What should be a fair price for a new cd?

There are CDs that retail at $7.99 brand new and those are many "Special Markets" titles. You can get a new copy of The Whites' "Greatest Hits" CD featuring their 80s country hits for $5.99.

 

Steve beat me to it. It constantly annoys me that people who complain about CD prices always mention the fact that it only costs 50 cents or $1 or whatever to manufacture a CD--but they don't seem to realize that manufacturing costs only account for a fraction of the cost of ANYTHING they buy. Heck, the direct manufacturing costs for a $20,000 Toyota Camry are probably only about $8,000 (that's a wild and probably inaccurate guess)-- but Toyota has to recoup its research and engineering costs, insurance fees, pay for advertising, pay the dealer, etc.

Then there's food. Buy a $1.00 bag of frozen corn, and only about two or three cents goes to the farmer who actually grew the stuff. The rest goes to the store, distributors, processors, etc., etc....

 

CDs: $12.99
LPs: significantly more, since the product is better

However the maximum I'd pay is about $20.99 for a single record

 

$11.99 or $12.99, which is the usual price for a new CD at Target, Best Buy, etc., usually the first week or two of release.

 

I still believe CD prices should be lower. And it could be done for under $10.

 

Fair max prices to me:

$11.99-$12.99 - regular CD
$14.99-$15.99 - SACD or DVD-A

For doubles, $18.99-$20.99 for CD.

 

It annoys me too when people don't realize all the other costs in making a CD. And that fact that a very large percentage of what's released into the marketplace doesn't turn a profit. Having worked in the music business for the last 12 years I've seen this and have experienced the negative affects of slumping CD sales personally. But I do agree that the price should come down.

 

Wait a minute...Don't today's -Artists-, Record Companies, Publishing Companies...get ROYALTIES every time their PRODUCT is played? A farmer gets paid ONCE for his CROP...a MUSICIAN/RECORD COMPANY...gets PAID forever and ever in today's times...I'm not referring to when the talented poor Musicians were ripped off in the 50's....TODAY with a the entertainment lawyers running everything, it's pretty much a shoe in if you have a hit record..Just ask Doggie Bag, with his slew of cars and cribs and being only the tender age of say 11 or 12...gone are the day's of exploited 'Artists"...They can lower the price substantially...and still make a TON of COIN!

 

Hmm...let's see, at one station I used to work for, we paid $10,000 per year to BMI...the playlist was some 600 songs, so that's about $16 a song a year multiplied by 400 stations...(I realize its more in larger markets and of course songs rotate in and out so they don't play all the time) but that's $6400...

 

Oh, I agree -- my comments about the hidden costs of producing a CD was a rant against the perception that CDs should cost $3 or some ridiculous amount like that. But I do think that prices should be lower -- $12 for a new release and $8 for a best-selling catalog item sounds reasonable to me...

 

Only song writers get royalties from air play. And only a very, very, very small percent of music gets any air play at all. That artist and record company don't get any of these performance royalties, unless the artist is also the song writer.

The artist/band only gets paid for sales (mechanical royalties) and only AFTER they recoup the recording and video costs (which are extraordinarily high). So only the top selling albums will ever recoup. Most bands never even come close to breaking even and their only source of income is ticket and t-shirt sales.

 

First of all, joefront made a good point ... applying a cost-of-living factor, which can sometimes be misleading, a $5 1965 LP would cost $29 in 2003 dollars.

The CD industry ... and this is not directed at Steve ... talk about all the additional costs associated with recording, manufacturing, marketing and distributing a CD but I have not seen ... even though the numbers are probably out there somewhere ... any concrete numbers. Based on the comments in this thread, the industry isn't doing a very good job of informing its buyers why CDs seem to cost so much.

I equate the CD industry to major league baseball owners who always seem to be crying about how much money they are losing ... but never show anyone the books and seem to almost always have enough money to pay players exorbitant salaries.

I suspect that it is very difficult for a small CD company to start up and compete ... especially since they have to license their product from their apparent competitors.

With the exception of some of Steve's CDs, I rarely pay more than $10 for a CD ... but I buy mostly "used" CDs and "on sale" w/free shipping on the net.

 

They need to bring back singles. I'd gladly pay $1-2 for a great song. iTunes 4 has the right idea, though the new format they use still is a far cry from CD quality. Flange city.

 

AMEN!

Heaven forbid we have to pay for a simple pleasure such as music.

 

You know.. what a great point. Seaching through the bins of records and seeing the cover art and really enjoying the whole experience.

Now the thrill is knowing you are getting it for nothing... Knowing you are doing something illeagl and then getting to whine and moan anf bitch about why it should be legal!


My how times have changed!

 

Debating a fair price for CDs is kind of like debating the existence of God. What is "fair" has very little to do with the price of ANYTHING. Prices are determined by cost/price/sales ratios. In the end, the PUBLIC determines what a disc will cost based on the number of units people will buy at a given price point.

The following example is VERY simplified, but should provide some insight into microeconomic theory and how prices are determined:

First, companies have fixed costs associated with just keeping the doors open and the lights on. These costs are accrued whether the company actually produces anything or not. Fixed costs include but are not limited to salaries, rent, and real estate taxes. These costs tend to be low for small audiophile labels, but can be astronomical for the major labels, which are essentially huge multinational conglomerates. Fixed costs have to be recouped from total sales.

