music industry digs their own grave

According to Nielsen Soundscan, music CD sales have declined by more than half since 2000. In 2007 alone, CD sales fell by 20 percent. The conventional wisdom is to blame online piracy for the sales decline, although actually this is a myth: market researchers at the NPD Group contend that CD sharing among friends accounts for more piracy than illegal internet downloading.

Consider the following 2 scenarios:

1) I could buy Pulp Fiction on DVD for $11.49 at Amazon.com. Or I could buy the audio CD of the Pulp Fiction soundtrack for $13.98 at Amazon.com. Not only is the movie 154 minuteslong, but the DVD is actually a 2 disc set, with deleted scenes, documentary, Charlie Rose interview, Siskel & Ebert review, Cannes acceptance speech, 13 TV spots, and behind the scenes footage. The CD is 41 minutes long. The DVD is copy-restricted, the CD isn't.

and

2) I could buy the Essential Neil Diamond on CD for $14.88 at Walmart.com. Or I could pay $17 for an MP3 download at Walmart.com. The music executives probably justify charging more for an MP3 download by reasoning that an MP3 download is instant and therefore more convenient. But I'm not in a hurry. And if I buy the physical CD, I get liner notes (which I care about) and slightly better audio quality (which I don't care about). My main point is that an MP3 download incurs no manufacturing costs, which means that if the industry wasn't so greedy they'd pass the savings on to the consumer.

Look, it's a free country, and these music executives are welcome to dig their own grave by charging $17 for MP3 files of music recorded 40 years ago. But if they insist upon charging $17, this gives me a $17 incentive to ask around and find a friend/relative/neighbor/coworker who will loan me this CD for free.

Comparing a movie DVD to it's soundtrack CD is like comparing apples to oranges.

Movies make a bulk of their money in the theaters and TV broadcasts. The DVD sales are extra. The music industry makes the bulk of their money in music sales. CDs. Concerts, although a good promtional tool for the new CD release, turn a profit, but not a lot.

When you buy a DVD, the music on them is background music, often with sound effects and dialog over it. The music licensing fees reflect that fact. The CD soundtrack is just the music, in it's pristine form. As such, the artists rightfully expect to get fully compensated.

So CDs soundtracks are justifiably more expensive than the DVD.


FYI: The DVD bonus features are often already produced (i.e. trailers), possibly produced by someone else (i.e. Charlie Rose, Siskel & Ebert, Cannes), or simply cheap to produce (behind the scenes, documentary). If they are someone else's production, they are often cheap to license. So the bonuses are the very cheap to add extra items that helped kill the video tape industry.

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But the Music intustry itself, and the 40 year old Neil Diamond album you used as an example? You're 100% right.


This is a recurring theme on some of the DJ message boards I'm on.

As least 15 years ago, I would ask why CDs are so much more expensive than LPs and Cassettes.

When CDs first came out (in the late 1970s?) it was true that they cost more to produce and justified the higher price.

But it didn't take long for the costs to drop to the point where it was cheaper to produce, cheaper to package and cheaper to distribute than the LP and Cassette counterpart. But no change in the price structure.

Plus singles seemed to be getting phased out, so it cost $15 to purchase an album for the one song you wanted.

Is it any wonder people shared their music?

The music industry was given some props when iTunes came out. Finally, it was possible to purchase the one song you really wanted, and for a reasonable price. But they even tried to screw with that.




Now they are pricing the download higher than a physical item that they have to manufacture, distribute, warehouse, handle, package and ship?

It looks like the industry is bent on shooting themselves in the foot.

Move to Canada, our copyright laws have no teeth. It's like giving the middle finger to the entire industry...

Quote: DJTeddyBear

Comparing a movie DVD to it's soundtrack CD is like comparing apples to oranges.

Movies make a bulk of their money in the theaters and TV broadcasts. The DVD sales are extra.

Not only that, but DVDs, at least of popular movies, have a guaranteed market in rentals.

