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RIAA Says CDs Should Cost More 540

Posted by kdawson
from the when-bandersnatchii-fly dept.
EatingSteak writes "The folks over at Techdirt just put up a great story today, with the RIAA claiming the cost of a CD has gone down significantly relative to the consumer price index. The RIAA 'Key Facts' page claims that based on the 1983 price of CDs, the 1996 price should have been $33.86. So naturally, you should feel like you're getting a bargain. Sounds an awful lot like the cable companies saying cable prices are really going down even though they're going up."
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RIAA Says CDs Should Cost More

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  • by BWJones (18351) * on Wednesday February 07, 2007 @01:08AM (#17916738) Homepage Journal
    Funny (not as in ha ha) because as I recall back in 1983 the record companies acknowledging that CDs *were* expensive but that the price would come down as the number of CD sales went up. Back then a record album ran around $7 US and CDs were anywhere from $13-18 US and I could as a 13 year not afford many CDs, but did I ever load up on all those punk 45s, likely outspending what I would have on CDs over time. What the record companies can not apparently figure out is that if priced affordably, some sales are money in the pocket versus no sales and no money in the pocket. Judging from the precipitous fall in music sales and revenues over the past few years from lousy music, over priced music, DRM and bad will from the RIAA, they obviously just don't get it. Now, if they were smart.... record companies would *give away* music from bands just starting out and from the biggest bands out there and make money from tours. Bands in the middle of the spectrum could be the "middle-class" of the record companies that could provide the most profit after small bands graduate into the middle class and start selling their music, touring as they want.

    • by ZachPruckowski (918562) <zachary.pruckowski@gmail.com> on Wednesday February 07, 2007 @01:15AM (#17916796)
      Correct. The 1983 price of CDs reflected the costs as an immature technology. Production costs for digital music have plummeted, as have the costs associated with pressing CDs. Similarly, in 10 years, the cost of an HD-DVD/Blu-Ray (whichever wins) will be a lot lower than current prices. It won't cost $500 a player, it'll cost more like $100.
      • by omeomi (675045) on Wednesday February 07, 2007 @02:20AM (#17917288) Homepage
        Just like everything else, CDs are subject to supply and demand market forces. If they really want to try to get record companies to sell their CDs for $34, let them. They'll quickly realize that the loss in revenue caused by the huge drop in sales is not worth it in the least, and the price will come right back down. The RIAA is just making noise because they know they'll be totally irrelevant within the next 10 years...
        • by NormalVisual (565491) on Wednesday February 07, 2007 @03:29AM (#17917594)
          They'll quickly realize that the loss in revenue caused by the huge drop in sales is not worth it in the least, and the price will come right back down.

          Or more likely, they'd blame the drop in sales on piracy and direct their wholly-owned subsidiary members of Congress to push yet more ridiculous legislation through in support of their dying business model at the expense of the citizenry.
          • by IainMH (176964) on Wednesday February 07, 2007 @05:47AM (#17918402)

            their dying business model - at the expense of the citizenry
            Thats sounds like an emo band - song title. Maybe that's what the execs should do next. :D
          • by AxemRed (755470) on Wednesday February 07, 2007 @09:18AM (#17919630)
            I don't think that it's their business model that is failing... Rather, they are failing at their business model. Granted, the current system needs some tweaks. But the main problem is that the record companies are just not doing their job. Their whole purpose is to go out and find music that people will like and then market it to people. They are doing the opposite though... They are trying to TELL people what music to like instead of finding music that people WILL really like.
            • by MojoRilla (591502) on Wednesday February 07, 2007 @11:39AM (#17921262)

              I don't think that it's their business model that is failing...
              Their business model is definitely failing. Their business model includes the following features:
              1. Find up and coming artists.
              2. Sign those artists to highly unfair contracts because there is no other way to get music distributed.
              3. Front artists seed money to record albums, and spend lots of money on studio magic making things sound better, all of which is recouped before artists actually make any money off royalties.
              4. Promote those artists through radio, which they control through payola.
              5. Control the distribution channels. Distributors won't work with non RIAA music.
              6. Sell full CDs even when people only want one song. Include three good songs and seven filler cuts.
              7. Rotate media every 10 to 20 years and re-sell their back catalog over and over. They successfully did this with records, tapes, and CDs. They have been unsuccessful with products like eight track and minidisc. The jury is still out on SACD and DVD-audio, but it isn't looking good.
              8. ...
              9. Profit!
              This is failing in the following ways:
              1. As you point out, they are not doing a good job of finding artists. They are trying to manufacture artists.
              2. Unfortunately, the RIAA's monopoly on distribution is ending. The internet is now a better way to distribute music.
              3. The cost of recording has been drastically reduced due to affordable computer recording software. The RIAA no longer has a monopoly on well recorded music.
              4. Radio is no longer the only way to hear music. The internet is making inroads here as well.
              5. Brick and mortar stores are no longer the easiest and cheapest way to distribute music. The internet is more convient. The RIAA resisted selling music on the internet, perhaps because their monopoly distribution system was threatened. So because convenient music wasn't available, people started sharing files.
              6. People are fed up with having to buy an entire CD when they only want a song. The internet makes it possible to only buy the tracks people want.
              7. People are fed up with rotating media. They are largely satisfied with the quality of CDs. They don't want to rebuy media.
          • by Cauchy (61097) on Wednesday February 07, 2007 @10:35AM (#17920434)
            their wholly-owned subsidiary members of Congress

            That's just silly---no member of Congress is a wholly-owned subsidiary of any one company. Ownership of any member of Congress is a much more complex beast involving many different investors.
        • by Kokuyo (549451) on Wednesday February 07, 2007 @04:20AM (#17917904) Journal
          They will never raise the CD price to 34$. That is not their intention with this statement. The record companies know damn well how the market works and they know damn well what we have been saying for months and years.

          But the problem is going the new routes and trying a new business model is somewhat risky. So the put up such statements in the hopes that people believe the bullshit and they can get away with it a bit longer. They don't want to raise prices... they just want to feed us bullshit in order for us to be quiet and be happy that it isn't even worse than it already is. It's a question of relativity.
        • by dubl-u (51156) * <[2523987012] [at] [pota.to]> on Wednesday February 07, 2007 @08:41AM (#17919346)
          Just like everything else, CDs are subject to supply and demand market forces.

