Why are downloaded cd's so expensive? Is it a rip-off?

[Andre Marc]

If all you of would like a heavy does of cold water reality..

Beyonce sold 617,000 downloads of her album on iTunes before any CD had shipped.

It has currently sold 991,000 in the USA alone to date.

Several retailers including Amazon and Target refused to carry the album in protest.

So over SIX HUNDRED thousand people could not be bothered with even CD quality.

BTW, 240,000 copies were downloaded for free from bit torrent sites.

For the record, the album is $16 bucks on iTunes, which includes videos. Guess how much
the CD/DVD is...16 bucks....LOL.

If anyone gives a crap, it is "Mastered For iTunes".

NEW YORK TIMES:

http://artsbeat.blogs.nytimes.com/2013/12/27/beyonc-stays-on-top/?_r=0

Beyoncé Stays on Top
By BEN SISARIO

Beyoncé’s new album, released by surprise on iTunes, has held at No. 1 for a second week and has now sold almost a million copies in the United States, even as some retailers refuse to stock it.

The album, “Beyoncé” (Columbia), which came out without warning at midnight on Dec. 12, sold 374,000 copies in the United States in its second week out, according to Nielsen SoundScan. After selling 617,000 here in its first week of release — when it was available for only a few days before the end of the industry’s standard sales week — it has sold 991,000 copies in the United States and well over one million in total around the world.

After first releasing Beyoncé’s album on iTunes, Columbia completed the manufacturing of its CD-DVD version and shipped it to brick-and-mortar retailers for sale. But Target is not selling it, and Amazon is selling only the digital version; both are among the biggest retailers of physical albums. According to Musicmetric, a music data analytics company, the album was also shared 240,000 times without permission in its first week on BitTorrent, a file-sharing system widely used for pirated movies, music and software (and sometimes by artists themselves).

Also this week, Garth Brooks’s eight-disc set “Blame It All on My Roots: Five Decades of Influences” (Pearl), available only at Walmart stores, holds at No. 2 for a second week with 199,000 copies sold, and One Direction’s “Midnight Memories” (Syco/Columbia) is No. 3 with 166,000. The season’s two most popular holiday albums hold the next two spots on the chart: “Duck the Halls: A Robertson Family Christmas” (EMI Nashville) is No. 4 with 132,000 sales, and Kelly Clarkson’s “Wrapped in Red” (RCA) is No. 5 with 124,000.

 

[garylkoh]

I've been talking to Winston Ma (FIM) and Todd Garfinkle (MARecordings) about offering downloads because I want greater access to their high-rez files.

The biggest problem is that their customers think that downloads are intangible, and hence refuse to pay the same amount as they would pay for CDs (do I hear $3?). The second problem is that it costs just as much publish. Royalties, artwork, mastering and recording costs don't go away just because it is a download. The up-front cost is the same.

Production cost is a little lower for downloads only, but if they have to make CDs as well, then the total production cost goes UP. If they expect download sales to take the place of the CD sales, then the production quantity of the CDs have to go down, which would make the CDs too expensive. Then, they lose money on the CD that they don't make up on with the downloads.

Distribution cost can be the same. You can't just buy a server from Best Buy and hook it up. To get decent download speeds, you'll have to host it with Amazon Web Services or some other cloud provider. Bandcamp charges the musician 15% of the revenue, and CDBaby charges 20%. Both much less than Amazon or Apple, but they don' have the traffic or advertising budget that Amazon and Apple have.

Unfortunately...... as Beyonce found out, sell downloads and some physical disk retailers will drop your line. If your biggest distributors drop your physical CD because you are selling downloads and your download sales don't cover the loss of business, you go bankrupt. Remember, distributors buy in volume. Downloads sell in trickles....... which do you think will keep the lights on and employees hired?

Knowing how great the high-rez versions of Winston's and Todd's work are, I wish that they would be more easily available to the music lovers of WBF, but I would rather that they stay in business so that I get more music from them. Winston told me that it costs him from $75,000 to $125,000 to put out a title. That gets him about 5,000 high quality CDs. (If you didn't care for quality, you could probably get 20,000) On many of his titles, it could take him years to break even. Guess how much money he has sunk into the 20 titles he has put out in the past 2 years? And guess how much in the hole he is until he starts making a profit on the titles he's done?

