Interesting Article:CD prices: Should record labels charge less?

Wouldn't high prices be the fault of the music stores selling the CD's? I worked for Camelot Music for a few years and a regular priced CD ($15.99) is roughly double what Camelot could get the CD for. Granted, the newer and hotter the music act, the cheaper the cost of the CD's became, but I always felt that Camelot was overcharging for most of thier stuff. I do realize it is more expensive to keep some obscure artist on stock, but before the MP3 revolution, corporate music stores were a pretty good profit machine.

 

Pressing the CD itself isn't terribly expensive. Getting a thousand CD's pressed with 4-page liner notes, a bar code and shrink wrapped runs under $1500 - or about a buck fifty per CD.

The expense is in the recording and mastering expenses. In the best case scenario, you're in a band with a guy who has a decent home studio and can do most of the mastering, etc. However, if you want a professional, radio-quality CD, you'll need a lot more. I'll take a simple example of a band that wants to do a 10-song CD...

Recording Budget:

Studio Time - $70 per hour (that is middle of the road for a good studio):
<blockquote>
Basic Tracks: 40 hours (4 hours per song) = $2800
Overdubs/Vocals: 20 hours (2 hours per song) = $1400
Mixdown: 20 hours (2 hours per song) = $1400
Mastering: 10 hours (1 hour per song) = $700

<b>Total Studio Time</b> = $6300</blockquote>

Studio Expenses
<blockquote>
Food (for band and engineers - don't underestimate this one): $1000
Rentals (mics, gear, etc): $500
Engineer/Producer Cost (usually separate from actual recording time): $2000

<b>Total Studio Expenses</b> = $3500</blockquote>

Promotional Budget:

<blockquote>Band Photos - $500
Logos and Graphics - $500
CD Cover Art - $500
CD Liner Notes Layout - $500
Ads for Record Release Party - $200

<b>Total Promotional Budget</b> = $2200</blockquote>

CD Production Budget:

<blockquote>CD Pressing/Art (2500) - $2500</blockquote>

GRAND TOTAL: $14,500

Understand that this is for a professional-quality CD in a decent studio with high quality graphics, etc. You can cut that cost by significant amounts if you do some of the work yourself, but, like anything, you get exactly what you pay for.

If you divide that amount up by the number of CD's you produce (2000 in this case), you get $7.25 per CD. Obviously, this doesn't take into account your day-to-day expenses like rehersal rooms, guitar strings, gas, promotion for other gigs, website, etc.

Most bands sell their CD's for $10 to $15 at shows depending on what they think they can get for them. Considering most bands never sell more than about 1500 CD's (and that's if they are lucky) in the course of their first year, it is a losing proposition given that they'll probably be back in the studio within 18 months to do another.

Also, a lot will depend on whether or not the band is playing for a living or just doing this while they work full time (or part time).

 

Getting it free off the web...

priceless

 

Jeff, for a major label band, aren't the studio costs a LOT more? It seems like I saw some ad in billboard magazine for a top of the line studio (I think it was in Hawaii maybe?), and it cost like $2800 per hour...Maybe I just misread,

 

Cost of goods is NOT $1.50 a package for large record companies.

Each CD packaged etc...is about $.50, the record companies have been price fixing and gouging the public for years.

I don't mind the MP3 revolution, it is a come uppance for these people.

DaDakota

PS For anyone who wants to say the same about the games industry remember it costs more to make a game then an album by a factor of N.

 

The RIAA theft network.

 

Like I said, this is a locally produced CD, not a big label thing. Most records on a major label run upwards of $100,000 plus and every penny is taken out of the artists' record sales. That does NOT include making the CD's, artwork or promotion which is done by the label.

I do think CD's are over priced. I don't think there is any question. Generally, because of the large volume of CD's produced and amount of in-house business done as opposed to having to pay outside sources for marketing, etc. CD's don't cost very much to produce for big labels. The last LEGITIMATE cost estimate I read from a non-industry source was approximately 78 cents per CD.

Of the $15 or whatever, $1 goes to cost of production, about $2-$3 dollars to the artist (depending on the contract), $2-$3 to distribution and the rest to the company.

The reality is that the music industry makes the bulk of its money off of a handful of artists. One non-industry-related producer said that of 12 signed artists, 10 lose money, 1 breaks even and 1 pays for the costs associated the other 11. That trend will very likely continue, however, what it means for the bulk of us as consumers is that the RIAA has literally NO incentive to make that many records that fail. They have done it in the past because they will occassionally find a hit in the bunch or because they still have A&R staff who want to make a name for themselves as breaking the next big thing.

However, A&R staffs are the first to get cut when a label loses money. The more they CLAIM to lose due to technology, the more they'll simply cut their losses and go with what sells which means bland, middle-of-the-road pop stars. As long as the 14-21 year olds are buying, they could care less what the rest of us buy because we don't have the disposable income and the rabid fan interest that younger audiences do.