          Well, no, they aren't, not entirely.

          If one sugar producer decides the "true" price of sugar is $15 a pound, then you can buy sugar from somebody else. But if you want to buy the latest Weird Al or Madonna album, there's only source. It's a monopoly, an in theory limited but in practice eternal one called "copyright". If they double the price of the hot Madonna release, there are a lot of people who won't think that Weird Al is just as good, and vice versa.

          It's also important to note that RIAA is a trade association of major music producers, not a single producer. If the major labels (heaven forbid!) were to get together and, say, fix prices [usatoday.com] then market forces would also not apply. Not that they would do such a thing; RIAA is here to help us. I'm just talking hypotherically, you see.
          • by zotz (3951) on Wednesday February 07, 2007 @10:04AM (#17920100) Homepage Journal
            "Well, no, they aren't, not entirely."

            and

            "But if you want to buy the latest Weird Al or Madonna album, there's only source. It's a monopoly, an in theory limited but in practice eternal one called "copyright"."

            Bingo! Mod parent up.

            There are no free markets in goods protected by copyrights and patents. These goods are covered by government granted monopolies. It should also be obvious that these monopolies distort the markets or people would likely not bother with them. I mean why go to the trouble to get a patent if it is not going to give you an advantage in the market? Why push to hve copyright terms extended if it is not going to help you in the market?

            One quirk though, even without copyright, there is still only one source in the first instance for the work of a particular artist.

            all the best,

            drew
            • Re: (Score:3, Insightful)

              by carpeweb (949895)
              I agree with the mods, but remember that copyright was developed in order to create markets where none might exist because creators had no good way to capitalize their creations. Copyright may be waaaaaay outdated, but it wasn't developed just on the off-chance that it would piss off a lot of Gen Xers a few hundred years later ... though that might have been a good rationale for it, too.

              Fix copyright; don't ignore it.
            • Re: (Score:3, Insightful)

              by Rary (566291)

              "One quirk though, even without copyright, there is still only one source in the first instance for the work of a particular artist."

              Without copyright, there's only one source for the initial creation of the content, but multiple sources for purchasing it once it's released. The only thing preventing me from being able to legally burn a Madonna CD and sell it to you for cheaper than the official distributor is copyright law.

          • Re: (Score:3, Insightful)

            by jfengel (409917)
            It depends on how you define the commodity. They have a monopoly on Weird Al's song, but they don't have a monopoly on music. If they raise the price of the Weird Al song to $99.95, you'll buy something else. If they raise the price of CDs to $34, you'll shift to other forms of music, or other forms of entertainment.

            The same thing can happen to sugar: if an organic sugar producer decides to charge $15 per pound, he can get it if the cost of substituting conventional sugar is too high for people in non-econo
        • by mehu (92260) on Wednesday February 07, 2007 @10:57AM (#17920660)
          All I can say is, be glad you don't live in Japan. CDs here generally sell for around ¥3000-3500 ($25-29 at the current exchange rate of ¥120:$1). Singles are generally ¥1000-1600 ($9-14). What's worse is that the prices are printed on the back label, so pretty much every store has the same price- you don't get those "Virgin Special Price $9.99" stickers anywhere.

          Then again, practically every high school girl has a $5000 Louis Vuitton purse (god those things are fugly), so it's not like there's a big bargain-conscious consumer base. And there's always the rental stores like Tsutaya, which seem to have more CDs than DVDs, so the thrifty can rent a CD for a couple bucks & copy it to their minidisc/MP3 player.
          • by badasscat (563442) <basscadet75NO@SPAMyahoo.com> on Wednesday February 07, 2007 @11:43AM (#17921314)
            All I can say is, be glad you don't live in Japan. CDs here generally sell for around ¥3000-3500 ($25-29 at the current exchange rate of ¥120:$1). Singles are generally ¥1000-1600 ($9-14). What's worse is that the prices are printed on the back label, so pretty much every store has the same price- you don't get those "Virgin Special Price $9.99" stickers anywhere.

            On the other hand, we also don't generally get DVD's packaged as a bonus [yesasia.com] on a regular basis. Japan does. Japanese inserts are also usually much thicker than ours, with tons of photos - heck, several of my "regular" (non-SE) CD's from Japan came with a whole separate photo book (as does the random CD I'm linking to above). Even the CD cases themselves are thicker and better made. In short, you get what you pay for.

            The RIAA's problem is they've been downgrading the value of their product for years, which of course is going to drive both demand and prices down along with it. Imagine if every big new release here came with the first couple singles (including b-sides), a live DVD, and a photo book - and that was the regular edition! That's akin to the situation in Japan much of the time. So it's no surprise that CD's there cost $25 or so and that people will pay it - they'd pay it here too if there was actually that much value in the product being offered.
      • Re: (Score:3, Insightful)

        by carninja (792514)
        $100? If that. We're already seeing DVD players that are actually retailing cheaper than an MPAA DVD itself. You get DVD players with you Cocoa Puffs nowadays, so it's easy to imagine that HDDVD/BVD players will be comprably priced.
        • by indifferent children (842621) on Wednesday February 07, 2007 @09:11AM (#17919572)
          It also strikes me as absurd, that I can buy a DVD of a movie in a store for $10-$20, and look over to the left and see a CD of the soundtrack for that movie for $18. Did all those people who took the pretty moving pictures cost nothing? Were the actors free? How can the soundtrack be considered to have equal value to the entire movie?
          • Re: (Score:3, Insightful)

            by Myopic (18616)
            Is your question hypothetical? (/irony) Or do you really not see the obvious answer to your question?

            The answer is that far fewer copies of the score will be sold, so even though the score is far cheaper to produce, the price reflects both the cost to produce as well as the projected sales volume. Well, sort of, surely there is still some guesswork involved, and a tendency to price all CDs similarly.