If he starts selling downloads, and the physical disk sales slow down or stop altogether, all of the sudden the download revenue has to make up for the now-worthless CD's that have been paid for and stored.

If you want great music to continue to be made, give these guys a break. Go to their websites and buy a CD today.

http://www.marecordings.com/main/index.php

https://www.firstimpressionmusic.com/

Thanks. Sorry for the rant.

 

[Steve williams]

I've been talking to Winston Ma (FIM) and Todd Garfinkle (MARecordings) about offering downloads because I want greater access to their high-rez files.

The biggest problem is that their customers think that downloads are intangible, and hence refuse to pay the same amount as they would pay for CDs (do I hear $3?). The second problem is that it costs just as much publish. Royalties, artwork, mastering and recording costs don't go away just because it is a download. The up-front cost is the same.

Production cost is a little lower for downloads only, but if they have to make CDs as well, then the total production cost goes UP. If they expect download sales to take the place of the CD sales, then the production quantity of the CDs have to go down, which would make the CDs too expensive. Then, they lose money on the CD that they don't make up on with the downloads.

Distribution cost can be the same. You can't just buy a server from Best Buy and hook it up. To get decent download speeds, you'll have to host it with Amazon Web Services or some other cloud provider. Bandcamp charges the musician 15% of the revenue, and CDBaby charges 20%. Both much less than Amazon or Apple, but they don' have the traffic or advertising budget that Amazon and Apple have.

Unfortunately...... as Beyonce found out, sell downloads and some physical disk retailers will drop your line. If your biggest distributors drop your physical CD because you are selling downloads and your download sales don't cover the loss of business, you go bankrupt. Remember, distributors buy in volume. Downloads sell in trickles....... which do you think will keep the lights on and employees hired?

Knowing how great the high-rez versions of Winston's and Todd's work are, I wish that they would be more easily available to the music lovers of WBF, but I would rather that they stay in business so that I get more music from them. Winston told me that it costs him from $75,000 to $125,000 to put out a title. That gets him about 5,000 high quality CDs. (If you didn't care for quality, you could probably get 20,000) On many of his titles, it could take him years to break even. Guess how much money he has sunk into the 20 titles he has put out in the past 2 years? And guess how much in the hole he is until he starts making a profit on the titles he's done?

If he starts selling downloads, and the physical disk sales slow down or stop altogether, all of the sudden the download revenue has to make up for the now-worthless CD's that have been paid for and stored.

If you want great music to continue to be made, give these guys a break. Go to their websites and buy a CD today.

http://www.marecordings.com/main/index.php

https://www.firstimpressionmusic.com/

Thanks. Sorry for the rant.

Bravo Gary

This reply IMO was probably the best worded most logically written and well understood post ever at WBF that that it has to be made a sticky

Gary, you know I love reading your posts. You are the voice of reason

Happy New Year to you and your family

 

[garylkoh]

Thanks, Steve. I thought that you were on holiday?

Truth be told, I came back to delete and re-write it because I thought I sounded a bit too angry.

Wishing you and your family a very Happy New Year too!

 

[RBFC]

I also thought you told it as it should be told. Never be afraid to say exactly what you believe, or you'll doubt yourself on every future post. Have a great holiday, all.

Lee

 

[Andre Marc]

Thanks, Steve. I thought that you were on holiday?

Truth be told, I came back to delete and re-write it because I thought I sounded a bit too angry.

Wishing you and your family a very Happy New Year too!

Agree with Steve and Lee...illuminating and very well done post.

It should be pointed out however, that CD/download market for major label music and esoteric, audiophile recordings have precious little in common. Literally as much as the market for Hondas and Toyotas vs the market for Lambos and Bugattis.

A new release from U2 will outsell FiM's or Analogue Productions entire years output.

 

[JackD201]

Going back to the OP here are pretty much the prices for new releases in dollars

MP3/iTunes $9.99 per album

iTunes+ (higher bitrate) $12.00 to $13.00

CD (Disc) 15 to 16 dollars free shipping for orders over 35 bucks continental US only (Amazon)
$4 used, $8 to $10 old stock

16/44.1 Download HD Tracks $13.00

24/44.1, 24/48, 24/88, 24/96 $13 to $18.00

24/192 $25

DSD64 $25 and up

 

[DaveyF]

Agree with Steve and Lee...illuminating and very well done post.

