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CDs Want To Be Free 439

Posted by timothy
from the so-do-cats dept.
Dotnaught writes: "An article that I wrote about a new music promotion service called fightcloud.com and CD pricing in general has just gone up on Salon. And heeding the advice of Dave Winer, I also posted the full transcript of the interview on my Web log, Lot 49, for those curious about what got left on the cutting room floor." Rather than complaining that Big Recording's CDs are overpriced, it sounds like this company is simply demonstrating that music (even on physical media) just don't have to cost that much.
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CDs Want To Be Free

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  • NOT FREE..... (Score:4, Insightful)

    by tiwason (187819) on Thursday May 23, 2002 @02:52PM (#3574291)
    ugg.. I hate advertising...

    If I have to pay $4.95 for shipping and you are making $2.64 "profit" from that $4.95, how the hell is the $4.95 "for shipping"..??

    $4.95 != Free

    • On the other hand, $2.64 for a full length CD, physically present in my hands with a jewelcase and artwork and everything really puts the lie to the "necessity" of paying $18 apiece at joe's CD shack.
      • Re:NOT FREE..... (Score:2, Informative)

        by Jobe_br (27348)

        No, it doesn't. The recording labels out there aren't saying that it costs $18 to duplicate a CD (en masse), print jewel-case inserts and stuff everything into a package and shrink-wrap it so that you can't get into it.

        Now, repeat after me: That's not what costs $18 per CD! What costs $18 per CD is the audio engineer that was paid to mix the tracks in the studio where the music was recorded; the rental time for that studio space and hi quality recording, mixing and sampling equipment; the designer that was paid to create the artwork you see on the jewel-case inserts and on the CD face; the copywriter that came up with what should be written on the inside sleeves of the jewel-case inserts; the production monkey that laid out the text + images in Quark for the jewel-case inserts. OK, so that all costs some money, right? Well, that's NOTHING compared with the cost of food, travel, housing that many recording labels provide their artists while they are recording. Some artists have VERY high demands for this ... caviar, first class plane tickets, 5 star hotels, the works. That costs money. The promotion work that is done when the artist goes on tour - that costs money: TV spots, banner ads, Ticketmaster kick-backs, deposits for venues, etc., etc. The promotion work that is done when a new CD launches: getting the artist on talk shows, on MTV - speaking of MTV, getting the new video shot for MTV, VH1, etc., etc.

        Guess what, folks?!? That ALL costs money, and lots of it. So much, in fact, that if a particular artist doesn't make it BIG most record labels lose their pants. Ever heard of a record label that doesn't have a big name artist signed? No? I'm not surprised ... until a big artist is "discovered" a record label is nothing because it has NO MONEY.

        There's a significant cost involved in promoting new music ... now, should you have to pay for lots of bad artists to be able to release their music?!? Maybe not, but that's the breaks. You can't really weed out the good from the mediocre before you incur all those costs ...

        I'm quite tired of all these misinformed people thinking that they're paying an outrageous amount of money for a plastic disc with binary information encoded on it. WAKE UP! There's a lot more that goes on behind the scenes with the money that you're paying.

        • Re:NOT FREE..... (Score:5, Informative)

          by User 956 (568564) on Thursday May 23, 2002 @03:26PM (#3574547) Homepage
          OK, so that all costs some money, right? Well, that's NOTHING compared with the cost of food, travel, housing that many recording labels provide their artists while they are recording.

          You know jack shit about the music industry, my friend. All those things are what are called RECOUPABLE EXPENSES.

          When a record label advances money to an artist, or spends money in certain areas, to make, market or promote a record, the artist must pay back that money before the label begins to split the profits with the artist. Paying back that money out of record sales is called "recouping." If the record stiffs, even at the fault of the label, the artist of course owes nothing. But if the record sells some units, and the label decides to put out another record, the debt is NOT wiped clean if the artist is unrecouped. This nasty little fact is called "cross collateralization" and what that means is that if the artist makes Record Number Two for the label, but hasn't recouped from Record Number One yet, the back owed funds come out of the sales from the new record before the artist ever sees a dime from the new record. So you can see how difficult it is to get ahead...which is how a label (meaning Def Jam) would explain why Slick Rick is unrecouped after all these years and 5 albums later.

          As an example, let's say the artist has an unrecouped balance of $200,000 on the day his record drops (his advance and recording budget were $150,000 and $100,000 was spent on the video for the first single, half of which is recoupable--that's $200,000). Let's say the label did its job properly and had a good four month set up on the album (set up is the amount of work that goes into a project to build awareness prior to its release), and the artist has a strong buzz in the marketplace. So pre-orders are looking good (the amount of records the retail stores ask for, based on the anticipation of sales for the release) and the label decides to ship 300,000 units initially. If the label is in the Universal family, for example, and offers a sales discount because it's a new artist, a $16.98 anticipated retail price will position this CD at $10.78 wholesale. So the label can anticipate an income initially of $3,234,000 (300,000 x $10.78). And by the way, the label feels as though it has already lost $189,000, because the full retail selling price of $17.98 would have brought the label $3,423,000 (300,000 x $11.41) and since they discounted the record one dollar, they're already losing money. Here's the ugly side of label accounting and recouping: the artist's contract stipulates that the artist's share of the back end is 12 points, which really means 12% of the retail price (less a whole bunch of stupid provisions for breakage, free goods, return reserves, and container charges, producer royalties, etc) which leaves the artist about $1 a record. That means that the artist's share of the income from one record sold at $16.98 is roughly $1. Recouping means that the artist has to pay back the money spent out of his share (which is $1 a record sold). So in order to pay back that $200,000 spent prior to the record even coming out, 200,000 units must sell.

          After the initial order is shipped, the artist incurs promotional costs which the label advances to him. The independent radio promoters, video promoters, tour support, remixes, etc, are all shared expenses that come out of the artist's money. So you can see how easy it is for an artist to remain unrecouped. If he finishes his project two or three singles deep, it's easy to come into the next project already at a high negative balance. The artist is artificially unrecouped, however, because the label has made back the money it spent off the top. Let's look at our above example. Let's say the label gets paid (meaning every retail store sells every copy with no returns) for every copy of the initial 300,000 units it shipped at $10.78 a copy. And let's also assume they did not spend any additional money to sell those records (also highly unlikely). The label has made $3,234,000. The label has also recouped $200,000 from the artist for the expenses, so that $3,234,000 is almost pure profit (except for the unrecouped costs of running their business and the overhead of running their business). Meanwhile, the artist has made only $100,000 (less the artist's overhead costs). According to my calculator, that's only 3% of the share.

          And the massive screwjob doesn't stop there, not by far. Labels pay royalties on 90% of sales which assumes 10% breakage, a holdover from the vinyl days. From that amount is deducted the advances and recoupable expenses such as studio time, engineers, producer, etc. However, a distributer is often given 15-30% of his albums free on which there is no royalty. Overseas sales and sales to military stores are at a greatly reduced royalty. Some Talent may be more popular overseas than in America which means they see very little royalties. If albums are returned and then sold at discount, Talent receives virtually no royalty on those sales.
          • Re:NOT FREE..... (Score:4, Insightful)

            by swillden (191260) <shawn-ds@willden.org> on Thursday May 23, 2002 @06:40PM (#3575685) Homepage Journal

            And the massive screwjob doesn't stop there, not by far. Labels pay royalties on 90% of sales which assumes 10% breakage, a holdover from the vinyl days.