            I'm not saying this makes things "fair" or whatever. Ask yourself why do all movies at the theater cost the s
    • by iocat (572367) on Wednesday February 07, 2007 @01:16AM (#17916804) Homepage Journal
      In 1983, CDs were considered this magical reference format, occupying roughly the same audiophile space now occupied by... vinyl records.
    • by kimvette (919543)

      Funny (not as in ha ha) because as I recall back in 1983 the record companies acknowledging that CDs *were* expensive but that the price would come down as the number of CD sales went up.
      They were still saying that in 1991-1992 when record stores were knocking vinyl down to 80% to 90% off to clear space for CDs.
      • Re: (Score:3, Insightful)

        by Lars T. (470328)

        Funny (not as in ha ha) because as I recall back in 1983 the record companies acknowledging that CDs *were* expensive but that the price would come down as the number of CD sales went up.

        They were still saying that in 1991-1992 when record stores were knocking vinyl down to 80% to 90% off to clear space for CDs.

        While albums on Compact Cassettes were still slightly cheaper than CDs. Now think about how much it costs to build something like a cassette and how lonbg it takes to get the music on it - compared to a CD.

    • by NotQuiteReal (608241) on Wednesday February 07, 2007 @01:33AM (#17916956) Journal
      Some things in 1983 were cheaper. But many were more expensive. Even in absolute dollars, not even counting inflation.

      CDs are STILL $13-18 (unless they are at Costco or "on sale", usually), but back in 1983, a decent computer cost $2000 (you can't even buy a computer that bad now, for as little as $299).

      Even a nice calculator was about $50 or so (better ones now for under $20). A Color TV (A heavy CRT, 13 channels, click-click tuner) was 2 - 3 times what they cost now (for 121 channels, multi inputs, remote, etc. etc.)

      The list goes on and on and gets "worse" (for the RIAA argument) when adjusting for inflation. LOTS of stuff is far cheaper than it has ever been.

      Bah.

    • by sumdumass (711423) on Wednesday February 07, 2007 @01:39AM (#17917010) Journal
      This is also interesting because they conspired to raise the prices of cd's [wired.com] already. Wonder if they will get away with it this time?

      And right on, They compare the price of a new product to the price index instead of the price it should have been retailing for. If someone did the math in the same way with a normal valued price, I would bet that they would be a little more expensive now. I guess RIAA might be doing the "see, you getting a deal already so don't pirate" thing here.

      Nothing like making you feel good about paying too much for something then by illistrating that they could be at a higher price.
    • by sk999 (846068) on Wednesday February 07, 2007 @02:05AM (#17917186)
      Well stated - matches my recollections as well. The price of CD's has NEVER come down since they were first introduced, and it is only because of inflation that their relative price is now on a par with that of record albums from yon times of yore. Taking 1983 as a reference point for what CD's OUGHT to cost, when CDs were a new technology, is just insanity.
  • What a joke (Score:4, Insightful)

    by n1000 (1051754) on Wednesday February 07, 2007 @01:10AM (#17916752)
    If they should cost more, they would! It's simple supply vs demand! I mean, the RIAA are cartel for all intents and purposes. Who are they to be complaining?!
    • Re:What a joke (Score:5, Insightful)

      by feyhunde (700477) on Wednesday February 07, 2007 @01:23AM (#17916866)
      More complex then that. What's the physical cost of a CD? Blank media from staples works out to a few cents. Before staples, it's even cheaper. Now burning data on a CD does cost money. A red laser in 1983 that can burn media would cost in the tens of thousands, if not hundreds of thousands of dollars. Now it costs less than 100 USD, again retail.

      So yah, if it cost the same amount to actually make the CD in 1983 as it did in 1996, or 2007, there might be some validity. But the physical cost of the CD fully packaged is 10 cents or so.

      So we're expected to believe the majority of costs in that same article are related to booths. When a 6$ record is replaced by a 14$ CD, the price works out the same. Nothing got cheaper, they just want us to believe a CD is magically as hard to make now as a LP in 1983.

      • Re:What a joke (Score:5, Informative)

        by littlerubberfeet (453565) on Wednesday February 07, 2007 @01:54AM (#17917116)
        What's the cost of a physical CD? let me tell you, since I have managed some commercial releases:

        Indie artists who get stuff replicated in 1000 CD batches from OasisCd or Diskmakers pay about $1.70 per CD. These are PRESSED, retail-ready, in standard jewel cases, in color, with barcodes, spine labels and all the trimmings, shipped to your doorstep.

        So, a physical cost of a CD is $1.70 or so for non-RIAA indie music. If you go to Sony DADC or another large manufacturing house and order 100K or gold (500,000) press jobs, your cost for a retail-ready jewel case+CD is between $.60 and $.90, depending on printing options. This info is from an actual quote. 10 cents a fully packaged disc is unrealistic. Materials alone are more then that. 10 cents gets you a pressed CD with 1 silk-screened color and a mylar sleeve.

        Remember that about 50% of any retail price consists of retailer/wholesaler cuts. Indie artists who sell through Amazon watch as Amazon takes 55% of the retail price, distributing 45% to the artist. Assuming a $12.00 CD, lets break this down:
        Out of that 45% ($5.40), the artist has to fund:
        shipping to Amazon ($.25)
        Duplication ($1.70)
        17 U.S.C. 115 compulsory royalties ($.91) low end cost.
        Producer's standard 20% cut ($1.08)

        This leaves $1.46, with which the artist has to eat, promote, fund the next record, and tour on.

        Anyway, the point is, CD pricing is complex. The RIAA is wrong though. CDs should cost less, but at the expense of our convoluted, monopolistic distribution system (cartel?), not at the expense of the artists.
        • Re:What a joke (Score:4, Insightful)

          by krotkruton (967718) on Wednesday February 07, 2007 @02:33AM (#17917338)
          I'm not trying to refute anything that you've said, but I think you missed the point. It seemed to me that the parent was saying that the price to make a CD goes down over a reasonable amount of time, so the RIAA can't just use a function of the worth of a consumer's dollar to determine the price after x amount of years. How the price of a CD is divided up isn't really the point. The point is that it costs less to make a CD now then it did in 1996, so that needs to be factored into the pricing of CDs, instead of just the consumer index that the RIAA used.
      • Re:What a joke (Score:5, Informative)

        by zakezuke (229119) on Wednesday February 07, 2007 @03:02AM (#17917488)
        More complex then that. What's the physical cost of a CD? Blank media from staples works out to a few cents. Before staples, it's even cheaper. Now burning data on a CD does cost money. A red laser in 1983 that can burn media would cost in the tens of thousands, if not hundreds of thousands of dollars. Now it costs less than 100 USD, again retail.

