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

[MylesBAstor]

I find it humorous that anyone can freely discuss $100k DACs and $185,000 speakers with a straight face at all. A $5k DAC is amusing. $100k? Theater of the absurd. That has absolutely nothing to do with the huge costs that have come out of the manufacture, distribution and retail sales of music when it goes to the electronic distribution model. Is charging the same $ gouging? That's a judgmental term and one must judge for themselves. A huge chunk of the cost of getting a product to market goes away; the price remains the same. Someone in the supply chain is making a lot more money and the consumer is paying the price. It's that simple. If the consumer is willing, that's the end of the market-driven story. But i sales are way down a re-examination of the market may be in order.

Tim

So a Ferrari 458 Italia listed for $230,000 in 2012. It's got four wheels, transmission, radio and a motor just like a Yugo. Must be a rip off too.

 

[Andre Marc]

So a Ferrari 458 Italia listed for $230,000 in 2012. It's got four wheels, transmission, radio and a motor just like a Yugo. Must be a rip off too.

Totally false equivalent. A 35 lb DAC vs a Ferrari? A joke. You must not have been to the Ferrari factory.

The breaking system alone cost Ferrari $25,000. It can save your life.

 

[DaveyF]

I really dislike these comparisons to automobiles. Like Andre said, a 35lb DAC vs a Ferrari...not a joke...A TOTAL JOKE.

When I was a lot younger I used to work on cars, in those days it was possible to do so without some of the sophisticated diagnostic equipment that is required today. Today, even the simplest and least expensive car is FAR FAR more complex and includes hundreds if not thousands more parts than ANY audio piece.
If it wasn't for economy of scale, all automobiles would be so pricey that just about no one could afford them....and certainly IF they were built like high-end gear and used the same distribution model with the same HIGHLY limited market that would be the case. I suggest that IF the market was much larger for the $165K DAC, perhaps it would be able to be sold for a mere fraction of that price. ( or not, depending on how much the distributor wants to gouge ----which is what I believe is more and more prevalent today than ever)

So a BIG +1 on what Andre said.

 

[Andre Marc]

I really dislike these comparisons to automobiles. Like Andre said, a 35lb DAC vs a Ferrari...not a joke...A TOTAL JOKE.

When I was a lot younger I used to work on cars, in those days it was possible to do so without some of the sophisticated diagnostic equipment that is required today. Today, even the simplest and least expensive car is FAR FAR more complex and includes hundreds if not thousands more parts than ANY audio piece.
If it wasn't for economy of scale, all automobiles would be so pricey that just about no one could afford them....and certainly IF they were built like high-end gear and used the same distribution model with the same HIGHLY limited market that would be the case. I suggest that IF the market was much larger for the $165K DAC, perhaps it would be able to be sold for a mere fraction of that price. ( or not, depending on how much the distributor wants to gouge ----which is what I believe is more and more prevalent today than ever)

So a BIG +1 on what Andre said.

Davey, an absolutely accurate and righteous post. One of my tennis partners works at the Ferrari dealer on Pearl St near you in La Jolla. I know first hand the parts count and quality that goes into a Ferrari these days and it makes Magicos look like Fischer price toys. Different market than audio is an understatement.

Cars have measurable performance parameters and there is no pseudo science or voodoo in Ferrari design.

An aluminum box with a few knobs, capacitors, resistors, connectors and wire for a 100k. Laughable on BOM basis and laughable in general.

 

[BlueFox]

Who has a $100K DAC? I know the dCS Vivaldi stack goes for $100k, but the DAC 'only' goes for $35K. Get it down to $15K and I will buy one.

As far as comparing audio gear to cars, a year or so ago, I was at the dealer for normal service and new tires. Anyway, the cost was a little over 1K, and the service rep was almost apologizing for the cost. At the same time I am thinking, "I pay more for a power cord than this."

Also, my power cord(s), and the rest of the stereo give me pleasure. The car gets me to work and back home. I will gladly pay for stereo gear, and bitch about the high price of cars.

 

[FrantzM]

I really dislike these comparisons to automobiles. Like Andre said, a 35lb DAC vs a Ferrari...not a joke...A TOTAL JOKE.

When I was a lot younger I used to work on cars, in those days it was possible to do so without some of the sophisticated diagnostic equipment that is required today. Today, even the simplest and least expensive car is FAR FAR more complex and includes hundreds if not thousands more parts than ANY audio piece.
If it wasn't for economy of scale, all automobiles would be so pricey that just about no one could afford them....and certainly IF they were built like high-end gear and used the same distribution model with the same HIGHLY limited market that would be the case. I suggest that IF the market was much larger for the $165K DAC, perhaps it would be able to be sold for a mere fraction of that price. ( or not, depending on how much the distributor wants to gouge ----which is what I believe is more and more prevalent today than ever)

So a BIG +1 on what Andre said.

