A Little Hypocrisy?

Hi Prpixel...I'm not so sure that your figures are accurate. Which CDs, which labels, and what type of distributors are you talking about?? I don't think distributors sell their CDs to stores for $5 or $6 per.

I would bet the distributor pays more than that (depending on which distributor you're talking about...the national, or local??). A local "one-stop" distributor is paying around $10 (give or take a couple dollars, depending on the CD, label, etc). I had a friend that owned a small independent record store back when Best Buy was buying themselves a market. She purchased her discs from the local "one-stop" (as most small stores do). A new Prince album was out at the time. Best Buy was selling it for $9.99 at the time and her COST was $12.99. Best Buy's cost was definitely less than $12.99, but not necessarily as low as $9.99. Big companies can sell certain titles at or below cost, using them as "loss leaders" to get customers into the store. Those customers will buy the sale CDs and (hopefully) buy some others too (they care about volume). That's why Best Buy was stocking everything, selling sale CDs for $9.99, and all regular CDs for $11.99 or $12.99 ten years ago. Their selection shrunk and their prices rose up to $15-$17 as soon as they had 10% of the CD market. Circuit City did the same thing.

And many of the above postings are correct. CDs are much cheaper to produce than LPs were when they were the main format, yet they sold for twice the price(and more). It's not the price that bothers me...it's the fact that the price isn't justified. I wouldn't mind the high price of CDs if I knew the artist was making a good chunk of the money, but in most cases they're getting screwed...at least those on major labels. Most major label artists (the non-superstars) don't ever turn a profit. The label may give them huge upfront advances and recording budgets, but those are loans...they owe that money to the labels (along with the money the label spends to market them). The labels will keep the artists' royalties until those debts are paid. That day never comes for most non-superstar artists. Roger McGuinn said that he made more money selling his Folk Den CDs on MP3.com for $8 each (with him getting 50%) than he ever made from his years with The Byrds and Columbia Records. I think that's unbelievable, considering the lasting poularity of some of their songs and the fact that their back catalog is still a consistent seller.

Hey T Bone...you made some great points and I agree with most of them.

1) I do think the industry is making a lot of money (by gouging the consumer), but they're wasting it...it's not coming in as profits. I think they're managed poorly and could easily turn much higher profits (and still charge less for music) if they knew what they were doing. They're blaming their lack of management skills on piracy, which is ridiculous. And yes...I'm sure music industry employees are paid too little and taken advantage of on a daily basis, just like most corporate employees. Isn't that what this country is all about? :-)

As far as CD costs and artists royalties go...I think most major labels are incredibly out of touch with all of the fringe markets that have been developing over the last decade or so (some of them quite large and desireable to advertisers). Most of the music I buy is sold direct by the artist themselves or by independent labels (where it is not uncommon to have a 50/50 label/artist split AND the artist usually owns their recordings, which is not usually the case with major labels). Many of the msucians I like were once on major labels, but eventually dropped because the labels had no idea how to market them (or chose not to spend the money to market them). Richard Thompson and Aimee Mann are two prime examples. People like Ani Difranco have proved that major labels are no longer necessary.

2) I buy most CDs that I'm interested in (usually for much less than the $17 the industry would prefer). Lower pricing would let me buy more than I currently am, but I think it would increase sales for the mass market by quite a bit. I realize most people on this site have spent thousands on equipment (myself included) and $17 for a CD isn't considered to be a lot, but to the majority of the country's population, $17 (per CD) is quite a bit of money to spend on leisure activities. Lowering the price to $10 or $11 would certainly make CDs more affordable to millions of potential buyers (including the students that are doing most of the downloading), and charging a small fee to download individual songs would also be a very smart move.

3) Yeah...$.34 is a deal for first class postage, but I'd gladly pay more if it meant that it wouldn't be destroyed or misdelivered by my local carrier (I won't even mention how frightening it is to visit my local post office). Same issue...how wisely and efficently is that $.34 being spent by the USPS??

4) Wouldn't it be more accurate to say, "Are 50 baseball players worth $1.85 billion in salary while the other 800 split the remaining $.15 billion?"? :-)

And no, the coffee itself isn't worth $3. You're paying for the luxury of having a well-trained, college graduate froth your milk for you. After all, he has a family to support and he might buy more CDs if they weren't so expensive).