            Actually breakage is a holdover from *shellac* days. A very long time ago, before vinyl was invented, records were made on shellac, which was very fragile. In the process of shipping a box of these shellac records to a retailer, inevitably a few would break. Since the record label didn't know how many would break, they just arbitrarily assumed that it would be around 10%. The record label gets paid for all of them, but they only pay the artist for 90% of them.

            This deduction for breakage continued even when vinyl records, which are much more durable, were introduced, continued with 8 tracks, cassettes and now continues to be applied on CDs.

            How many CDs do you think get broken in shipment?

            It's a crock. OTOH, the labels will just say, "Well, yeah, but what really matters at the end of the day is that our books have to balance. If we didn't deduct all those things from the royalties, we'd just have to lower the artist's royalty percentage."

            Whatever. It's an industry that is so rife with dishonesty and manipulation that they figure all of the lies wash out and leave them clean.

        • Re:NOT FREE..... (Score:5, Insightful)

          by JHromadka (88188) on Thursday May 23, 2002 @03:44PM (#3574696) Homepage
          Now, repeat after me: That's not what costs $18 per CD! What costs $18 per CD is the audio engineer that was paid to mix the tracks in the studio where the music was recorded; the rental time for that studio space and hi quality recording, mixing and sampling equipment; the designer that was paid to create the artwork you see on the jewel-case inserts and on the CD face; ...

          Um, then why do tapes cost half as much. All the mumbo jumbo you mentioned is in the prep costs. CDs cost less than $1 each to make; tapes cost more than that. Now if tapes cost $20 when CDs cost $18, then your theory would make sense.

        • Re:NOT FREE..... (Score:2, Insightful)

          by PK_ERTW (538588)
          Here's a clue. Most of the CD's on this site have been mastered in a studio as well. Maybe not quite the state of the art place down at WhateverMajorLabel, but still a pretty nice place with people who make a living off it doing the mixing.

          They do that with their own money. If they choose to distibute it themselves, they make the labels and other stuff with their own money. It is not cheap, but it is also something that any band that is remotely close to making it big manages to get the money to pay for and produce their 1000 CD run.

          The demands for cavier and 5 star hotels for your hoochies don't come into play until you are big anyway. Tours, they generally pay for themselves. Yes, there is the odd flop, on both the large and small scale, but in general, they make a lot of money off tours.

          So, when you look at a major label and talk about their costs, which as someone else mentioned, they make "Recoupable" costs, it doesn't look all that big anymore.

          And of course, what happens to any label that has someone big? That someone is bought out by a major label. If that someone can't be bought, the whole label is bought. If that can't happen, clearchannel does what it can to keep it from being played until they decide to sell. The labels demand control of the industry. They don't do it in nice fair ways, they do it by screwing whoever they can and taking every penny they can possibly get their hands own. They don't have a good image anyway, and they aren't even bothering to try and make one. How do they sleep at night? On a bed made of money.

          PK

        • And then a large sum of money that they pay to the radio stations to get their music played. Radio stations that are already 40% advertisement jingles anyways.

          And people wonder why the industry killed streaming audio? 'Cause it would hurt their racket, maybe actually getting some independants some air time (god forbid people get to hear music they want).
        • Re:NOT FREE..... (Score:4, Informative)

          by elmegil (12001) on Thursday May 23, 2002 @04:03PM (#3574834) Homepage Journal
          I'm a musician, and I have friends who are not only musicians, but nationally distributed and known musicians (though not "stars"). I know those things go into the cost of a CD. Guess what? Most artists don't spend ($18 - $2.64) * # of cd's sold on all those things, or even close. The $18 is there because every middleman who touches the little plastic disk wants his cut. But the fact of the matter is, there is no need to have so many middlemen that it drives up the cost 500%!

          So you either have:
          1) way to damn many middlemen--in which case you need to improve your efficiency so that you can compete on price, or
          2)a few people who are excessively greedy (and potentially fixing prices with the other labels, since everyone seems to have the same range of hyperinflated pricing).

          Think hard: do the artists at fightcloud have no costs to record and engineer their music? Is it really likely that the costs of a good amateur production studio are so infinitesimally smaller than a professional studio? Do they have no gigging costs? No artwork costs? Keep in mind, the "professional" releases can spread their costs over millions of CDs whereas the amateurs are lucky to spread them over thousands--you'd expect the amateur productions to have those costs make up a BIGGER percentage of the per CD cost, even if the total costs are less.

          Finally, you need to go re-read Courtney Love's essay about who bears the production costs with the majors--it comes out of the artist's royalties, which are a small fraction of that $18. That's true for big artists and small on the major labels; it's not like the label is paying that artist extra specially to stick around in most cases.

        • Re:NOT FREE..... (Score:4, Informative)

          by Chris Johnson (580) on Thursday May 23, 2002 @04:12PM (#3574878) Homepage Journal
          Oh, come on. The engineering may be covered by the label in the recording budget that's set- that may or may not come out of the artist's share (see 'recoupable'). Same with the graphics. Offset printing almost certainly is paid for by the label. Goodies FOR THE ARTIST come out of the ARTIST'S share, are you kidding? Promotion, including paying off independent promoters in an auction-like payola scheme to get tunes played on radio and stocked in Wal-Mart, does in fact get paid for by the label.

          I'm indie: see URL above. I worked with Ampcast to help them set up their CD program and I have a pretty good idea of how much CDs really cost physically. Mine go for $12: that is with a color four-panel two-sided insert, a color but one-sided tray liner, Red Book uncompressed CD master from high-resolution originals: in other words, very very near to major-label technical quality, and in some ways (sound quality) substantially better than the average major label release. And that is why I set my price so a couple bucks go to the artist, rather than setting it so that I get nothing.

          It'll cost you about 8$ to 10$ per CD to run a business that sustains itself producing CDs that are like major label releases. If you're good with having no artwork, or God forbid 'CDs' burned off mp3s and the like, you should be able to bring them in for much cheaper than that.

          Note, however, that the RIAA releases tend to be mass production- even 1000 is in its way mass production- and it sure as hell costs them less than $8 to cover everything involved. There's a lot of people gobbling caviar and Chateau Lafite in that business. Many are label people. Some are artists. For the artists, it means they will never see a royalty check so long as they live- but so long as they're allowed, they'll live high as if they were going to get paid. It's relatively cheap to give an artist a limo ride rather than pay them what you REALLY owe them, and if you own the limo company, hey- even cheaper. The whole industry is a big con.

        • Re:NOT FREE..... (Score:3, Insightful)

          by subgeek (263292)
          The promotion work that is done when the artist goes on tour - that costs money: TV spots, banner ads, Ticketmaster kick-backs, deposits for venues, etc., etc.