+1


and

Happy New Year.. Iam still not convinced why a download has to be more or as expensive than the equivalent CD. All that I have read so far look like rationalizations rather than strong arguments. Since I mainly buy used CD... it hasn't mattered to me.. yet

 

[Orb]

It's analagous to the printing industry. You can go somewhere and have a small run of books done because there are small printers. Are they made and the same way though? That is the question to ask. The assumption is that they are replicated and not duplicated but even in the former there is a variance in stamping quality.

In any case rights are fixed as are items like cover art design. If it is an all new production and not just a re-issue then all production costs down to the coffee is included in the fixed costs.

Let me put it another way setting aside specialized CD pressings, a small run done by a small company will cost you these days about a dollar per CD including the jewel case and the printing. You'll get a better price by a few cents for a larger run. A HUGE (aka Global) release will not be pressed all in one place. That is something a lot of people assume but we know it isn't the case. Pressing will be done in different countries and be distributed from there so the limit to the volume discounts kicks in sooner. So Katy Perry might have just a 10,000 run in a small market like the Philippines for example. Absorptive capacity is low so the quality is low skimping by using old replicator plants. Sadly, yes you can here the difference.

Long story short, 2 bucks tops for an ordinary CD. That's what you forego when you download instead of buying the disc. What you get in its place is mainly time saved.

By that logic though Jack most classical/jazz/blues/etc albums that are not "mainstream" (sort of then niche within a niche) would sound worse on CD to other albums released on the same format.
I have known the sound quality to be more of a variable on how recorded-mixed-mastered than number of runs of CD.
As a good comparison good quality LPs in general have been taken for granted in more recent years and some of this is down to the fact the numbers of LPs purchased had dropped to such a low number it was easier to produce higher quality at these lower volumes (appreciate quite a few other variables involved as well but I mean generally not the special companies).
Since the trend of new LPs has increased more recently quality of LPs in general seem to have been dropping.
This is in Europe and there has been some interesting reports on this in some magazines.

It is possible to do small run batches even for CD and be economical, but it does depend upon what setup is used without compromising copying/pressing.
Be interesting to know what Naim/Linn/Hyperion/etc use for their releases (both their popular top 3 and also the rest), along with other labels known for sound quality for releases that would sell consistently low volume a year.

Cheers
Orb

 

[Phelonious Ponk]

So a Ferrari 458 Italia listed for $230,000 in 2012. It's got four wheels, transmission, radio and a motor just like a Yugo. Must be a rip off too.

If a Ferrari Italia was a fuel injection system listing for $230,000 (not counting $100k worth of magic fuel lines) and the Yugo was the injectors that came built-in, as a small part of the price of a $30k Honda, this analogy would just be a little weak. As it stands, it's completely irrelevant.

Tim

 

[rblnr]

Side question, but why are hires downloads so much more than lossy ones? The Stones' 'GRRR' Amazon MP3: $18.99 CD: $21.99 Mastered for iTunes: $19.99 HDtracks 24/88: $44.98 Feel like I'm being penalized for caring. And if you have an intention of pulling younger gens into better listening, forget it.

OK, HDtracks doesn't have the economy of scale of an Amazon or Apple. Perhaps storage and delivery of the larger files has some cost too, but c'mon.

 

[Kingsrule]

Yes I know. Unfortunately you can't have a discussion about downloading of music without including Apple in the conversation. They drive the bus and all the labels are just passengers. If Apple ever decides to offer lossless and/or hi-res downloads all the other sites will disappear.

Totally agree!

 

[Kingsrule]

Its easy to say come on, you're talking a few dollars here while you guys have $100,000.00 systems, etc. but that is fools thinking

To put it in perspective, you need to think in terms of percentages, not dollars.

$3.00 on $15.00 is 20%!!!
$5.00 is 33%!

 

[Johnny Vinyl]

Its easy to say come on, you're talking a few dollars here while you guys have $100,000.00 systems, etc. but that is fools thinking

To put it in perspective, you need to think in terms of percentages, not dollars.

$3.00 on $15.00 is 20%!!!
$5.00 is 33%!

+1.

It shouldn't matter whether the premium one pays for hi-rez is an affordable option or not.

