"Fair" pricing for CDs? (1 Viewer)

[Jeff Ulmer]

First, this is not intended as an advertisement. I am looking for feedback from the forum as to what is considered "fair" CD pricing, and your attitude towards music purchases in general.

As some of you know, I am a music content provider. This morning I received an anonymous email from someone claiming the pricing for my upcoming CD release was too high. He goes on to comment that he will stick with his vinyl version of our old record, and a bootleg CD (which originally sold for 40DM, or $24USD) that was produced some years ago.

The new album took over ten years in production, and several hundred thousand dollars to create, not counting the tens of thousands of hours of labor involved. The CD is being sold for $13USD plus shipping, which is at cost.

I am not looking for feedback directly related to my project, but am using its development as a basis for providing some perspective. Assuming an artist was to release a CD that had material you enjoyed on it, and was of high quality from a production and packaging perspective, what do feel would be fair to pay for it?

Also, would you feel any more inclined to purchase this CD directly from the artist know they were being paid for it, rather than getting only a small percentage through a big record company and distribution chain, and that any income would be going directly into producing more new music?

PS. I have already emailed the admins to see if there is anything out of line with the content of this post.

I look forward to your comments.

 

[Steve Owen]

The price of something should be whatever the market will bear without resorting to price-fixing (ie, the trouble the big labels got into with anti-trust laws). If the price you have to charge is higher than the market will bear but less than what will make you money, then you over spent on the production/creation of that product.

As far as what I will pay for an album... I've spent well over $100 on some titles (such as various releases of Dark Side of the Moon) and felt it was worth every penny and then some. Others I've spent well under $10 and felt as though I'd been ripped off.

Given the cost of CD manufacturing, $10 seems like a price that's more than reasonable for most releases (that's probably still far more profit margin than record companies used to get on tapes and vinyl). I rarely pay more than $12 (new titles on sale at Newbury Comics usually). I can't fathom paying $17-19 at mall stores.

-Steve

 

[Tommy G]

$13 for a band I like wouldn't be too much at all. I normally pay that amount for a new release and I also tend to like non-mainstream stuff so it makes it a little more rare than the mass produced stuff. I am a true believer in whatever you can get for what you put out....take it. I know I would pay about $50 for Jennifer Knapp's Wishing Well CD because it is out of print. Just an example. Hope that helps but I really don't think $13 is out of line.

 

[Gary->dee]

Thirteen to fourteen dollars is my cut-off point for a regular CD. Beyond that I think the store or artist is charging too much unless of course it's a special recording(limited editions) or a higher quality format. For a less recognizable artist I'd say somewhere between $9 and $11. In general in this day and age of MP3s and such I think every CD should be $10 just to compete. I'd always prefer to get music from the artist compared to a record company but my tastes are usually the big names so there's little chance of say, Steely Dan or Pink Floyd getting my money directly. I'm sure they have enough money anyway. :wink:

 

[Mike Broadman]

I buy directly from artists and independant record labels sometimes, but more out of principle. The price is sometimes higher than what I coule be paying for a mainstream release in a store. It's not unusual to pay less than 12 bucks for a CD at Best Buy, but when ordering it is often higher.

Either way, I don't see why a CD should have to cost more than $10.

 

[MarkHastings]

I agree with the others that $13-$15 would be the highest I'd pay for anything fairly mainstream. It shouldn't matter how much something cost to make a CD (i.e. you pay the same price at the movie theater for a Billion dollar blockbuster as you do a down and dirty Independent film).

The only way I'd pay more than $20 for a CD is if it were either out of print, an import, it had some sort of exclusive stuff on it, or something that was considered "Hard to Find". Other than that, I can live without expensive CD's.

 

[Jeff Ulmer]

In general in this day and age of MP3s and such I think every CD should be $10 just to compete.

I can't agree with this. You are saying that because people can steal your product, you should make less from it? This should work the other way around. If your potential market is shrinking due to theft, the price goes up. That's the way it works in every other form of retail. Just because people can steal your music doesn't make it any less expensive to produce or market.

 

[Lee Scoggins]

I can provide some perspective on CD costs which may serve as a base.

Here is a recent breakdown of costs from a small project I worked on:

Total recording fees: approximately $24,000 (assume $1 per disc or less)

Per disc replication cost with packaging: $1.20

Artist royaltees: $4.00

Total Production Cost per disc: $6.20

Distribution fee: $2.00

Record Label expected Profit Margin: $2.00

Cost to Tower and Other Retailers: $10.20

Expected Retail: Around $14.00

I provide these to show how much each expense item is. Many people are unaware how expensive royaltees and distribution costs can be.

I would say that I would pay more for a direct product from someone like Jeff since I feel that supporting a musician I like is a good thing.

Direct sale: $14
Retailer: $12 is fair enough

Now there are exceptions of course...such as:

1. MoFi SACDs - I think its high but I gladly pay $30 per disc given the great sonics and music content I am accustomed to paying.

2. Classic Records Vinyl or DAD discs - $25+ and worth it due ot extra care label puts in and great quality work of Mike Hobson.

3. Audiophile CDs - for classical and jazz I will pay up to $16-18 per disc.

4. Super Audio discs - any titles I really like I spend around $20 on average. I have found Media Play to have the best prices here in Georgia.