          Don't forget that concert tickets cover a lot of this expense. even after ticketmaster takes their cut, the remaining amount is more than the price of a new cd for most big-name artists. touring is great promotion because it usually makes money and encourages cd sales.

          There's a significant cost involved in promoting new music ... now, should you have to pay for lots of bad artists to be able to release their music?!? Maybe not, but that's the breaks. You can't really weed out the good from the mediocre before you incur all those costs ...

          promotional costs are the reason why some cds that bring in tens of millions of dollars still don't turn a profit. when the promotional budget is in the tens of millions of dollars, chances are this is more than the production costs.

          now, about mediocre artists. why can't these costs be avoided? shouldn't the recording industry be spending a little more money trying to figure out if a band sucks or not? it is my opinion that they spend more time considering whether they have a *chance* at marketing it successfully. they excuse away an artist's shortcomings by arguing it doesn't matter because if they throw enough money into marketing people will buy it anyway. (often they are correct) even if the labels are gambling, i think they would do much better for themselves trying to get a little more quality. initial costs probably wouldn't increase if marketing budgets were reduced accordingly (followin a theory that it costs less to sell something people are more likely to want than it does to convince people it's what they want and then convince them to shell money out for it).

          as someone else pointed out, tapes cost less than cds. people don't want them as much, so if they cost more, people wouldn't buy them. the costs get bundled onto what people will buy.

          my complaint isn't that cds only cost .30 or .40 to press. my complaint is that the model for deciding how to spend money that causes a cd to cost 18.00 instead of about 10.00 is flawed. the only costs that are not one-time expenses are manufacturing and royalties. everything else is pay once. all of the expenses you mentioned could be covered if the hype machine were a little more efficient in deciding what and how to promote things.

          we'd all end up with cheaper cds of higher quality.
      • Read the article. You get the CD and a slimline colored case. No art, no booklet, no lyrics.
    • While you are technically correct, I'd say that making $1.32 per CD (the other $1.32 goes to the artist) isn't exactly reaming the consumer.

      It's actually not a bad model: the artist takes on the responsiblity of creating the content, the consumer takes a partial risk on an unknow artist, although it's less of a risk in many cases than major label releases:

      You will almost never hear more than a 30 second clip of any song from a major label release (at CDNow.com for example) and thus can't get a good idea if that new album you want is chock full of interesting tunes or a "one hit with filler" coaster. And since none of the major retailers will allow you to return an opened CD except to exchange due to defect, you're taking a pretty big risk, especially since there are very few albums where more than 20% of the songs are more than just "ok."

      So in the big picture, this company is making less per CD than a major, but with very little overhead, the artist makes more per CD and is free from overbearing contractual obligations, but with more up-front responsibilities and costs, and the consumer pays less per CD, but doesn't get Britney, Christina, or Celine. Not a horrible tradeoff unless you're a 14 year-old media zombie or a baby-boomer with disposable cash and VH1.

      I think the cost is reasonable (if they didn't make some money, they wouldn't be in business after all), and that the "free" angle, while not completely accurate, isn't any worse than advertising a price in big, bold letters with "price after rebate" in 6 point type, or much different from "free email," "free web hosting," or "free car wash with 10 gal. minimum purchase."

  • You're forgetting the first rule of Fightcloud...don't talk about Fightcloud.
  • Well, that Salon article was practically devoid of anything new.

    I'll sum up:

    "CDs are too expensive, because recording labels are greedy"

    Man, I should be writign for Salon.com
  • by Lumpy (12016) on Thursday May 23, 2002 @02:55PM (#3574322) Homepage
    If Cd's were reasonably priced people would buy them.

    I spend hours in second hand Cd shops looking for what I want first and then only after utter failure to find it will I buy it new. The second hand CD shops are booming, the two in my town make a killing, are always packed and always has a great selection of indie/non-mainstream/plain wierd along with the regular -popular.

    hell Cd sales would double overnight if they dropped the price to $9.95 for new. but as is normal... if they cant squeeze every drop of money out of something, they dont want to sell it.
    • It is my experience that in my town that if a second hand store has a wide selection, a large number of the cd's on the shelves are stolen goods. It has also been my experience that if they are your cd's that are stolen, it is very difficult to actually prove they were yours and get them back.

      Is it different in your town, or do you just not feel bad for perpetuating an awful business?

      • I've had a few hundred of my CDs stolen a few years back and supprisingly I didn't notice for a month...this represented a small percentage of my discs and a former friend snagged all the ones I had in storage after I had burned them to MP3 and multiple CDRs knowing I wouldn't miss them. Sadly, I'd probably be a RIAA Pirate Posterboy because of my collection of MP3s even though most of the music is legit and I make it a habit of picking up what I listen to.

        Anywho, its not too difficult to recover them if you take precautions. I had all my discs organized and catalogued that were taken (which was easy as I had already burned them). I generally write my name on CDs on the inside cover under the disc holder thingie...you can't see it unless you take the disc apart. So, I'm at the used store looking to see if they have anything I NEED to pick up to keep my collection up to date and legit. Doing so, I keep seeing discs that looked like mine...damn I'm going to check through these as someone listens to the same music I do. Trying to remember if I had one of the discs (I can't remember these things) I turn it over and see my name faintly spelled backwards.

        It took a few months to get my discs back and reimbursed, but in Indiana technically selling CDs is the same as pawning stuff, so they govern it the same way. Legit ID, Signature and thumb print. Turns out it was a former friend. He got probation for theft and had to reimburse me for the discs that were sold, and the store for the discs they had to return to me. Personally, I think the guy should have been locked up...and maybe shot. Anyone that would steal from a friend is no longer a part of the human race and deserves to be extinguished...but thats beside the point.

        So no, its not difficult to prove that this stuff was stolen. Its not too hard determining who stole it, granting you don't like in a backwards state or have stores that go out of their way to hide the fact that they are specifically targetting illegal sales. In most states in the US, if this were to happen, they would be fined severly and may face the theft charges themselves...most of these business owners aren't thieves and while they ask few questions, they are more than happy to help you out in the end...

        Ok...that was way longer than I expected it to be...
    • by Geckoman (44653) on Thursday May 23, 2002 @03:19PM (#3574506)
      The problem is that record companies, like lots of big corporations, have forgotten about the Law of Supply and Demand. Instead, they've turned to the Law of Constant Revenue.

      On their balance sheets, if they've been selling 100 million CDs at a profit of $10 each, and suddenly they're only selling 50 million, the only way to guarantee the same profit is to double the price.

      I'm not anti-capitalist or anti-free-market, far from it, but to me that looks like evidence of monopolistic practices. They're not allowing themselves to be affected by market forces, because they're the only source of the product.

      Economically, if demand is falling for something, the price should be falling to match the demand. It follows that if you're not selling enough of a product at a certain price point, you should drop your price to make it more attractive, thus increasing demand.

      The RIAA should ask Nintendo, Sony, and Microsoft (or their game divisions, at least) how this works.
      • The problem is that record companies, like lots of big corporations, have forgotten about the Law of Supply and Demand. Instead, they've turned to the Law of Constant Revenue.



