CDs Want To Be Free 439
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.
NOT FREE..... (Score:4, Insightful)
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
Hey, c'mon... (Score:4, Insightful)
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.
price floors already pending... (Score:2, Insightful)
Marketing, warehousing... (Score:3, Insightful)
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.
I just don't get it (Score:2, Insightful)
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?
bizness 101... (Score:2, Insightful)
Got a problem with non-free music? (Score:2, Insightful)
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.
Bad marketing choice (Score:5, Insightful)
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".
Re:someday they'll get a clue... (Score:3, Insightful)
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.
Re:Hypocritcal.... (Score:2, Insightful)
I would agree
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.
Re: What about production costs? (Score:1, Insightful)
Re:I guess the question to ask is.... (Score:5, Insightful)
Assimilation would be the better of the two choices, although I don't think they'll do that either.
The majors have become less and less interested in artist development, and more and more interested in risk management. You need someone to wade through all the crap, and believe me, there's a whole lot of crap out there.
Labels are banks that loan money at really high interest rates. The benefit to the artist is that if you default on the loan (walk away from the deal or get dropped) there's not really any financial penalty - the label has taken all of the financial risk. You probably won't ever get another deal on any major, but you don't owe anybody any money. They've given you money in return for you signing away your copyrights, name, likeness, etc. For some people this is a good deal.
Unless you've been groomed by the Disney machine for stardom, you can't really even get a foot in the door unless you've already self-released at least one or two CDs, have an established fan base, and are more or less self-sufficient. An independent artist who has achieved this doesn't really need a label deal anymore unless they want a more widespread audience/fame and are willing to take a paycut (for 90% of them anyway) to get it.
So if there's a company willing to wade through the crap and can provide the labels with some hard numbers on sales, it makes the label's job that much easier and less risky. It also provides talented independents with a potentially good source of exposure and distribution which is, after the creation of quality works, probably the hardest part of any artist's job.
Remember that the majors no longer as interested in long-term sales as in increasing quarterly profits - they have stockholders and parent companies to keep happy, and let's face it - the majority of the top selling music today is disposable. There are a few standout tracks that might be popular 10 years from now, but those are getting fewer and farther between.
Assuming that this company can stay afloat, I think the majors will treat it as a semi-weeded flower bed. I know for a fact that mp3.com is surfed by several major A&R reps - think how happy they'll be if they can deal with a company that actually has some quality control going on.
Re:NOT FREE..... (Score:5, Insightful)
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)
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
Re:Why they're free (Score:4, Insightful)
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.
The point of (Score:5, Insightful)
This article explains to HER that:
> $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.
Re:NOT FREE..... (Score:2, Insightful)
Of course this could just be a lesson that the traditional retail market just doesn't work for something like CDs. It would be rather neat if you could go into a store and go to a machine and punch in the CD you want and it spits out the insert, a CD, etc from a giant database.
Re:Hypocritcal.... (Score:3, Insightful)
Also a game will go down in price over time, music does not.
Jack Scalfani is an idiot (Score:5, Insightful)
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?).
Re:NOT FREE..... (Score:3, Insightful)
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
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
we'd all end up with cheaper cds of higher quality.
Read the full interview! (Score:3, Insightful)
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.
Price=Willingness to pay (Score:2, Insightful)
1.1. Price != Variable Cost
1.2. Price != Fixed Cost
2. Price != Value
PRICE = WILLINGNESS TO PAY
Re:someday they'll get a clue... (Score:3, Insightful)
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.
Re:Hypocritcal.... (Score:1, Insightful)
I'm the customer, I decide what the content is worth paying for.
If I decide you're asking for too much, I won't buy (*cough*MP3 sharing*cough*). If I decide the price is fair, there is a good chance that I buy it.
The RIAA just has to lower prices if they wish to sell more. That's what one calls "being competitive".
Re:Hypocritcal.... (Score:3, Insightful)
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.
Re:NOT FREE..... (Score:4, Insightful)
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:Hypocritcal.... (Score:2, Insightful)
I might agree with your argument if you changed CD to DVD, because I know for a fact that I've only watched some of the DVDs I own once or twice, as compared to most music CDs that tend to get many, many plays. My DVDs are mostly for when friends come over and want to watch something, rather than when I want to watch something.
And music prices do go down, just go to Best Buy and find some old or unknown artist's CD that's been on shelves for a long time. I'm sure you can find things that have been marked down to move. I'm fairly confident I've seen lower prices on older stuff.
Re:NOT FREE..... (Score:1, Insightful)
If the artist has nothing more to do with the record company, then they will have lost their investment.
Re:Explain Me This: (Score:2, Insightful)
Copyright violation is not a criminal offense, it is a civil offense. Do you understand the difference?
Re:NOT FREE..... (Score:2, Insightful)
And it's "you're", not "your", genius. Maybe you need some grammar classes?