Second, companies have unit costs that are associated with actual unit production. Usually, unit costs are higher for small audiophile labels, who tend to pay fixed rates, than for majors that produce millions of units.

Third, there are related costs, incuding but not limited to research, licensing fees, legal fees, recording, mastering, packaging, etc. These costs are usually higher per unit for small audiophile labels, who tend to pay fixed rates, than for majors that produce millions of units, which is one of the reasons audiophile titles are so expensive. They can also be very low, which is why you can buy odd classical releases on obscure labels for $2-$3.

Fourth, there are distibution costs and return costs.

Fifth, there is advertising and promotion.

For CDs, there are publishing and artist royalties. These tend to be higher for major artists.

Add all these costs together for an individual title for a given number of units and you get an estimate of the actual costs of producing that many units. However, you can't just divide the number of units into the total cost to get your break even point - you have to figure opportunity costs. An opportunity cost is the amount of revenue you could earn on the same investment if you produce NO units and invest the funds in something else. Add the opportunity cost to the actual cost and you get the break even point. This is how much revenue you have to generate to justify producing ANYTHING. Divide by the number of units produced and you get a per unit cost. This is a simplification of a complicated process, but it is basically how things work. Of course, in practice, what you actually get is a curve that relates the break even point to the number of units.

Next you have to estimate the number of units you can sell at a given price point. (You can estimate demand/price curves for almost anything that is sold. In most cases, the higher the price, the fewer people will buy the item.) Say you can sell 1 million units at $12, 2.5 million units at $11, 3 million units at $10, and 7 million units at $7. Lets say the total cost per unit (after you add all the junk above together) is $8 (this will normally vary based on number of units, but let's just preted it's fixed.)

OK. You're not going to price the item to sell 7 million units at $7, because you lose 7 million. At $12, you make 4 million. At $10 you make 6 million. But at $11 you make 7.5 million. So you price the item at $11.

Is $11 a "fair" price? 2.5 million people think so. True, .5 million of the people who would purchase at $10 think $11 is too high, and 4.5 million of the people who would have bought at $7 think it is too high. BUT WHO CARES???? You already KNOW these people probably won't buy the item. Since you make 7.5 million at $11, dropping the price to $10 COSTS YOU 1.5 million, just as raising the price to $12 costs you 3.5 million. (At $12 you don't GAIN an extra $1 a unit - you LOSE 3.5 million dollars. So you make 2.5 million units, price them at $11, and move on to something else.

So, in this case, if you're one of the .5 million people who would have paid $10, but think $11 is a rip off, you can't really blame the COMPANY. Blame the 2.5 million people who are willing to pay $1 more than you. Even if you convinced .5 million of these people to boycott an $11 price, the company could STILL sell 2 million units at $11 and earn the SAME 6 million they could make selling 3 million units for $10. Since there is less risk in trying to sell 2 million units, the price would STILL be $11. So in this example, I'd have to say $11 is a "fair" price.

Why should they? For every person on this board (or anywhere else) complaining about high CD prices there is ANOTHER person who will walk into a mall record store and pay LIST without batting an eye. THESE people are the reason prices are what they are. As I've tried to show here, companies DON'T CARE what the unit sells for. They care about the best price/sales ratio. If they could make more money selling a CD at $12.99 than they can at $15.99 or $14.99, THEY WILL SELL THE CDS FOR $12.99, and be happy to do so. Trust me on this. If you think CD prices are too high you can't blame the companies selling them. Blame your fellow music lovers.

 

A new CD costs about $ 14 here... I think $ 12 are fair.

 

First, what Yesman said, most artists don't recoup. B. - When you see these guys on Cribs with their cars and houses they are usually leased or rented - don't believe the hype.

 

I hope no one thought I meant music should be free. But that is the mentality of a lot of people. Its the "good enough for most people" mindset. I have coworkers that have downloaded over 5000 mp3's on a computer a few feet from where I'm sitting. I keep bringing in $30 hold plated CDs to listen to (ok I burn copies and those are the ones that leave my home) and they think I'm nuts.

When I started buying CD's in 1987 they were $16.99 each or 3 for 49.99. Thats the best I could do at the time without driving 50-60 miles. So I'm happy when I pay $14.99 for an Peter Gabriel SACD 16 years later.

A coworker looked into a photography catalog and told me he didn't understand why a 70-300mm zoom costs $250. I laughed and told him thats the low end of the price scale.

With every last nitnoid item you could ask "whats it worth to you?"

 

I think Tom Petty did some interview (probably around the time he fought MCA about the planned price-hike on one of his albums) where he said he could mow a few lawns one summer afternoon and make enough to buy a record or two that same day. Then again, I have relatives who said they managed to pay off their college education with a small grant and the money from their summer jobs. Man, I wish I could have experienced that.

 

Music is not a an item that depreciates in value like some durable good. cost of producing it rises as does the cost of marketing, and the items Steve mentioned that are the costs of the business.


Its almost a comodity, depending on the artist...