        On their balance sheets, if they've been selling 100 million CDs at a profit of $10 each, and suddenly they're only selling 50 million, the only way to guarantee the same profit is to double the price.



        Oh, come on. Do you think that the head of Sony Music got to be where he is because he's an idiot? Do you think that all of their economists just graduated from High School and learned how to use a calculator? I'm shocked at how little credit people give the music industry. These are not dumb people.



        You want to know why a CD costs what it does? Because that is the *exact* amount at which revenue will be maximized. Make it cost $1.00 more, and the sales dropoff will be more than the increase in revenue per unit. Make it cost $1.00 less, and although more people will buy it, it won't make up for the lost revenue per unit.



        These people spend hours going over Gallup Polls and marketing data and the census and focus groups and the music charts and whatever other information they have, to determine the cost of the CD.



        Don't accuse them of just pulling the price out of their asses, and certainly don't accuse them of not knowing anything about economics.

      • On their balance sheets, if they've been selling 100 million CDs at a profit of $10 each, and suddenly they're only selling 50 million, the only way to guarantee the same profit is to double the price.

        Not quite, the only way to guarantee the same profit is double their margins, doubling the price will more than double their profit. Economically, if demand is falling for something, the price should be falling to match the demand. It follows that if you're not selling enough of a product at a certain price point, you should drop your price to make it more attractive, thus increasing demand.

        Economically the price should do whatever the firm wants it to do. The firm will only drop their price if the Price elasticity of demand indicates it's worth their while. The 'Law of Supply and Demand' you cite really only applies in the long run and in competitive industries where smaller players are priced out or starved out.

        Economics is not quite as simple as the Supply and Demand curve.

    • "hell Cd sales would double" - so what you're saying is, you think record companies shouldn't lower the CD price, since they'd lose money?

      If I can sell a x CDs for 20 bucks, or sell 2x CDs for 10 bucks, and given that I have *some* amount of fixed cost per CD, well, I end up with more money at the end of the day at the 20 buck price point. So if I want to make money, exactly why would I lower the price?

      It's extremely hard to paint the record companies as money-grubbing capitalists and foolishly missing out on money due to lost sales at the same time. Rather than totally blowing capitalism 101, stick to arguments that try to tie proposed sale prices to production costs rather than using supply/demand; it's the only way you could possibly have a point to make, and it only requires a fundamental change in philosophy on the part of most of your readers.
    • Cd sales would double overnight if they dropped the price to $9.95 for new

      So, basically, they manage twice the inventory for the same revenue. Also, they have to pay the artist more. I'm just not seeing the benefit.

      • Well, there would be benefits by having more people having the CD. One being that since more people have it, the chance of pirating the cd is lower. So they wouldn't have to spend as much money on anti-copying techniques.
        They don't have to pay the artist more depending on how the deal is structured. I don't know how if all record deals are by number of disks sold or total revenue. If it's total revenue, then they have to pay the artists the same in either case, if by number of disks, then lower cost means more money to the artist.
        If all Cd's were lowered in cost, this is a major difference from if only one or two cd's are released at a lower cost. When something is lower in cost then the average, it is percieved as being of poor quality, not the case if all cd's were less then 10 dollars.
        On a similar note, the priceing of CD's is really messed up because they only get more expensive with time. One pricing scheme I really like is the Sony PS game system. If a game is really popular, then it's put on the Sony Greatest Hits list. Where people can then pick it up for less then half the price of normal games. They also fix all games at a price of $50 until it sells a certain number of copies, or just bombs though. CD's never get cheaper, an older popular group is more expensive then a newer band (not the newest music, say and album back). Going to buy like beatles or led zep is not cheap.
    • If Cd's were reasonably priced people would buy them.

      You mean as opposed to the millions of people who buy CDs every year and make the RIAA and the artists as filthy rich as they are in the first place?

      I doubt the RIAA sees the problem of not enough demand. They would probably have lowered CD prices already if they did. I doubt they have intentionally priced CDs so high in order to reduce their own profits.

      Also, remember that since the second-hand CD shops are booming that means I am more likely to buy a CD since I know I can sell it used and recover some money.
  • Hypocritcal.... (Score:5, Interesting)

    by Anonymous Coward on Thursday May 23, 2002 @02:58PM (#3574340)
    Hear me out here, I think I have a valid point. Lots of people here are programmers. Lots of people think CD's are overpriced. Well a CD is about 15 bucks give or take a few. How much is a video game these days? 40 or 50 bucks, a DRASTICALLY different number than 15. But guess what? You get a game , it comes on a CD. You get an album, it comes on a CD. What can we conclude from this? You're not paying for the CD at all, you're paying for what's on it! So why should we tolerate 50 dollar games without batting an eye, but a 15 dollar music collection is "way too much"?? I don't see the difference. Programmers put in tons of effort to create a game. Musicians put in tons of effort to create a CD. The time schedules are roughly similiar, no artist is cranking out CD's weekly or anything. So is there any reason we complain about music being too much, while games we don't? I think its because most people here are programmers, and think that because video games involve programming, they are inherently worth more.
    • I get a lot more repeat enjoyment out of a video game than a music cd. How many people listen to the same music cd for 8 hours a day for a whole month?
      • And how many games are you still playing on any regular basis five or ten years after they come out?

        I have every CD I've ever purchased, and still listen to them on a fairly regular basis. I don't regularly play Need for Speed 4, and I just got that a couple of years ago.

    • That's because a lot of games these days come on multiple CDs.
      :)
    • As a former game programmer I can tell you that it's very similar to the record industry. Normally in video game development you have a publisher, a development studio, and programmers/artists that work for the game studio. The publisher gets most of the money, then the game studio, then the programmers/artists get crap. In my experience game programmers make much less and work longer hours than people in other industries. Though game programming is much more challenging and fun!
    • You are absolutely right, the artists' time is worth something.

      But. Cassettes sell for far less than a cd, even though they aren't that much different in price. I don't know the exact numbers, but I wouldn't be surprised to learn that a cd actually costs less to produce than a cassette tape.

      How many people here are old enough to remember when it was "18.99 cd/12.99 cassette" for all of those time-life or rhino music compilations. This means that you pay a premium for getting the same "thing" on cd. And as either the article or another poster pointed out, when cd's first came out, the record companies said that the price would drop over time as people bought more of them.

      I'm curious to know what percentage of a computer game sale goes to the people who actually produced the game: programmers, artists, musicians, etc.

      And who pays 50 bucks for a computer game? I wait 2 years and let the price drop to 10-15 bucks. If I'm lucky, I have a new computer and the game plays really nicely. Imagine the frame rates you'd get playing the original Doom or Duke Nukem on your PIV 2.2 gig with 512 megs of memory and a 65 meg video card.

      Shoot, I'm old enough to remember when you had to get software to slow your clock speed down when playing the older games. But now I'm starting to get OT.
      • cassette tape - .75 to 1.98 depending on tape composition/packaging. cd - .10 to 1.15 depending on composition/packaging. BUT most of the production run CD's I've seen around aroun a quarter each. (remember kiddies your initial expense at making the master goes down and down with every identical one you stamp out with it)
      • How many people here are old enough to remember when it was "18.99 cd/12.99 cassette" for all of those time-life or rhino music compilations.