        Commercial CDs are typicaly not burnt, they are pressed. In some ways they are like vinyl in the way they are mass produced, from a master, stamp stamp. The process i'm familar with uses a glass master which then a laser is used to etch the photo sensative layer, then several metal molds are made. Then the metal molds stamp the plastic layer, and reflective layer is added.

        This is not like your home brew system.

        Tape was always more tedius, you rather needed a loop master which would play and replay as banks of decks recorded them. The process could be automated to a large degree, but still the speed at which you copy was limited, vs pressing while requiring more prep time produced copies faster per unit.

    • Re:What a joke (Score:5, Interesting)

      by Technician (215283) on Wednesday February 07, 2007 @01:32AM (#17916950)
      If they should cost more, they would! It's simple supply vs demand!

      No it is not. Ask what happens to unsold CD's at the local music store. Prices are artificialy high by created shortage. Surplus is returned, not sold on a discount. Ask your local retailer what happens to unsold titles that waste valuable floor space.
    • Re:What a joke (Score:4, Insightful)

      by EatingSteak (1053512) on Wednesday February 07, 2007 @02:00AM (#17917148) Journal
      "It's simple supply vs demand!"

      I don't think I'm the first to say, but it really isn't supply vs. demand at all.
      "Supply & Demand" implies a free market, ie, one with (theoretically) infinite suppliers and infinite consumers. In practice, we just say "many" suppliers and consumers, both of whom are price takers. Emphasis on takers.
      Even with the concept of monopoly pricing "creating a shortage", that is more like OPEC (a large group acting as a monopoly). OPEC, believe it or not, is a price taker. They do not say "ok I will sell you this many barrels of oil at, say $60/barrel. They can only set a goal price of $60 by restricting supply.

      Retails sales are a completely different ball game. Of course, by the definition of copyright, and the fact that the record label holds it (as opposed to the artist), that label has a monopoly on selling that artist's music. To prevent competition from similar artists, they have a cartel going for them.
      So, one could say that the labels have at least a partial monopoly. But here's the kicker: they are price makers. In a market (such as the market for futures, where you get quote "oil prices"), a monopoly would set supply. In retail/wholesale, the label sets prices (well, wholesale prices). There is no market to buy whatever's there at whatever price will make it move.
      Rather, the labels set a price (at least a wholesale price), and the public buys however many units they feel like. The supply is theoretically infinite... it'd be a tough case to argue that they would stop printing additional CDs as long as they keep selling. Basically, they set the price (retail is $12.75 IIRC), and the public buys or does not buy.
  • by Anonycat (905015) on Wednesday February 07, 2007 @01:13AM (#17916770)
    I suppose we should have to pay $1300 for a Commodore 64 nowadays, too?

    You don't even want to hear how much the RIAA thinks you should have to pay for a machine capable of a billion calculations per second...
    • Re: (Score:3, Insightful)

      Yes. This is a fundamental intersection between two economic concepts - Inflation and Moore's Law.

      Inflation indices imply that prices have risen over the last few decades. However, those numbers are averages across a wide variety of (generally non-technical) goods. There are numerous causes of inflation, and I won't discuss that here.

      Moore's Law is not strictly speaking an economic law, but with the benefits of Moore's Law, we see electronics and machines become more affordable. In all likelihood, pro
    • by Phat_Tony (661117) on Wednesday February 07, 2007 @02:00AM (#17917152)
      It's clear that no one would pay $1300 for a C64 these days because computers have gotten so much faster for the money. But what's the comparison with music? You cite an example of how old computers aren't worth much because new computers are so much better, so what are you implying, that old music was worth a lot more because new music isn't anywhere near as good? Is new music so much worse than older music that it's not worth paying that much anymore, and the price had to fall on the new stuff, like prices fall on old computers? Obviously not, because a lot of these CD's being sold now have the same music on them that they had in 1983. The march of technology and Moore's law doesn't really say anything about the price of music over time.

      The only reason I expect a CD to be inflation-adjusted cheaper today than in 1983 is that in 1983 they were still selling primarily tapes and some vinyl, and the only people with CD players were mostly audiophiles and early adopters, and the CD players had cost them a fortune and were part of premium stereo systems. No one had CD players in their cars, or portable ones, CD players were big, expensive components for rich high-end audio enthusiasts, who were clearly willing to pay a huge premium for the CD experience. The price of a CD in 1983 should be inflation adjusted and compared with the price of an SACD [wikipedia.org] today. CD's are now the lowest-common-denominator standard format for the masses and should be priced as such. Had the price of CD's not fallen dramatically since the 1983 price, they would never have gotten popular and remained inaccessible, which would be an example of the RIAA companies shooting themselves in the foot, reducing profits trough overly high prices and small unit sales.

      So pricing changes since '83 are a silly comparison, because the product's placement in the market changed entirely since '83. CD's have been the de facto audio standard now since at least 2000, I'd like to see what inflation adjusted prices have done from 2000-2007. That would indicate what CD prices have been doing.
  • We didn't say you were paranoid, you must have imagined that.
  • by orthancstone (665890) on Wednesday February 07, 2007 @01:15AM (#17916792)
    Seriously, jack them up. That way, when less CDs fly off the shelves, they'll start making some good decisions on how to run the industry and actually attract customers. Throwing us tons of garbage every week for a "good price" doesn't mean they are doing us any favors.
    • by TheUni (1007895) on Wednesday February 07, 2007 @01:48AM (#17917072) Homepage
      If less CDs fly off the shelves, they'll blame it on rampant piracy. Always something with these guys.
      • Re: (Score:3, Insightful)

        by Grishnakh (216268)
        They can blame it on piracy all they want, but that's not going to keep the revenue flowing in to support their business and pay their staff and rent. Eventually they'd have to make a change.
    • by littlerubberfeet (453565) on Wednesday February 07, 2007 @02:01AM (#17917158)
      I agree, but for a slightly different reason. I want the RIAA to jack prices through the roof. Our wonderful market economy would then allow indie record companies and artists to undercut the "cartel". That would actually be the best scenario I could think of.

