On Nov 22, 2011, at 6:56 AM, Nick Andrews wrote: > The music industry did it to themselves by screwing the consumer on cd > prices, so too bad for them. Artists and pseudo-musicians probably > get almost as much from an itunes sale as they did from a cd sale > costing ten times as much. And while Ticketmaster continues to > royally screw concert goers with their ridiculous markups and fees, at > least the bands make some decent money off of touring. Now that is > hard work, especially for these old guys like Steven Tyler and Co! >
LOL. They never "screwed" the consumer on CD prices. It's a common perception from anyone who isn't in the business or who doesn't have a degree in marketing, but that's not what happened. Without turning this into a Marketing 101 session, the short version is that cost of good is only one, relatively minor, factor in product pricing. The single biggest factor is what the market will bear. When CDs first came out the market segment was hard core early tech adopters so the expectation was market forces would be high end electronics model not consumer electronic model. So it would be the tweakers with the $3,000 stereo rigs who would be the first to buy CD players, not the kid playing cassettes on his boom box. So cassettes were out at about $4.95 to $7.95 depending on what was on them, and CD's hit the market at about $12.95 if memory services. What happened is demand continued to steadily rise. There was no market force to drive the price down. I've never seen much like it, before. Usually at some point demand slackens and the "2nd iteration of the market" kicks in, which is the cross-over from high end electronics to consumer electronics, i.e. the cost of players comes down and the cost of media comes down. That never happened. When a Sony portable "Walkman" CD player hit at $400 the prices on hardware started coming down. But content just stayed where it was. What happened was the demand for CDs just kept climbing without any downward price pressure, which no one in the entertainment business had ever seen before. In short, there was NO reason for companies to lower prices. (I'll skip the entire discussion of how much money reaches the artists because that's an entire "History of the Music Business" going back to when my great uncle Leo Feist was the largest music publisher in New York; let's just say the artists has routinely been screwed, and despite that many of them ended up multi-millionares).l Here's the thing: it happened again with Laser Discs. Priced many times twice as much as VHS tape, and originally a high end electronics product. But it never caught on in any significant way. And it was obliterated by the far superior DVD. DVD also stayed high, but once the switch was made to consumer electronics, and especially when movie titles started to be remaindered, prices fell. What's interesting is that DVD still seems to be strong despite Blu-ray. Lastly, notice now that studios are giving away DVDs or allowing cloud content with the purchase of a Blu-Ray? That's a completely new business model. Anyway, this is longer than I intended, so I must be in "work avoidance mode," which I will now leave and get back to. Best, R.E.F. ---- www.crydee.com Never attribute to malice what can satisfactorily be explained away by stupidity.