        For some of them, it's stil those prices. Prices really haven't come down at all. And seeing as how most music is now digitaly recorded, I wouldn't suprise me if tapes did cost more to produce, but the marketing they're relying on is the same thing that sells iMacs and 2.2 gig intels the "OOH NEW SHINY THING" mentality that a lot of people have.

        Most of the time you don't even have to wait 2 years to get a game cheap. After 6 months, it usualy drops in price and then you pick up the cheap resales on ebay.
    • Re:Hypocritcal.... (Score:2, Insightful)

      by ip_vjl (410654)

      You're not paying for the CD at all, you're paying for what's on it!


      I would agree ... but there is one problem with that. Why is there a difference in price between casette and CD? They've already paid everyone involved in making the master recording, so that's not it ... and I know full well that you can actually duplicate CDs for less than you can duplicate tape, so its definitely not a material cost.

      The difference is that CDs are priced by what they think the market will bear. I have no problem paying to support artists (and all the other people necessary to produce them). I'm happy to pay a little to a store that gives me the benefit of immediate access (as opposed to online/shipping, etc.) - but if they want to run the "you're paying for the content" argument, then the cost should be the same regardless of the media.

      I remember back in the days when software first started coming out on CD-ROMs. You had to pay extra to get floppy sets. That made sense because the media cost more. But in music, you purchase on a less expensive (to produce) media and pay more. Curious.

      • "Why is there a difference in price between casette and CD? They've already paid everyone involved in making the master recording, so that's not it ..."

        If I were a company involved in a business that involved a large, fixed cost in order to produce two products, I'd assign a larger portion of that cost to the higher priced/more desireable product (while sticking within the constraints of what the market will bear). It'd be the same if the fixed cost were a $500,000 factory necessary for producing both cheap and premium widgets as it is for a $500,000 intangible recording/production session cost necessary for producing both tapes and CDs.

    • That's not really a fair comparison.

      A band is generally somewhere between 3 and 5 people. If they're not machine-stamp created by a major label, they've probably spent months or years writing their songs, playing them in bad bars with leaky ceilings, etc., and putting out a CD might not change this very much. But the _cost_ of recording that CD is not too much these days. There are just oodles of bands recording their stuff for not very much money at all. Nirvana recorded "Bleach" for something like $400. Yes, indie bands still give away bunches of CDs to college radio stations (like mine), but when I go to Soundgarden (a music store, not the band), I can get their CDs for less than $10.

      The reason major label CDs cost so much is because they spend millions on advertising, pyrotechnics, etc. Cynics (like me) say that they have to do this because the music made by major label artists just isn't that good, and without the commercialism, they are nothing. There are, as always, exceptions (Radiohead and Tool are doing great with everyone...but they started small, moving from college radio to mainstream. This is the way things are "supposed" to be, IMHO.)

      However, where is the huge market for "indie" games? Why don't we see lots of little companies making cool games for the consoles? The cost is much higher. While someone can make a great record with just a few people in the band and a recording/mixing/mastering engineer, it simply takes a lot more manpower to take a game idea and make it reality. Good luck doing it on cheap hardware, too. And then, if you want to be on a console, you need to pay the console makers, code your game for different platforms, etc.

      The entry barriers for PC games are a bit lower, but still, you're going to need a team of people working for a very long time. If you don't want to spend lots of time in the studio -- which is the part that costs money -- you don't have to do so. Bands can play shows for a year and get their songs down to the point where they can record just about everything in one take (and believe me, it's a lot more fun to record bands like this). Sure, if you're a perfectionist like Kevin Shields of My Bloody Valentine, you might spend all day placing a microphone, but then you probably have your own studio and are doing the sound yourself, so again, the costs go down.

      There's also the fact that it probably doesn't take as long to learn how to play bass for a punk band as it does to learn C++ and OpenGL (or Python/SDL, or whatever). And coming up with either good games or good songs requires creativity.

      • >There's also the fact that it probably doesn't
        >take as long to learn how to play bass for a
        >punk band as it does to learn C++ and OpenGL (or
        >Python/SDL, or whatever).

        hate to break it to ya, but any decent musician has been playing for YEARS and YEARS before they manage to put out a cd and are discovered.

        picking up a new programming language is a couple weeks at worst.

        (though - learning the obscene black magic needed to optimize game graphics routines takes forever)

    • Good point, but there is a difference.

      1. New PC games cost $50. As time goes on, their retail price drops significantly. CDs keep their value (not resale value, but re-releases) for a much longer period time, somewhere settling around the $13.00 range even for CDs that are 20+ years old. In that sense, the record company can continue making revenue from them for years, whereas games stop selling completely after a short window of opportunity.

      2. The average mainstream PC game costs much more to make then an album (I'm basing this off years of observing game development houses closing down all the time, and a relatively few number of bands/artists/record companies that have ever filed for bankruptcy). A bad game can put a company out of business. Artists at least have other revenue streams (live appearences, merchandising) so they aren't dependant on a single method of earning income. This is one reason why people feel worse about stealing video games than they do music.

      3. If you visit many game forums and websites, you'll see plenty of complaints about the $50 price on most new games.
    • Re:Hypocritcal.... (Score:3, Insightful)

      by MoneyT (548795)
      For one, the value of the game is much higher than that of music because consumers get a better utility out of the game than out of the music. A game has huge reuse value as compared to a music CD. And there isn't just a demand for lower priced music, there's one for games too. Ever see those warez sites? Same thing. The major difference is that the gaming industry isn't trying to have burners and copies eliminated completely (yes there is copy protection, but it's more to discourage casual piracy rather than complete blockage). The RIAA want's burners to not work period. If the gaming industry did that, we would be up in arms just the same.

      Also a game will go down in price over time, music does not.
    • The Big Difference (Score:5, Informative)

      by irix (22687) on Thursday May 23, 2002 @04:46PM (#3575086) Journal

      You can charge whatever the market will bear. So, game producers charge $50 (at least for a few months) for a new game.

      How is that different from CDs? Well, the game producers didn't have to settle with the FTC because they were conspiring to inflate the price of CDs [cnn.com]. Retailers wanted to sell them cheaper, but the middle-men wouldn't let them!

      Even with the antitrust allegations settled, I wouldn't be surprised if this kind of crap still goes on. The RIAA members are effectively a monopoly on the music industry. As a result, the market isn't dictating what price a CD will go for, they are.

    • Musicians put in tons of effort to create a CD.
      • Yup ... and what do they get for it? Maybe 50 cents of that $15.00.
    • Re:Hypocritcal.... (Score:3, Insightful)

      by Saint Nobody (21391)

      ask yourself -- why is the price where it is? record companies, when explaining the price of cd's explain that much of the price of cd's is because of the budget required to promote albums. so why do you have to pay fifteen to twenty dollars for a CD that has no promotion? when you pay $20 for a cd by an actually talented musician, you're paying for the record companies to promote britney spears and n'sync. the drive to make a select few records into "hits" drives the promotions budget skywards.

      meanwhile, joe consumer decides he doesn't like britney spears. he decides to shell out $18 for an old david bowie album instead.* this is one less britney spears cd sold, and so the record companies get annoyed that people aren't buying what they're supposed to be brainwashed into liking. and so they increase the promotions budget, and take it out of those david bowies cd's.

