If you've taken collegiate level economics then you're aware of the elasticity of demand.
When CD's first hit the market and went past the early adopter stage in to critical mass, CD's were priced between $16 and $20 with replication costs just under $2 (and CD players were $300-$400). Within my first year of buying CD's, the pricing seemed to reach equilibrium at roughly $16.
The kicker? As hardware prices have continued to plummet the CD pricing itself has remained relatively constant. All the while the prices of CD replication have continued to fall and are now under $.25.
It's no wonder that my 14 year old daughter refuses to spend her babysitting money on music. She has an iPod and we have been in a constant struggle over piracy as I refuse to allow her to use Kazaa, copy friends CD's or make CD's for others (from the music she *does* buy). She views me as the "tough unreasonable Dad" and she truly doesn't understand why she should throw money away and why, "...the record companies are so lame and don't get it".
In the next breath she says, "...I'd buy all day long if CD's were under $10" and she does buy frequently when on sale or on mark-down at retailers. Also, in two seconds she'd sign up for a music service *if* it had all her favorite bands and she could buy songs one-at-a-time (not yet available though some services getting closer).
Makes me wonder if the record company executives slept through Econ 101 in college?
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If you've taken collegiate level economics then you're aware of the elasticity of demand.
When CD's first hit the market and went past the early adopter stage in to critical mass, CD's were priced between $16 and $20 with replication costs just under $2 (and CD players were $300-$400). Within my first year of buying CD's, the pricing seemed to reach equilibrium at roughly $16.
The kicker? As hardware prices have continued to plummet the CD pricing itself has remained relatively constant. All the while the prices of CD replication have continued to fall and are now under $
It's no wonder that my 14 year old daughter refuses to spend her babysitting money on music. She has an iPod and we have been in a constant struggle over piracy as I refuse to allow her to use Kazaa, copy friends CD's or make CD's for others (from the music she *does* buy). She views me as the "tough unreasonable Dad" and she truly doesn't understand why she should throw money away and why, "...the record companies are so lame and don't get it".
In the next breath she says, "...I'd buy all day long if CD's were under $10" and she does buy frequently when on sale or on mark-down at retailers. Also, in two seconds she'd sign up for a music service *if* it had all her favorite bands and she could buy songs one-at-a-time (not yet available though some services getting closer).
Makes me wonder if the record company executives slept through Econ 101 in college?