 

[lasercd]

Side question, but why are hires downloads so much more than lossy ones? The Stones' 'GRRR' Amazon MP3: $18.99 CD: $21.99 Mastered for iTunes: $19.99 HDtracks 24/88: $44.98 Feel like I'm being penalized for caring. And if you have an intention of pulling younger gens into better listening, forget it.

OK, HDtracks doesn't have the economy of scale of an Amazon or Apple. Perhaps storage and delivery of the larger files has some cost too, but c'mon.

Bandwidth and storage are a factor. More likely is that The Rolling Stones can negotiate a higher royalty rate to allow their albums to be downloaded.

 

[Orb]

Bandwidth and storage are a factor. More likely is that The Rolling Stones can negotiate a higher royalty rate to allow their albums to be downloaded.

Does seem that is the business model used (appreciate you know more due to experience-knowledge in the business), interesting comparing various sites/labels that offer CD/hirez/DXD/DSD.
As one would expect with that business model DSD 64 and 128 is actually cheaper than DXD when looking at some such as 2L (who ironically has studio master file in DXD for most of their releases).
Anyway seems most sites I recently visited are basing price upon storage and bandwidth utilisation.
Also tying into that is how MP3 is the cheapest (even when including CD) from a few sites I just checked.

Cheers
Orb

 

[rblnr]

Bandwidth and storage are a factor. More likely is that The Rolling Stones can negotiate a higher royalty rate to allow their albums to be downloaded.

It's not just the Stones album, it's nearly everything. Most individual albums are $20 - 24.

HDtracks et. al. need a lot more margin to survive than Amazon, that said, they may be making hay while they can because if/when the big guys move in, prices will likely drop.

 

[JackD201]

By that logic though Jack most classical/jazz/blues/etc albums that are not "mainstream" (sort of then niche within a niche) would sound worse on CD to other albums released on the same format.
I have known the sound quality to be more of a variable on how recorded-mixed-mastered than number of runs of CD.
As a good comparison good quality LPs in general have been taken for granted in more recent years and some of this is down to the fact the numbers of LPs purchased had dropped to such a low number it was easier to produce higher quality at these lower volumes (appreciate quite a few other variables involved as well but I mean generally not the special companies).
Since the trend of new LPs has increased more recently quality of LPs in general seem to have been dropping.
This is in Europe and there has been some interesting reports on this in some magazines.

It is possible to do small run batches even for CD and be economical, but it does depend upon what setup is used without compromising copying/pressing.
Be interesting to know what Naim/Linn/Hyperion/etc use for their releases (both their popular top 3 and also the rest), along with other labels known for sound quality for releases that would sell consistently low volume a year.

Cheers
Orb

We have to remember though Orb that when a composer has been dead for 50 years, their work enters the public domain. That's another cost layer gone.

 

[BlueFox]

Side question, but why are hires downloads so much more than lossy ones? The Stones' 'GRRR' Amazon MP3: $18.99 CD: $21.99 Mastered for iTunes: $19.99 HDtracks 24/88: $44.98

I bought the BR Audio version of Grrr for $30, and ripped it to my music server. I do admit it would be nicer to download it at hi-res for $15. The drawback here is, so far, the BR Audio selection is very limited.

 

[garylkoh]

Bandwidth and storage are a factor. More likely is that The Rolling Stones can negotiate a higher royalty rate to allow their albums to be downloaded.

With mainstream albums (not the niche players like FIM and MARecordings) another factor could be the lack of high-rez mastering studios, which is also keeping the price high. Two of the mastering studios I know do not do anything over 24/96 and are looking to upgrade their gear/software so that they can. That costs money - just ask Bruce how much money he has spent over the years building one of the best studios in the world and whether he's broken even. I'll bet that he's still financing our hobby.

 

[Bruce B]

With mainstream albums (not the niche players like FIM and MARecordings) another factor could be the lack of high-rez mastering studios, which is also keeping the price high. Two of the mastering studios I know do not do anything over 24/96 and are looking to upgrade their gear/software so that they can. That costs money - just ask Bruce how much money he has spent over the years building one of the best studios in the world and whether he's broken even. I'll bet that he's still financing our hobby.

The first job pays for the second job!!

 

[Andre Marc]

The following is EXACTLY what should be, and what I would except to see:

The Mp3 is cheapest, followed by the lossless FLAC, then CD, then the vinyl is the most expensive.

It is REAL simple, and I don't know why there is any debate that this should be the model.

I bought the FLAC, btw...great neo psychedelic band from Chapel Hill.



http://www.mergerecords.com/siberia