      * did anybody else notice that three years ago, rykodisc charged, like $8 for bowie's back catalog? then virgin bought it. they cut the bonus tracks and more than doubled the price. there's no way any production costs warrant that kind of abuse of the consumer.

  • Hey, c'mon... (Score:4, Insightful)

    by vkg (158234) on Thursday May 23, 2002 @02:59PM (#3574352) Homepage
    although calling something free and charging five bucks for it is kinda scummy, at least these folks are punching a hole through the perception that there's something expensive about producing a CD.

    15 bucks is NOT reasonable, and was the price point initially agreed upon to finance the cost to convert to the new format (i.e. from vinyl). CDs were supposed to cost about eight bucks in stores.
  • This is a good idea, but the state of Nevada for instance has already made progress towards placing price floors on any "mainstream music distributions". Because of pointless legislation such as this, projects like these will never succeed.
  • If anything, this site might be merely a proof-of-concept, but I doubt if it's a model that will become widespread. People have been conditioned to pay $18+ for CDs and as long as the only way they can get their Britney fix is through those who have the monopoly, they'll continue paying it.

    Since all the artists on the site are unknown, they'll never be able to reach much of an audience because the radio stations are the pretty much beholden to the recording industry will never play their music.

    I really haven't followed up with Prince's attempts in directly selling to the consumer, but I don't recall hearing much from him lately. He might still be selling records, but who thinks he'd be as well-known as he is without generating lots of dollars for the recording industry first.

    It's a cynical view, but it's hard to not to have it. I do applaud attempts to go it alone, but I can't help but think these guys will be gone this time next year.
  • wheres my $20 going? (Score:3, Informative)

    by ejaw5 (570071) on Thursday May 23, 2002 @03:00PM (#3574362)
    In 2000, the average suggested list price of a CD was $14.02, according to the Recording Industry Association of American (RIAA). The CD itself costs about 32 cents in a large production run, according to Michael Pardo, V.P. of sales for CD duplicator Greenwood Solutions. Add packaging and the price goes to 54 cents. Add the cut for a new artist, somewhere between 10 and 50 cents,

    CD+ Packaging + artist cut == $1.36
    $20 - $1.36 == 18.64 RIAA
    • You'd have more money left if you stopped paying $20 for $14 CDs.

      I see the $20 CD figure thrown around a lot on Slashdot. Does anyone actually pay $20 for their CDs? I don't mean a double CD set or an export, there's a reason those are more expensive. And I don't mean a $16.99 CD that you've decided to round up to $20. It usually doesn't matter what the exact price is, but when you use the mythical $20 value to determine the RIAA's profit, that's just faulty math.
    • Incorrect assumption.

      Don't forget that CDs never get from the production company to the retail store directly through magic.

      Count in distributor, wholesaler, and chain, then the shipping/trucking costs between, and you'll see that the RIAA does not get what's left after packaging, CD cost and cut to artist.
    • I'm not sure what the cost is ( and I don't really think it's alot ) but the equation is better stated as this

      CD+ Packaging + artist cut + marketing + shipping == ????
  • I just checked the site out, to see what they have, since I already buy a good number of CDs.

    I've never heard of the artists they carry, and they have a selection of approximately 10 artists.

    Yeah, the reason they're free is probably that the artists CAN'T SELL their CDs, so they'll give them away for "free" to save on dispoasal costs.

    Bah.
    • by autechre (121980) on Thursday May 23, 2002 @03:55PM (#3574782) Homepage

      So since you've never heard of any of the artists, they're obviously no good?

      It always amazes me how people who are so gung-ho about alternatives of one sort are content to follow the crowd about everything else. People use Linux, but then listen to music that's terrible. Environmentalists rant about big companies destroying the planet, and then run IIS as their webserver. People eat healthy, organic food, and then don't want to hear about hemp clothing, or are intolerant of other religions.

      In short, I think it's important, in all aspects of life, to really _think_ about things. Why are you buying/doing what you are? Is it the best for you? Have you really looked at the alternatives? This is a lifelong process; saying, "Oh, I heard some indie band once and it was bad" isn't good enough. I try food that I don't like every few years just to make sure, because otherwise I might be missing out.

      I guess you might not want to take the time to do that with everything, but it's not so good to talk about things if you really don't know.

  • Pshaw, not free. Almost free. Not free.

    Hey, if I show up at your offices, can I just take the CDs home for free? Since you're only charging me shipping and handling, it shouldn't be a big deal. Where's the office?
  • by jfengel (409917) on Thursday May 23, 2002 @03:02PM (#3574383) Homepage Journal
    A CD really does cost money to produce. The reason you (well, not you necessarily, but somebody) want the Mariah Carey CD is that somebody brought it to your attention. "Attention", as everybody on the Internet knows, costs money.

    Physical stores cost money: clerks, rent, utilities, inventory overhead. Some of what Fightcloud is doing just matches the Amazon model of using the Internet to reduce many of those costs. Good for them; I applaud it.

    Now comes the real question: will they have any CDs worth buying? And if they do, how will you know? Most CDs are crap. Even in a general area that you like, most CDs aren't worth the plastic they're printed on, at least to you. It's the job of marketing to match you with that CD, and that's expensive to do. We'll see if $4.95 gradually becomes $9.95. Still a better price than the RIAA wants you to pay, of course.
    • "Attention", as everybody on the Internet knows, costs money.
      Only if what you are promoting wouldn't have attracted attention in the first place. For example, how much money did it cost to generate the attention surrounding projects like Linux or Gnome in the early days? Obviously the answer is $0.00, those projects received attention because people were interested, not because they were hammered with adverts on television.

      The record industry spends large amounts of money on promotion because it is expensive to get people to buy stuff that they otherwise wouldn't want.

    • "Attention", as everybody on the Internet knows, costs money.

      Now I'm so confused!

      I wanted php on my web site, so I went to www.php.net and downloaded it, for free! And then I did the same for MySQL! I then I found some people had written some create scripts for dynamic web sites, and I downloaded them for free too!

      Those people got my attention, which you say costs them money, and I didn't pay them anything. Now I feel bad! They must have spent millions of dollars on marketing, because virtually all web developers know about them. I must be robbing them. Although they didn't ask me for money, which is odd...

      Or perhaps something else is happening here? Perhaps in the age of the internet, if you've got something really good, it practically promotes itself, at no cost? Of course this would make the record companies redunant. I guess they don't like that idea.
  • I'm a twenty-something programmer/analyst. I have a DSL line. I don't pirate movies or music or pc games or video games. I, like most people, like to pay for things, including the things I could get for free. For better or worse, we are all consumers and just because we can download things for free doesn't mean we do.

    Why bother with the copy protection crap? If I want to pirate a game protected by safe disc, I will, and there isn't a damn thing anyone can do about it since I am just one person out of millions.