As to the OP's, MP3s do have a production cost. Suppose some band, call it the Vgeas Munchkins, decide to release an "album" only on MP3, without any CD recordings at all. Fine. They have to rent a recording studio, pay several sound engineers, assistants, etc, merely to record their songs. This can take any time from days to weeks, depending on various factors. Next they have to distribute their MP3s to various outlets. The cost per unt may be small, but the server farms and massive hard drives (or whatever memory is used), has a large aggregate cost.

It's not as if the Munchkins just play their songs and MP3s of each magically appear in everyone's computers.

We all know it costs a bunch of money to produce the first copy.


That doesn't explain why an album produced 40 years ago costs more via download than CD.

Or why, back in the day, CDs cost more than LPs or cassettes.

Quote: DJTeddyBear

We all know it costs a bunch of money to produce the first copy.


That doesn't explain why an album produced 40 years ago costs more via download than CD.

Or why, back in the day, CDs cost more than LPs or cassettes.

Demand.

At the start of the CD era, even when production prices for CDs dropped, there was a long period where still more poeple bought records and cassettes than CDs. And because CDs were marketed as being superior to the older media, people paid more money for them.

These days a download will cost what people are willing to pay for it. Especially since many more people now rely on MP3 players for their music almost exclusively (I don't have one, BTW).

I do keep thinking the music industry should lwoer prices as a deterrent to piracy and music sharing. I don't know why they don't. Nor would this be the first time. Digital audio tapes (DATs) pretty much died stillborn because the music industry would not authorize any releases until copy protection was arranged to their satisfaction. By the time that happened, CD burners were as common as dirt. There were also some early online services that would burn custom music CDs (think of it as a rpecursor to the MP3). That got quashed quickly, too.

I was just thinking about this today. Most artists in the last 40 years have not earned back the investment the industry has put into them; this has been offset by the huge payback of a handful of artists (Stones, Zep, Diamond, Springsteen, Streisand, etc). A new band, and sometimes even an established artist, represents risk (Bonnie Raitt, 20 years before she paid off). As the marketing changes, the assessment of the risk changes. And not just the marketing is changing... the market itself is changing. In the '60s, a new Beatles album was an event. In the '70s, a new Led Zeppelin album was like communion for rock lovers. In the '80s, the new wave was an entirely new set of rules for pop music, and gave us a huge new set of sounds. In the '90s, though, that started fragmenting, as indies started making small runs of local bands. And now, a band can do everything a label and studio could have done for them, except for the promotion. But the promotion cost money, and many bands never earned that back... so they are better off doing it themselves, and controlling the numbers and distribution. They may never become huge like Zep and Springsteen, but they never go into huge debt, either. And they retain creative control, and they retain rights into the future.

Before the advent of recorded music, musicians played live and lived on patronage. The recording industry freed them from the patronage, but tied them to usurious contracts and the label advances, and in exchange gave us superstars, starting in the swing era through today. Now, with the technology in everyones' hands, artists are freed from the labels, at the expense of superstardom; no matter how good a band like The Hold Steady gets (to pick an example of a band in between indiedom and acceptance), they aren't ever going to rock a generation like The Beatles, The Stones, Michael Jackson, Led Zeppelin, Bruce Springsteen, or anyone else.

So what will happen? I dunno. Artists need to eat. But do they need to be Kanye West? Should 50 Cent or or Carrie Underwood be rich beyond anything we could ever achieve simply because they've been singled out by the Star Maker Machine? I don't think so. I think what we're seeing is a return of sanity to the marketplace. Humans will keep making music, because we have to. We'll keep listening, because we want to. But perhaps we'll be spared having dreck forced on us. Maybe because we'll get more choices, we'll better relate to what we choose. If no one becomes famous doing that, well, maybe there's nothing wrong with that.

Quote: Nareed

Demand.

Demand?? What demand?!? Music sales have crashed 50 percent in 10 years! Demand is going down, not up. Perhaps if sales were growing, or perhaps if sales were flat but steady, then maybe they could get away with charging $17. But the industry is in a death spiral, and their only solution is to make MP3s even more expensive than CDs! It's just astonishing that they haven't learned anything in these past 10 years. I'm beginning to think that their plan for the next 10 years is to raise prices to $30 per album, and then scratch their heads in confused bewilderment when sales fall 99 percent.