      As it is, many of the indie artists I have worked with, and in some cases, recorded, price their records below the RIAA retail range of $16-$22, so they can sell more. A huge number of indie CDs are $10-$15, which is much more in line with what the market will bear.

      The RIAA will not make good decisions. They want the market to react to it. They don't want to react to the market. As long as they view the industry that way, they will continue making bad decisions.

      So let them.
  • Yup (Score:3, Interesting)

    by Xiph (723935) on Wednesday February 07, 2007 @01:19AM (#17916836)
    That's absolutely right, compared to 1983, the relative price is down, early adopters pay a price!
    Thats an age old truth.

    Now, thanks to economies of scale and lots of hours of research, it's much cheaper to produce the individual cd.
    Not only that, due to IT it is also cheaper to produce the individual album.

    I'm still waiting for legally downloadable music to be as problem free and cheap as the distribution method should allow.
    until then, Happy Mp3.com. (yes i stopped buying cds the first time i got a malware loaded cd).
    The distribution is already a lot cheaper, which means that the price has to cover three things: Development of the site, music production and marketing.
    Please lower the price and drop the drm.

  • the cost stuff (Score:3, Interesting)

    by intthis (525681) on Wednesday February 07, 2007 @01:19AM (#17916838)
    why does it seem like every week the riaa has some new, bizarre claim about the cost of music, or some completely inane justification for them to charge us all more money for our cds? i spend a good portion of my life in studios, and while it does cost quite a lot of money to record / produce / master a big commercial release, there's no way that a cd would ever cost $33... but then again, i don't work for the riaa, so i probably don't know the 'real' truth...
  • It doesn't matter (Score:4, Insightful)

    by yotto (590067) on Wednesday February 07, 2007 @01:20AM (#17916842) Homepage
    I still won't buy them.
  • I'm rich!! (Score:5, Funny)

    by AmigaHeretic (991368) on Wednesday February 07, 2007 @01:21AM (#17916848) Journal
    My pirated music collection just tripled in value! I guess it's worth the trouble to back it all up to DVDs now.
  • by wall0159 (881759) on Wednesday February 07, 2007 @01:24AM (#17916878)

    Also, the cost of international phone calls has declined markedly since 1925. Based on inflation, we should now be paying $500/min for international calls. Don't tell the telcos!

    Similarly, the cost of motor cars has come down since the Model-T Ford - they should cost $1.5 million each (based on inflation - discounting better performance these days)

    Or... perhaps technology and economics has some influence on the price of things too..
  • How Ironic (Score:3, Insightful)

    by argoff (142580) * on Wednesday February 07, 2007 @01:24AM (#17916882)
    It is the ultimate irony. The record industry is trying control information in the form of content, and the US Federal Reserve Bank is trying to control information that refelcts itself in the form of money and markets. So now the Fed is lying to us about the value of our money, and long behold it has the effect of destroying the pricing power for those who are lying to us about "protecting" artists, and branding about other lies such as saying copyrights are "property" rather than a personal regulatory monopoly.

    Well, guess what. As society enters the information age, that means that information is becomming commoditized and the service value of information starts to exceed the control value. So liars who control information like Hollywood and the Fed (and Microsoft) are in serious trouble. How ironoc it is that, unlike the service sector, they will have no pricing power as they destroy each other.
    • Re:How Ironic (Score:4, Insightful)

      by Planesdragon (210349) <slashdot@castles ... .us minus author> on Wednesday February 07, 2007 @01:52AM (#17917096) Homepage Journal
      So now the Fed is lying to us about the value of our money

      The fed says jack and shit about the value of my money. Price Chopper, McDonald's, and Wal-Mart are where I discover the value of my dollars.

      All the fed does is set a price for new money put into the system, which is after all the Fed's job. It can't lie about the "value of money" any more than McDonald's can lie about the value of the ice scraper I bought at Wal-Mart.

      Well, guess what. As society enters the information age, that means that information is [becoming] commoditized and the service value of information starts to exceed the control value. So liars who control information like Hollywood and the Fed (and Microsoft) are in serious trouble. How [ironic] it is that, unlike the service sector, they will have no pricing power as they destroy each other.

      Amazing, how you can use so many words and not actually say anything.

      The "Digital Age", or "Information Revolution", or even "flat-earth effect", is pretty well set upon us now. And you know what? Controlling Information is still the best way to make immediate wealth. Google makes their money allegedly enabling the free flow of information, but they control their means and methods with a zeal greater than Coke ever used for their soda formula. The Chinese are building industrial powerhouses, but they're very careful to control the knowledge of the real cost and value of their operations from anyone.

      So what if you can now buy music from China, software from Europe, or outsource your Russian McDonald's drive-thru to Utah. People still need to eat, sets still need to be built, and governments will still collection taxes. The "Information Age" might be as big a shift as the introduction of the counting machine and the photocopier, but it's not as big as you think.
  • by zakezuke (229119) on Wednesday February 07, 2007 @01:30AM (#17916934)
    The RIAA 'Key Facts' page claims that based on the 1983 price of CDs, the 1996 price should have been $33.86.

    No, because CDs are by far cheaper to mass produce than cassettes or, in all fairness, vinyl. For a small production run of vinyl, i'd expect to spend $1.00 per disc [recordtech.com] including a paper dust cover. CDs I would expect to spend 1/2 that [communitymusician.com] with a basic sleve for a small production run. Cassette I would expect to spend double that of CD.

    Yet for some reason, they sell commercial cassettes for less than a CD.

    Not to speak of mastering seems to be done by some yahoo with protools.

  • Marketing costs (Score:5, Interesting)

    by websitebroke (996163) on Wednesday February 07, 2007 @01:31AM (#17916940)

    FTFA:

    For every album released in a given year, a marketing strategy was developed to make that album stand out among the other releases that hit the market that year. Art must be designed for the CD box, and promotional materials (posters, store displays and music videos) developed and produced. For many artists, a costly concert tour is essential to promote their recordings.

    How about you all agree to stop marketing the CDs and just let the people choose what they think is good, rather than trying to tell them? We'd all save millions.