    Why not save the money? Honestly, the only thing I have pirated in the last year was Windows XP - I paid for Windows 98 and I just consider it an upgrade to a working copy. That and paying for it would have meant registering. I may just buy it and stick the shrink wrapped copy on the shelf.

    I would rather see the money spent on more content than some stupid scheme to stop me from ripping a cd that doesn't even work. It doesn't stop the poor pirates and it doesn't stop the rich pirates. It doesn't stop me from making legit backups when I want. So why bother?
  • It's a good idea... we all know that CDs are overpriced. I try to buy music direct from the artist... they generally get a much higher cut and the prices are generally much better.

    It's too bad that FightCloud doesn't have a better selection...
  • Best Value? (Score:2, Interesting)

    by giantsfan89 (536448)
    "If you compare the CD to other entertainment, it's one of the best values out there."

    Hmm lets say we use an entertainment piece 100 times...
    DVDs $ 20/100 = $ .20
    CDs $ 15/100 = $ .15
    Computer $1500/100 = $15.00
    MP3s $ /100 = $ .00 (AKA KaZaA)
    Slashdot $.50/100 = $ .005 (half a cent)
    Hmmm so looks like Slashdot's $5/1000 deal isn't too bad for non-banner ad pages!
  • by donnacha (161610) on Thursday May 23, 2002 @03:07PM (#3574417) Homepage


    From the Salon article [salon.com]:

    Scalfani sells CDs for free. That is, if you don't count the $4.95 "shipping" charge

    So, if I turn up at their offices in person, with a box, these CDs really will be free. As in free.

    If I were the word free, I'd be feeling pretty raw and abused these days.

  • I do it too. Every time I go to Newbury Comics, it seems those bastards have upped the price of CD's.

    But bitching about it doesn't really do anything. The CD producers can charge whatever price they think the market will bear. Some people actually buy CD's at stores like Sam Greedy and Record Frown, both of which seem to sell everything at MSRP (about $19 now), so it's obvious people are willing to pay.

    My answer? I simply buy fewer CD's: at $10 I'll buy almost anything, at $13 I'll buy most stuff, but at $15+ I'll only buy what I really want. The rest of it just isn't worth that price.

    However, just because I think they can charge whatever they want doesn't also mean they get to dictate terms. If they want a limited-time monopoly on distributing their recordings, they have to fulfill their side of the copyright bargain, which IMO means that they have to make it easy for me to exercise my fair use rights. It isn't enough simply not to prosecute me for attempting to exercise those rights, such as space-shifting (ripping to .ogg, making a copy for the car, etc.) and time-shifting (taping stuff off the radio to play later); they should not even be able to make it difficult to perform such tasks. This means that copyright should not apply to recordings with fair use interference measures/anti-free trade measures (collectively and inaccurately known as "copy protection").

    Go sign the Digital Consumer Bill of Rights [digitalconsumer.org] and stand up for preservation of your fair use rights. Call your Congressmen. Donate to Rick Boucher and let him know why. Join the EFF. (And if all else fails, join the NRA, buy a handgun, and get ready to defend your liberties with force.) Stop simply complaining, and do something about it.
  • bizness 101... (Score:2, Insightful)

    by L. VeGas (580015)
    ...tells you to sell the product at the price at which you will make the most money. Let's assume $4 per unit production cost. If one million people are willing to buy your product at $14 each, you make 10 million dollars. If only twice that many people are willing to buy it at $8 each, you only make 8 million. I'd be an idiot not to price my product at $14.
    • Good point, but your math is flawed. If 2 million people buy my product at $8 that's 16 million, which is more than 10 million. I doubt sales would double, but yes, many people are willing to pay $15-20 for a music cd. Same thing with gas prices, we are willing to pay whatever it takes to drive our car, even if it means we're being screwed. Why? Because we see being able to drive our car at all more important than the fact that we're being totally screwed by major corporations. Selfishness is the problem here.
      • You didn't do the math correctly.

        Its $16 million in revenue, true. But at the $4 production cost he quoted per CD, at 2 million cd's, thats $8 million, so you end up with $8 profit.

        Granted, it probably doesn't cost $4 per CD to produce it, but for the purposes of the problem stated, it fits.

        Now, the obvious solution here would be to reduce the per unit cost of each CD. Cutting out the middlemen would help significantly.

        -Restil
      • by nuggz (69912)
        ($14 sale price - $4 cost) * 1 million sales = $10 million profit.

        ($8 sale price - $4 cost) * 2 millon sales = $8 million profit

        His math isn't flawed. you forgot to subtract the cost.
        I'd like to add
        ($20 sale price - $4 cost) * 0.5 millon sales = $8 million profit

        The idea is at a certain point, you get maximum total profit. I think CD prices are pretty close to it. People buy lots of CD's at their current price. If they raised the price significantly I think there would be a substantial drop in sales. If they lowered their price somewhat (representing a larger decrease in net profit) their sales would not increase all that much, I know I wouldn't run out and buy most of the crap out there at any price.

  • Electronic? (Score:2, Funny)

    by version5 (540999)
    Whenever I see music retailers ignore electronic music, I conclude that they must be horribly out of touch.

    But the good news is that they are championing the oft-overlooked Christmas music genre. In May, for some reason.

  • In music, just as in software, you can't complain that other people are trying to make money off what they do. If you don't like the fact that you have to pay for music, go and make some music! Distribute it for free. Put it under the EFF OAL or something. Whatever works.

    There's certainly a place for professionals in music (questions about how well the current payment system works aside), but music should also be an amateur (look it up) endeavour. If you have a day job, then share what you create!

    Finding my recording of the Brahms Requiem is left as an exercise for the reader.

  • by proxima (165692) on Thursday May 23, 2002 @03:21PM (#3574514)
    People hate hearing "free" when it means $4.95 shipping for something that's cheap to make and ship.

    Instead, they should've said that the CDs were $4.95 with free shipping. Then we wouldn't feel like we're being lured in by "free", it'd just be a good deal.

    It's just wording, I know, but it makes or breaks this company's "image".

  • Apples and oranges (Score:3, Informative)

    by smallpaul (65919) <paul@presc[ ]net ['od.' in gap]> on Thursday May 23, 2002 @03:32PM (#3574589)
    I don't want to defend the RIAA but comparing these guys to a label is apples and oranges. Presumably in most or at least many cases, the label pays the studio costs and marketing costs. Think of how many $2.64 CDs an artist will have to sell to make the cost of the studio time, any hired musicians, marketing materials etc. The artists cannot even be breaking even unless they record in their homes using SoundBlasters.
    • by autechre (121980)

      The linear notes for Nirvana's "Bleach" say that it was recorded for $400. Personally, it sounds pretty good to me; you can do a lot with a little equipment and a lot of knowledge and time. Many recording majors I know (at UMBC) use their studio project time to record their band. That means it cost them _nothing_, and they got to use some damn nice equipment. Plus, if they ever go back and decide the sound could use improvement, they've got the masters, and can go for it.

