran to the curb. It's nice, but it's not necessary for a small mom-and-pop (unless you WANT to sell to WalMart).
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.
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
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 %]
Musicians that fall on hard times can get a fucking job like the rest of us.
I rarely read replies, it's my opinion and if you thought about your opinion a little more, I'm OK with that.
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.
Or they can plan ahead. Purchase insurance like the rest of us, have a savings plan like the rest of us.
I am Jack's complete lack of surprise.
Membership in a union that promises to take care of you is a sort of insurance plan.
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...
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 can get insurance for instruments and equipment through ASCAP without being part of any union.... Bear in mind, though, that the people in unions are not the artists. The folks in the unions are the studio session musicians, the composer/arrangers on hire by studios, etc. I see no reason that they should be a line item on the CD sales costs, though. They should be getting their money in the form of union dues from the hired musicians in question. That money should fall under the "label overhead" column. The only reason to break that out into a separate column is to make anti-union people see red. Unless, of course, the unions are actually getting money directly from each sale, in which case, the anti-union people should be seeing red.
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you pick a guy who died in 1945 as your example of how they're helping? how about something they've done in the last 50 years?
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.
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.
Vlasic was, for lack of a better word, stupid in their dealings with Wal-Mart.
IIRC from an article I read a few years ago, they agreed to sell industrial-sized jars of pickles to Wal-Mart. For (figurative) peanuts, a few bucks a piece. They were making a loss on every picke sold.
Why'd they still go through with it even though they were taking a loss? 'Cuz they were selling a lot of them!
DATABASE WOW WOW
>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.
Your comment is interesting. From my perspective:
(*) The sooner music stops being a viable business the better. The sooner people just record for the love of it and put it up on the net for free, the better. I'll hunt it down. I can google. I can read music blogs. No problem.
(*) Even the utter annihilation of the music industry (something I don't see happening) would not mean the end of music. Walk down any cultural center in any city in the world and there are musicians who can't stop playing. Some people can't stop playing for 5 minutes even if you want them to. Every other person I meet is a self-described musician. A large percentage of those people really want to do it professionally.
I really wish I didn't have to work for a living, but you know, I find it hard, working a soul-sucking dayjob, to feel bad for some musician who has to have one too. I am unconvinced that songwriting itself is "work." Touring is work. The business side of music is work, but I'm hoping to see that go away, leaving people and their instruments to do the magic. If it's such hard work, don't do it. Civilization will march on. There will be enough others to fill the gap. There are ten million songs that will never make a dime being written as I write this.
The consolation prize is the musicians will still get laid more than I will because they are musicians. That's the magic of music. So enjoy that. But I can see no reason why any rockstar should be a multimillionaire when there are teachers funding school supplies out of their own wallets, or poverty such as it exists in the third world still exists. (I'm all for musicians making a decent wage or salary if they're good enough.)
I love music. I'm even willing to pay a little bit for it. I am triply more likely to *donate* to a musician than I am to buy the commodity he has transformed his music into.
I'm jealous of musicians. I wish I was one, and I wish I could make music, because I think music is important in a non-financial way. But if I did, I sure as hell couldn't live with the pretentiousness of posing as a musician, as opposed to a normal guy who "makes music" as an expression of my mind and spirit.
Should the day come when there are no more rock stars, I will applaud that.
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.
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
>>What do you mean what is overhead? What kind of question is that?
It was of the rhetorical variety.
>>The answer is that the money goes to marketing
No, it does not. It seems that you might not have read TFA. They break down where the money goes, and marketing is it's own huge chunk, as is distribution.
So to restate my question in a way that might be a bit more pleasing to you, given that we've already accounted for profit, marketing, distribution, and manufacturing, why is the label overhead so gosh darned high? The answer is that it's the funny math that record labels use to deprive artists of income. When the movie studios do it, it's called Hollywood Accounting. Feel free to read all about it:
http://en.wikipedia.org/wiki/Hollywood_accounting/
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