It should be pointed out however, that CD/download market for major label music and esoteric, audiophile recordings have precious little in common. Literally as much as the market for Hondas and Toyotas vs the market for Lambos and Bugattis.

A new release from U2 will outsell FiM's or Analogue Productions entire years output.

+1

 

[egidius]

Has COST something to do with PRICE? context..

I take exception, if we talk solely about the entrepreneurial risk of a producer! In my previous post I looked at the situation, when you have established contacts and work with mutually trusting people - which does not create a win/win, but rather a loose not / loose not situation.
So: Whilst there are many great producers, the usual situation for the artist, be they in Classical Music or in Jazz (don't know about Rock) looks like that:

YOU deliver the master and the whole caboodle of information for the art work for 0$!
YOU pay the label a lump sum
YOU wave your Royalties whereever the Label has to pay. (Radiostations still pay out to you, as this is legally fixed).

As most Artists cannot afford this, they look for a sponsor or crowdsource or ask Foundations for help. So effectively:

YOU fundraise the production.

I am afraid, this is again not an answer to the question to "how much should a download cost", but I want to put the informed replies of LaserCD and Garylkoh into perspective.

Maybe now is the point to disclose my own interest: I am a violinist. I have produced many CD's for various Labels (mostly german). Recently I have set up an artists label, taking many of above points into account. Our aim is a "fair trade" deal, where all the costs are open to everybody involved.

www.streiffzug.com

 

[Orb]

Sorry to be insulting but you have no idea what you are talking about.

First of all there are two distributors involved: Apple takes a 30% cut right off the top. Next you have the digital distributor/aggregator who takes (on average) 20%. The label pays its artists a full royalty whether its physical or digital product sold. This includes publishing. Marketing and promotional costs are the same to the label, regardless of the method of delivery to the consumer. As physical sales diminish and digital sales increase, the distinction between the formats blur relative to costs. As a label, I (and the artist) makes marginally more on a digital sale than a physical one.

And sadly that is what I feel the problem is and the trend being similar to gaming (but gaming is further along the trend); basically the distributors/publishers are the ones really controlling the management-business model of the digital media and it is in their interest to ensure that those who buy really only have a "virtual" copy of the music with restrictive T&C.
Against this backdrop are the labels who provide greater flexibility with T&C/DRM with their own services, but sadly this is a drop in the ocean compared to the big distributors/publishers most of the listening population buy from.

It cannot be mentioned I would assume by any labels on a forum, but I do wonder how much pressure Apple puts on those who want to sell via them not to also do their own service and site in parallel with a more relaxed T&C/DRM.
The concern being that eventually the large digital distributors/publishers eventual strangle any meaningful resistance from services that are actually good for consumers from a T&C/digital management perspective.

Cheers
Orb

 

[treitz3]

Excellent post, Gary. My hat is off to you, sir.

Tom

 

[Phelonious Ponk]

There are a lot of very literate arguments here that completely miss the point. In the electronic distribution model, physical manufacturing, distribution, warehousing, packaging and retailing are eliminated. These are very expensive, labor and resource-intensive parts of the business model. They are not replaced in the electronic business model, and not a penny of the savings has shown up in the retail price. Are apple and amazon getting all that money? Maybe. Is it wrong? Immoral? Of course not. The price we're paying is what the market will bear. Maybe. Or maybe music sales would be up and pirating would be down if those savings had been passed on to the consumer. We just don't know. But we do know that the new model eliminated the most labor and resource-intensive steps in the old one, the consumer price didn't change, music sales have gone down dramatically and no one in the business seems to be looking at price as a possible cause. Time to look, I think.

Tim

 

[lasercd]

I find it humorous that a website that freely discusses $100,000 DACs and $185,000 speakers would suggest price gouging of a $13 digital download.

Really?

 

[MylesBAstor]

I find it humorous that a website that freely discusses $100,000 DACs and $185,000 speakers would suggest price gouging of a $13 digital download.

Really?

Bada bing, bada boom......