  • by ewhac (5844) on Wednesday February 07, 2007 @01:33AM (#17916958) Homepage Journal
    Fact: The unit cost of a single CD, silkscreened, in a jewel case, with six-page four-color liner notes, quantity 5,000: USD$0.91.

    Quantity 10,000: USD$0.79.

    Explain to me again why these fsckers cost $16.00?

    Now then, what was the per-unit pressing cost, quantity 10,000, of a CD in 1980? If we calculate MSRP as a percentage multiplier of the raw pressing cost, what should music CDs cost today?

    Schwab

    • by Rimbo (139781) <rimbosity@@@sbcglobal...net> on Wednesday February 07, 2007 @02:05AM (#17917182) Homepage Journal
      That's nothing. My CD [cdbaby.com], through a frickin' vanity effort, costs me...

      (...goes to books to make sure it's the right number...)

      • $2.20 per CD for 100 shrink-wrapped, color-printed pressed CDs,
      • about $0.85 per CD in shop setup costs, amortized over the current production run of 100 CDs,
      • $0.085x2 = $0.17 per CD in artist royalties for cover songs,
      • a whopping $2 per CD to the artist for artwork (I was being generous since I knew I wouldn't sell many)
      • CD Baby's cut of $2 per CD
      ...for a grand total of $7.22 per CD, for a vanity run of just 100 CDs. If I don't bother with an artist for the cover art, and if I sell them myself out of the back of my station wagon, it'd be only $2.37! (Take away $2 for the artist, $2 for the store, and $0.85 per for shop setup costs.) For a small-time vanity run! That includes digital distribution through Connect, iTunes, and three dozen groups I haven't even heard of, and real CDs -- not cheesy CD-R's with cheap CD Stomper labels. Plus, I have these CDs, and can sell them myself without going through CD Baby -- the agreement with CD Baby is non-exclusive. Even with iTunes, where a big label artist gets pennies per song, I get like $0.67 per $0.99 download.

      And that's with my shoddy economies of scale. I can't even imagine where the RIAA gets this kind of thinking, but I guess they gotta do what they gotta do to keep up with the price of cocaine, right? Can't imagine the weak dollar has helped them with their fine imported Columbian stuff.
    • Re:#include (Score:5, Interesting)

      by nbritton (823086) on Wednesday February 07, 2007 @02:35AM (#17917356)
      "Fact: The unit cost of a single CD, silkscreened, in a jewel case, with six-page four-color liner notes,
      Quantity 5,000: USD$0.91.
      Quantity 10,000: USD$0.79.

      Explain to me again why these fsckers cost $16.00?"


      It's real simple:
      +$16.00
      -$12.01 (75% cut for recording label)
      -$01.33 (8.33% cut for artist)
      -$01.33 (8.33% cut for retailer)
      -$01.33 (8.33% cut for manufacturing & distribution)
      -------
      $0
  • by domukun367 (681095) on Wednesday February 07, 2007 @01:35AM (#17916966)
    Ben Woods' argument is correct, if we are talking about a piece of electronics, where, say, 90% of the cost of that piece of electronics is in the production. However, only a very small amount of the cost of the cd (less than 1% if 1c for the CD and 3c for the case/cover) is in the PRODUCTION of the CD.

    Most of the cost of a CD is in the marketing and (of course) profits for the record company. Sure there are a few extras, like the pittance they give the artist, but the majority of the cost is MARKETING. This gets more and more expensive as they get more and more ridiculous in their marketing and the cost of marketing increases over time.

    Another spin might be that CDs are now more expensive to produce due to all the non-redbook copy prevention measures that they keep trying to put on "CDs" now.
  • overpriced (Score:3, Funny)

    by mqduck (232646) <mqduck AT mqduck DOT net> on Wednesday February 07, 2007 @01:36AM (#17916976)
    Me, I tagged the story "overpriced".
  • Pure BS (Score:4, Insightful)

    by soren100 (63191) on Wednesday February 07, 2007 @01:43AM (#17917040)

    This is one of the most laughable things I have ever heard.

    CD prices were always higher than the equivalent cassette tape, which was much more complicated to produce and had the same production and marketing costs.

    FTA: For example, when you hear a song played on the radio -- that didn't just happen! Labels make investments in artists by paying for both the production and the promotion of the album, and promotion is very expensive.

    The only thing that gets played on the radio is the latest Britney Spears bubblegum crap-ola. In fact, Mandy Moore recently apologized for making such bad music [cinemablend.com]

    So we have to pay for all the payola [dontbuycds.org] in getting the radio stations bribed [slashdot.org] to play the songs on the radio.

    And then when a CD gets scratched, broken, or stolen, do we get a free replacement? Oh no, we have to pay the full retail cost all over again even though the RIAA wants us to think that we have somehow "licensed" the music from them.

    I am glad that they are sweating, which they must be in order to be trying to play the "victim" game. The days of the Internet are here to stay, and bands can finally distribute their own music without getting shafted.

    In the linked article it says that only 10% of all CD's make a profit. The other 90% of CD's put the bands into debt to the record companies, making it a really bad deal to sign a record contract. Courtney Love does the math. [salon.com]

    The RIAA sounds desperate, and I hope they are -- it would serve them right.

  • by StarWreck (695075) on Wednesday February 07, 2007 @01:44AM (#17917044) Homepage Journal

    Record Industry Meets in Las Vegas for Conference
    Reuters

    Record Industry Execs from all four major record labels are meeting in Las Vegas, Nevada today to discuss the future of of CD sales. Wild speculation indicates that CD prices will be lowered due to increased competitive pressure from online sources.

    ...

    Sony-BMG Sales Tycoon Oliver Klosoff was quoted as he left the conference hall "I'm happy with our new pricing figures. They will be considerably lower than our original 1986 prices after inflation is taken into account." He also added "We are also planning to implement Iraq insurgency style death-squads to manage any record store that fails to adhere to our strict $33.86 per CD policy."

    ...