So, don't be shocked if the music industry only gets WORSE from this point on out when it comes to what they produce. The number of artists actually signed by record labels has been reduced by over 15 percent since 1995. That decline is expected to increase over the next decade. I'm not saying downloading is evil, but the legitimate reality is that the artists who get downloaded now who don't fit into the pop icon category are the one's who will get dropped later.

Ultimately, there will have to be a new system in place to distribute music because that is where 90 percent of the costs are. If there becomes a new distribution system that is accessible easily to EVERYONE - not just a website - the RIAA is in trouble.

 

Anyone have the numbers for DVD's? I wonder how much we're being gouged there.

 

If you're refering to the actual pressing of the DVDs, there's no much difference in the cost of pressing a DVD and pressing a CD.

I know I can get 1,000 DVDs for about $1.30 each. But that doens't include the cost of mastering the DVD, making the graphics, menus, etc. Paying for recording time to record the commentaries, paying someone to get all the extras together, converting the 24fps film into 30fps video, and so on.

Plus, the actors, writer and director get a percentage of each disc sold, so there's an additional cost. And there's the additional contributions to the various Unions' pension funds that's required on union productions (which is nearly all movies commercially released on DVD or video). And so on.

And there's promotional costs like advertising (including B2B advertising) or in-store displays or other promotions, the cost of promo discs sent to newspapers, magazines, other reviewers that has to be made up on the discs sold. And, if I'm the studio releasing the disc, I only get the wholesale price anyway. And there's a middle-man who takes a cut (hard to believe, but many even larger stores do not deal with the studios releasing the product directly) and the store itself takes a not-insignificant portion.

And so on.

So while I'm sure there's plenty of profit being made on DVDs on the studio level, I don't think the miniscule cost to press each DVD (likely to be less than $1 per disc) is necessarily relevant to the discussion of how much these discs cost the consumer.

 

New CDs are horribly expensive. For many years, I would end up buying cassettes just because they were cheaper. I've never been able to get used to paying over $15 for a CD. Usually, I ask for it as a gift from my parents (they don't seem to mind paying) for the next birthday or Christmas, or try a discount store (like Wal-Mart; of course, they have nothing there you would actually want to listen to).

My solution is usually to go retro and pick up everything from a used-CD store. At least I can get decent stuff for $8 or $9 that way. The disadvantage, of course, is that I'm not likely to find stuff from the last couple of years, so I'm always way behind the latest trends. But I can buy stuff that I don't know that much about; if I only end up liking one or two songs, at least I didn't lose much money on the deal and I can mix those into my own CDs. Right now, I feel guilty about downloading, but at the same time it's a good way to try out stuff you've never heard of. Because the sampling you get on the radio just isn't going to work these days.

 

The thing about downloading, for me, is this...

If you are such a music buff and love music enough to want to take time out of your day to download and you do so because you don't hear good music on the radio, etc., do you also take time to listen to stuff that is available for download and advertised for that purpose?

For example, do you browse around IUMA.com or MP3.com to listen to artists you haven't heard before? Do you do band searches on Yahoo or Google and download CD's from un-signed artists?

I'm not knocking anyone because I've done both types of downloads for various purposes. I just am wondering if you, like me and many other people, really hate the industry, do you do anything other than downloading pop music for free to support competition like supporting un-signed artists?

 

If CDs were cheaper, I'd buy TONS more. As it is, I buy a bunch -- lately, on average about 4 CDs every 2 weeks. The thing is, they're all used CDs that I was getting at Wherehouse Music on the 20% off sale. I could walk out with 5 great CDs for 30 bucks -- you can hardly go wrong there!

It seems to me that rather than actually try to change, the RIAA has found a scapegoat. Napster was not REALLY the problem with sales. Heck, when Napster was up, CDs sales were up. Now, that doesn't necessarily directly correlate, but there are A LOT more reasons that CD sales have gone down in the past year -- things much more significant than internet file sharing. In the past few years, we've been exposed to the unfailing greed and awful treatment of both customers and especially recording artists/musicians by the RIAA. People would just as soon not buy music just because the RIAA is behind it. Or take the economy's downturn -- people don't have the disposable income they did a few years ago. There are dozens of reasons that are arguably MORE significant than the file-sharing argument, but the RIAA would rather have you believe it's Napster's fault they aren't doing well.

The record companies have made a FORTUNE off of the business of selling CDs -- it WAS the perfect medium for the RIAA. A $15 CD that doesn't cost hardly anything to make, wasn't copyable (with eqivalent quality) until recently, and was easy to ship, package and shelve. They don't want to lose that -- no other format was even close to this profitable, and it's likely that no other format will be this profitable, and allow them to keep such a high market share.