 

[Andre Marc]

Going back to the OP here are pretty much the prices for new releases in dollars

MP3/iTunes $9.99 per album

iTunes+ (higher bitrate) $12.00 to $13.00

CD (Disc) 15 to 16 dollars free shipping for orders over 35 bucks continental US only (Amazon)
$4 used, $8 to $10 old stock

16/44.1 Download HD Tracks $13.00

24/44.1, 24/48, 24/88, 24/96 $13 to $18.00

24/192 $25

DSD64 $25 and up

FYI, I buy around 200 CDs or more per year, mostly from Amazon. I have never paid 15 bucks for a new release.

I pay between 9 and 11 bucks for single discs tops. I have occasionally paid around 15 for out of print, very
hard to find discs, or imports.

 

[Andre Marc]

I find it humorous that a website that freely discusses $100,000 DACs and $185,000 speakers would suggest price gouging of a $13 digital download.

Really?

Did you know that some of us consider the very premise of a 100K DAC a total joke?

 

[JackD201]

FYI, I buy around 200 CDs or more per year, mostly from Amazon. I have never paid 15 bucks for a new release.

I pay between 9 and 11 bucks for single discs tops. I have occasionally paid around 15 for out of print, very
hard to find discs, or imports.

FYI

Amazon's top seller today was $15.00

 

[Orb]

Tim,
I think you will find the amount of clout the primary digital publishers/distributors is very high, just look at the trend of the digital gaming market to see how they managed to take greater control of the business-consumer model, price model and their take, "virtual" orientated T&C,etc.
The gaming industry is a strong parallel to what is happening with the move of music to cloud/digital distribution purchasing IMO.
And some of the worst offenders in the gaming industry are also developers, such as EA and Ubisoft.
So will be interesting to see where the biggest commercial labels go with their strategy, although I doubt they can break the hold and strategy of such as Apple/Amazon/etc; that said they would also like to tie consumers into a more "virtual" T&C themselves as this wipes out sales that they do not see (2nd-hand physical media/swapping/etc), increasing potential revenue.

So the efficient route for a label would be to go via one of the major/primary digital distributors/publishers but then their profit margin decreases,T&C agreements more controlled,etc.
Or go independant as a smaller company with greater control but then with the need to create both sales and business model/infrastructure orientated around digital distribution that would not exist even if they are currently selling physical media.

Where one may have the view of it being cheeky I guess is how the cost goes up as the hirez sampling rate does, scaling all the way up to DXD or DSD; after all each version comes from the very same digital source especially for PCM source file.
But then I can see the counter and real-world argument is that each version type then needs to be stored for download, so higher rates consume more storage and in reality more bandwidth/high streaming time usage to download, and so needs to be costed in.
Tricky discussion.

However something we can all agree upon is that it would be naughty IMO for anyone to sell lower native rate source that has been upsampled and priced at the "better" hirez spec (such as an original 44.1 or 96 then sold as a higher cost upsampled to 192khz).

Cheers
Orb

 

[Andre Marc]

FYI

Amazon's top seller today was $15.00

What title? I see a two disc soundtrack as the "Best Seller", followed by the Springsteen CD/DVD release.

 

[JackD201]

Fine, lets split hairs between the number of silver things. So how much are CDs in Walmart, Target, Best Buy or whatever brick and mortars are left? Last I was in one I don't recall seeing too many 10 buck CDs.

Excuse me if I take the contrary position here Andre but our situations are very different. A local pressed or South East Asian pressed CD I can get for 3 dollars in stores. US, EU and JP pressed CDs $17 to $20. Par for the course when I go CD buying in Hong Kong and Tokyo. When I order from Amazon I don't get nifty free shipping so I pay freight AND get slapped taxes and an absurd handling fee of $10 dollars per package.

Now I'll take music where I can get it. While my first choice is vinyl, I do buy MP3s usually by the song only (Dance), CDs and 24bit/n downloads for much everything else I can't get on LP.

I have freakish 15-20 vision yet CD liner notes are still a joke.

The question is, are we being hosed when we download? Where I am sitting I'm getting equal or better quality with the exception of the MP3s for less. Much less. If YOU are paying less buying CDs well good for you. Never mind that there are people out there not paying anything at all downloading files ripped from those very CDs. Those are the ones we all should be pissed at.

The market will handle itself.