    UMG Chief Executive, Holden Magroin, stopped shortly to answer reporters questions. When asked to explain how the record industry hopes to enforce its strict pricing policy after facing multiple price fixing allegations, Mr. Magroin responded by having a hit placed on the reporters family.
  • by Glowing Fish (155236) on Wednesday February 07, 2007 @01:48AM (#17917070) Homepage
    If you look at most computer or home electronic prices, the trend has been downwards over the past twenty years. Not only downwards when adjusted for inflation, downwards when adjusted for performance, but downwards in absolute prices. I wish I had stronger memories and figures to back this up, but I do remember as a child, (I was born in 1979), people just had a wildly different attitude towards electronics. A VCR, cable television, a microwave oven, color TVs...all of these were important luxury items. This could be just a artifact of me growing up, but a color television set was on par with say, a grand piano as far as how expensive it seemed.
    I do have better data for computers. I have a 1994 price guide to computers when bottom line computers, 386s cost around 1500 dollars, twice as much as a midrange new desktop would today.
    All of this is stuff most readers here know. (Although I am expecting at least a few people will correct my specifics.)
    What I have noticed, however, is that many people have not psychologically adjusted to this, even when they intellectually know it is the case. I have noticed this most at my work at Free Geek [freegeek.org], where often people come in, with a Packard-Bell Pentium, and explain at some detail that the quad speed CD Drive works, if you just wiggle it around first. Or that their 14 inch monitor still works, but it might blink off every few minutes. Meanwhile, we get truckloads of P-4 systems every few days.
    The point is, I think many people (often older people, but not always that much older), still have a mindset that computer and electronics are rare and valuable, instead of being the mass-produced, quickly obsolete, pieces of junk they are. And I think that many of these people are honestly confused about how valuable their product is. Of course, the RIAA people know that AOL mails out millions of CDs a month (do they still do that?), and that CDs cost "under 1 dollar to make" ( wikipedia on CD manufacturing [wikipedia.org]). Of course they know these things intellectually, but I really do think they have a mindset that they are producing a rare and valuable resource, and that they aren't asking for much in that they haven't raised their prices with inflation.

    Post-scarcity takes some getting used to. I consider the entertainment industries inability to come up with a more financing method that doesn't involve creating false scarcity to be one of the less harmful inabilities to adjust to a new paradigm. I consider the fact that the US political and industrial leaders really don't understand (even though they know) that the US has lost textiles 50 years ago, consumer items 40 years ago, vehicle manufacturing 30 years ago, electronic manufacturing 20 years ago and computer manufacturing 10 years ago (numbers somewhat generalized), and that all of those things are now produced overseas for a fraction of a US worker's hourly minimum wage, to be a much more dangerous symptom of the same disease.
  • by MSTCrow5429 (642744) on Wednesday February 07, 2007 @01:49AM (#17917076)
    Maybe the RIAA doesn't believe in free-market economics, but the price of a product follows the S-curve, and should drop from its introduction price, not stay there forever. Lunacy to expect or whine that a product should remain in the "early adopter" phase of the S-curve for the life of the product.
  • Corporate math (Score:5, Insightful)

    by Bullfish (858648) on Wednesday February 07, 2007 @02:05AM (#17917180)
    You have to understand corporate math. That math says that if you made 15 million in profit in year one, and 10 million in year 2, then you have taken a 5 million loss in that second year. That thinking convolutes all kinds of statistics.
  • by 2Bits (167227) on Wednesday February 07, 2007 @02:21AM (#17917290)
    pissed off, shake your head, blaspheme god/allah/budha/your_own_divinity, shoot your computer monitor, .... or you can vote with your money.

    I used to spend quite a bit of money on music, movies and theaters. I recently spent a weekend working out my budget in the last 15 years (wonder why I kept all these shits for all these years), and found out I spent on average 5K per year on those items (before I made my decisions, that is). The biggest chunk goes to CDs and cassette tapes. It's even more than what I spent on food (Unbelievable, I spent less than 50$ per week on food).

    Then, in early 2001, I decided not to do that anymore. I haven't bought a CD since then, went to theaters only twice, rented movies less than 10 times. Now, every time I crave for movies, I go out for an excursion in the forest or in the mountain, or get a good book (which cost the same as going to theater but the pleasure of reading certainly lasts longer). Well, all these monies I've saved...

    I wish I've done this 20 years earlier. Imagine all the monies saved, with wise investment or accumulated interest, my pension fund would have been much better off.

    I'm not saying you should give up all these, but you certainly don't have to pay your "taxes". You can certainly do something about it though, like give less money to those fatty RIAA executives, for once.
  • by nighty5 (615965) on Wednesday February 07, 2007 @03:42AM (#17917666)
    How can I possibly pick up a DVD for $10 ?

    The fact is, its all about greed. I think other slashdotters have already covered the whole scales of economy so I won't take it any further than that.

    I can tell you now that I simply don't think a CD is worth $33. They only think its worth that much because its what they think they can get away with it.
  • I agree completely (Score:3, Insightful)

    by elronxenu (117773) on Wednesday February 07, 2007 @06:07AM (#17918508) Homepage
    In 1986 I paid $660 for a 20 meg hard disk drive. So I should feel happy that I'm not paying over 10 MILLION DOLLARS for the brand-new 320 gig drive which I received today.

    The RIAA treats us like idiots (when it's not like criminals). CD stamping costs only cents in quantities of 10,000+; even in Australia it's only 99c each for a run of 10,000 including a jewel box (ref: www.cdroms.com.au)

  • by timtwobuck (833954) on Wednesday February 07, 2007 @09:13AM (#17919592)
    Everyone spewing about the cost of technology going down over the past 14 years is correct, the RIAA states that in the beginning of their article!

    What they postulate is that all the non-technical/manufacturing costs have gone down, but the cost of advertising, recording, wages, etc. etc. has actually increased (these type of things will increase along with the CPI).

    So in effect, the cost of making the CD has gone down. But the cost of making the CD successful by finding new artists, recording the music, advertising, etc. has gone UP!!!

    I hate the RIAA, they are despicable. But you're not even reading the articles!

    No - I'm not new here
  • by ajs318 (655362) <sd_resp2@@@earthshod...co...uk> on Wednesday February 07, 2007 @09:23AM (#17919676)
    What are they smoking?