      The Mountain Goat's "All Hail West Texas" is one singer/guitarist recorded on a _defective_ Marantz, which produces an interesting effect. The album is amazing, and it probably cost nothing to record; the value is in the songs.

  • by teamhasnoi (554944) <teamhasnoi@@@yahoo...com> on Thursday May 23, 2002 @03:33PM (#3574601) Homepage Journal
    Here's the beautiful thing.

    The RIAA finds some girl w/ boobies. Some dude in Nashville writes her a song. Some guy in NYC comes up with a marketing campaign. Someone in Chicago stocks the shelves. Some dumb-ass pays $15+ for a manufactured image. THE MUSIC IS INCIDENTAL! This 'artist' doesn't write her own music. Doesn't come up with her own dance moves. Does not even dress herself. And people buy this. Alot of this. And I'm supposed to let advertisers interfere with my abillity to skip commercials when it's _this_ obvious that advertising and marketing works?

    Lowest common denominator entertainment.

    I wish the Lone Gunmen were here. *sniff*

  • Well...their bandwidth and servers aren't free, and looks like they'll need more:

    modules/ui/mmui.mv: Line 4120: MvDO: Runtime Error: Error opening '/Merchant2/footer.htm': Too many open files in system
  • These CDs are not free, nor is the music free. You can market them as free, but those taglines fall quickly on their face when you see that you can't download the music without charge (or even with a charge, for that matter).

    Essentially this is a distribution company, and they charge huge rates to send you a 'free' CD. I can get better shipping rates through any major (or minor) carrier, and even most couriers.

    Here's their business plan:
    1. Make no useful product
    2. Obtain 'free' product from elsewhere
    3. Advertise shipping service for 'free' product
    4. Outsource shipping
    This doesn't punch a hole in anything, much less the RIAA's theory about the CD price fixing being necessary. All this shows is that someone can set up a virtual company giving product away and making money on the shipping - which all too many internet companies failed at a year or two ago.

    Here's the bottom line - you can give away garbage, and you can sell wanted products, but you can't sell garbage and expect to survive off it. If they think that they are going to make enough money on this gimmick to grow their business and become a heavyweight player, well, best of luck. But remember MP3.com isn't so hot these days, their artists aren't so hot, and they're giving away their music with the added benefit of instant gratification.

    FightCloud - if you really want to appeal to people, don't call a donkey a horse. We are intelligent consumers. If we're given an reasonable choice, we'll make a reasonable decision. The RIAA markets their products to the stupid and weak. We have to eat it because that's all there is for many good groups (who can't or won't free themselves of the RIAA's lies). Tell us that your CDs cost $2.50 each and that S&H is $2.50 for the first CD and $0.50 for each additional CD in each shipment.

    But then, your business would fail, wouldn't it?

    -Adam
  • The point of (Score:5, Insightful)

    by Asprin (545477) <gsarnold AT yahoo DOT com> on Thursday May 23, 2002 @03:56PM (#3574790) Homepage Journal
    This is an absolutely, completely, totally ---[R0XX0RZ]--- Salon article. Why - because of outstanding analysis and information therein about RIAA price gouging? No. Because even though *we* are all aware of the problems with the RIAA's anti-p2p, pro-DRM positions, my wife isn't.

    This article explains to HER that:

    &gt $16 of the $18 she's spends on a CD is record company profit.

    Prices on CDs should be going down, not up.

    A $5 CD sold direct to the consumer makes almost double the profit for the artist.

    The positions of the RIAA on P2P and DRM are likely motivated by greed, not survival.
    In my view, it's a LOT more important *where* this article is than *what* it actually says.

    I'd love to see a big name (Madonna, U2, N'Sync, etc.) use the net to direct-market a low cost original CD just to confirm for everyone that the RIAA is obsolete. Likely, however, it'll go the other way - one of these 'unknowns' is going to hit it big and promote the hell out of this approach.

  • by dinotrac (18304) on Thursday May 23, 2002 @03:59PM (#3574811) Journal
    The thing, I think, that makes me maddest about the record industry is that I want to be sympathetic. I really do.

    I understand that hiring the best engineers and studio musicians cost money
    Honest, I understand that.

    I understand that promoting new acts entails risk and that established acts help to buffer that.

    I understand that marketing and distribution cost money.

    I don't begrudge somebody turning an honest dollar doing all this stuff. Not one bit.

    But $18.99 per CD?
    Can you say exploitation?

    $18.99 per CD then trying to make it so that I can't play it on my pc?
    Can you say outrage?

    $18.99 per CD to help you lobby to take away my rights with a little help from your friends Hollings and Feinstein?
    Can you say I don't need your stinkin' CDs?

    When you want to make an honest dollar, I may stop back by the store.

  • Follow the Money (Score:2, Informative)

    by bedessen (411686)
    There is an article on Electronic Musician called Follow the Money: Who's Really Making the Dough? [industryclick.com] that breaks down exactly where that $18 goes and how the system works. (In case anyone's interested in facts and not speculation.)

  • by puppetman (131489) on Thursday May 23, 2002 @04:19PM (#3574912) Homepage

    On the Web Log (lot 49), he said, "Here is the biggest mistake of them all: two good songs on a CD. How many times do we have that? Remember that girl who sang "Where Have All the Cowboys Gone"? Vaguely. She was a kind of folksy singer. That was the only good song on that CD."

    That was Paula Cole, and for that albumn she got nominations for Best New Artist, Best Album of the Year, Best Pop Albumn, Record of the Year, Song of the Year, Best Female Pop Vocal Performance, and Producer of the Year.

    If this guy didn't know that, how would you feel about his business acumen? And if his musical taste is that bad (Paula Cole's This Fire is one of my top 10 CDs of all time), then I don't want to listen to what ever else he's selling (Kid Rock ripoffs?).
  • by bughunter (10093) <bughunter@@@earthlink...net> on Thursday May 23, 2002 @04:41PM (#3575057) Journal
    Didn't anyone read the full interview on Lot 49? It appears to me no one has. I don't know why the whole thing isn't on Salon, it's great stuff.

    Scalfani makes some excellent observations, predictions, and explains his business model fully. He carefully selects the artists he features on Fightcloud.

    I expected this to generate some insightful, intelligent commentary here on Slashdot, but all I found was kneejerk whining about shipping and handling and the number of artists on the site.

    Damn, I'm really disappointed in you all. Go read the full interview.

  • by scubacuda (411898) <scubacuda@[ ]il.com ['gma' in gap]> on Thursday May 23, 2002 @05:00PM (#3575185)
    Lot49.com [lot49.com] is an interesting tribute to Thomas Pynchon's Crying of Lot 49 [gradesaver.com], an intersting exploration of life in CA. (My favorite part is the name of one of the bands--Sick Dick and the Volkwagens)

    For those interesting in a real headtrip, try to plow your way through Pynchon's Gravity's Rainbow [themodernword.com].

    Pynchon is an interesting hermit [who2.com]. He didn't accept his award for Gravity's Rainbow [google.com].

    Instead, he sent Irwin Corey [hyperarts.com].

    (BTW, You'll enjoy GR a lot more if you read it with a companion [amazon.com].)

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