    Almost every newsagent and bookshop has a photocopier. Yet people don't commonly "pirate" books and newspapers. Why? Well, because it's cheaper to buy than to pirate. It's my reckoning that if CDs cost about £3.00 (€4.55 / $5.88) each, then it would not be worth most people's while to go to the effort of copying them. Nor would anyone think twice about buying a CD at that price. The record companies could easily afford to sell CDs at for £3.00 if they didn't spend so much pursuing failed copy-prevention schemes and paying fatcats to do nothing useful. And they'd probably sell enough units to be earning more than they were before. People would be more willing to take a gamble; if it turns out to be shite, it's not such a great loss.

    Now I'm going to tell you a story. It's a sad story. About music, and greed, and the Perversity of Human Nature.

    There was a bar I used to drink in once. They had a juke box in there. An NSM Prestige, played 45s, 160 selections. 10 pence a song, six for 50p., and it was always playing. Everyone who came into the place used to walk up to the machine, look at the records, drop in a coin and put on a tune.

    Actually, the juke box wasn't always playing. For one hour a fortnight, it would be silent, while the man from the amusement machine hire company emptied the coin box, changed the records and cleaned and serviced the machine. And the bar was closed sometimes. But you get the general idea. It was a popular machine. It also played the records in the order they were arranged in the magazine, not the order in which they were selected (that way, it used only 20 bytes of RAM to store all its selections; which is important when your brain is a single-chip micro with just 64 bytes of RAM), and it was quite possible that you'd have to stay awhile to hear your track if there were a lot of selections from the other end of the machine to be played. That meant the bar sold more beer and food, since the Perversity of Human Nature is such that someone who has paid to hear a song will gladly spend a few pounds on refreshments rather than waste ten pence by leaving before the song comes around on the record machine.

    All that changed one sunny afternoon. The man from the amusement hire company came round as usual; only this time, as well as merely emptying the coin box, changing the records, cleaning and servicing the machine, he also tweaked the price up to 20 pence a song.

    After that, people just used to walk up to the machine, look at the records, and walk away again.

    And the moral of the story, if you're really choking for this story to have a moral, is that if you charge too much then people won't pay it.
  • by Luscious868 (679143) on Wednesday February 07, 2007 @10:01AM (#17920066)
    The RIAA has a point but what they willfully ignore is that market forces have radically changed since the CD was introduced. Consumers today are literally overloaded when it comes to entertainment options. Hundreds of TV channels via satellite and cable, tons of movies playing in theaters, a huge collection of titles available on DVD, movies on demand, radio, satellite radio, the web, podcasts, video games and the list goes on and on.

    So while the RIAA has a point that CD prices would be a lot more today if prices had kept up with the rate of inflation instead of staying relatively stagnant they fail to take into account the fact that the entertainment market has radically changed since the CD was first introduced. Consumers have a hell of a lot more entertainment options than they had even 5 to 10 years ago and CD prices need to reflect that reality.
  • by bcarl314 (804900) on Wednesday February 07, 2007 @10:13AM (#17920194)
    I seem to recall about 5 years ago the RIAA lost a huge government case whereby the government insisted that CD prices (at the time averaging around $20 - $25) were out of line with actual cost. As I recall, the government won that case and CD prices fell to the current $13 - $18 range.

    This seems to me a media ploy from the RIAA to "claim" that they have a just reason to raise the price of a CD back to the pre-lawsuit range.

    Nevermind the fact that the production costs have plummeted.

    Based on my rough calculations (rough = not really doing any research, just making a point), and using the same logic as the RIAA, microwaves should be retailing for about $4000, radios for well over $50,000 and a car should be in the millions.

  • by UnknowingFool (672806) on Wednesday February 07, 2007 @12:13PM (#17921716)

    If you've read the RIAA's argument, they are not arguing that the manufacturing costs have gone up. What they are arguing is the total cost has gone up. For them they are including things like marketing and labor costs which costs more today than in 1983. On the surface that seems like a reasonable argument but if you think about, it's BS.

    Of course, the most important component of a CD is the artist's effort in developing that music. Artists spend a large portion of their creative energy on writing song lyrics and composing music or working with producers and A&R executives to find great songs from great writers. This task can take weeks, months, or even years. The creative ability of these artists to produce the music we love, combined with the time and energy they spend throughout that process is in itself priceless. But while the creative process is priceless, it must be compensated. Artists receive royalties on each recording, which vary according to their contract, and the songwriter gets royalties too. In addition, the label incurs additional costs in finding and signing new artists.

    Except for a few artists, most artists get the scraps left over after the record companies take their share. If anything the share for the artist has gone down in terms of absolute dollars as the record companies cry poverty.

    Once an artist or group has songs composed, they must then go into the studio and begin recording. The costs of recording this work, including recording studio fees, studio musicians, sound engineers, producers and others, all must be recovered by the cost of the CD.

    I consider this the biggest lie. First of all, the record companies charge the artist for studio time if the artist uses their studios. This cost is not factored into their royalties. So if an artist has a contract stipulating he/she gets $1 an album, that does not include any studio costs yet. Some artists like TLC have claimed bankruptcy after high album sales because their studio costs exceeded their royalties. If the record companies say the price of the CD covers studio time then they are double dipping. Because of this reason and for more creative control, many artists build/use their own studios. For these artists, the studio cost to the record company is nothing because the studio costs are borne by the artist.

    Then come marketing and promotion costs -- perhaps the most expensive part of the music business today. They include increasingly expensive video clips, public relations, tour support, marketing campaigns, and promotion to get the songs played on the radio. For example, when you hear a song played on the radio -- that didn't just happen! . . .

    Yes marketing costs money but the subtext here is that the studios seem to admit the payola scheme.

    For many artists, a costly concert tour is essential to promote their recordings.

    Another case of double dipping. First, the tours are supported by ticket sales. Second, like studio time, concert tours are mostly funded by the artists themselves because they keep all the proceeds. There are tours funded by the record company but those are just another instrument to rip the artist off even more. The company makes more profit off them.

    Another factor commonly overlooked in assessing CD prices is to assume that all CDs are equally profitable. In fact, the vast majority are never profitable. After production, recording, promotion and distribution costs, most never sell enough to recover these costs, let alone make a profit. In the end, less than 10% are profitable, and in effect, it's these recordings that finance all the rest.

    Taking the record companies argument, what is overlooked is not all CDs costs the same to the record company. Manufacturing costs might vary between 100K copies and 1 million but the difference is small comp

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