Hope that helps.

Jeff, is there a web link to your album? what kind of music is it?

 

[Steve Owen]

I can't agree with this. You are saying that because people can steal your product, you should make less from it?

Who said anything about stealing?!?! There's plenty of good and legal and free music out there (Epitonic.com for example), plus the myriad of places popping up to purchase single tracks for cheap. Why should I risk putting down $14 for a whole CD when I can get the singles online for a buck each. So yes, CDs have to compete with .mp3's and it has nothing to do with theft.

If anything, mp3s have allowed me to be more selective about the music I buy... but in the end, I buy more. I'll take a chance on a less than $10 CD, but if I can't get it for that cheap, you'd better bet that I'm going to download it first to see if its worth buying (new Radiohead... VERY much worth buying!). If you consider that theft, then we're just going to have to agree to disagree.

-Steve

 

[Jeff Ulmer]

Lee, I'd prefer to keep any direct reference to my own product out of this thread, as HTF doesn't allow marketing here, which I respect.

Obviously, album budgets vary widely, from a few hundred dollars, to hundreds of thousands of dollars, which usually has some correlation to the expected market for the product, and hopefully to the sonic quality thereof (unless you run into one of those perfectionistic "I don't care what it costs" types that record companies aren't too fond of - looks in mirror).

Another cost Lee neglected to mention is advertising, which can be ridiculously expensive. I could blow Lee's album budget on a quarter page ad in a third tier magazine with no problem.

Costs aside, there is obviously a point where buying becomes attractive to the consumer, even in light of other less scrupulous options, and I would hope that the quality of the product on all levels would have some bearing on what I would expect or be willing to pay for an album.

 

[Gary->dee]

You are saying that because people can steal your product, you should make less from it? This should work the other way around. If your potential market is shrinking due to theft, the price goes up. That's the way it works in every other form of retail.

And that's why the music industry is struggling right now. MP3s shouldn't be viewed as theft, they should be seen as competition. And in response to that competition I think the music industry should lower the price of CDs to $10. That way an album looks even more attractive to the consumer. Either way people are going to burn CDs and rip songs from online, but at least there's a greater chance that people will actually buy the CDs compared to if they're still being sold from $13-20.

And as Steve pointed out, MP3s are available to legally purchase. Even major artists and labels such as Steely Dan jumped on the bandwagon recently and offered an MP3 of their song weeks before the album came out. I thought that was cool even though I didn't partake in it.

 

[MarkHastings]

I would hope that the quality of the product on all levels would have some bearing on what I would expect or be willing to pay for an album.

But unfortunately we can't "Test Drive" CD's like we can with items like cars. If I knew the quality was going to be outstanding and if I knew that I was going to like all the songs, then I'd be happy to spend $15 - $20, but (as Steve mentioned) I am not willing to spend that kind of cash on something I'm not familiar with.

Since I have no idea what kind of music you do or how popular you are, I have to assume it's not a fairly popular name..So, if your budget is so high that it requires your CD's to be over the $12 - $13 mark, then you either have to learn to budget better, cut back on the high quality until you get more of a demand for it, or live with the fact that most people don't want to invest that much money on something that is somewhat of a "gamble" to them.

 

[Brian L]

The price of something should be whatever the market will bear without resorting to price-fixing (ie, the trouble the big labels got into with anti-trust laws).

I think that pretty much says it all, right?

Each of us will have a price we are willing to pay. I typically won't go above $15 for a CD, and I am a lot happier at $10 to $12 for a mainstream title (new stuff or back-catalog properly remastered).

I will go higher for Hi-Rez (SACD and DVD-A) stuff because I feel I am getting more for my money (better sonics, surround sound, multiple formats, etc). But even then, I will not normally go above $20. My Best Buy has some DTS discs (not DVD-A, just 5.1 DTS) and they are all well over $20. Sorry, but for me thats too much, even though there are some titles I would like.

For me, the availability of MP3 (legit or otherwise) matters not. I am just not an MP3 kind or guy. I like holding those shiny discs in my hand, reading the liner notes, and looking at my CD collection. Looking it a list of titles on a hard drive just don't give me the same kick.

It does kind of kill me when I read articles about the loss of revenue that the record industry is enduring. Someone allways trots out some statistic that says its all due to the high cost of CDs, and that the average cost of a CD is $18 or $19.

Who in there right mind pays that for any mainstream garden variety CD release?

Back to your original questions, I would gladly buy directly from an artist, if the material met your criteria (music I wanted to hear, good production values, etc.). But at what price? Its that value equation that is so hard to quantify, and is different from user to user.

Back to something I said earlier about hi-rez stuff; I am really finding it hard to run down to Best Buy to grab the latest CD by artist XYZ for the simple fact that all I am getting is a 2CH Stereo mix. For about the same money, I can pick up SACD or DVD-A titles that represent better value (to me). The availability of hi-rez has devalued plain-jane CD's for me.

While those formats are not yet mainstream, as they do begin to penetrate into the average guy's HT rig, I think the result will be downward pressure on CD prices.

FWIW, I note that the new release by Metallica was less than $10 at Best Buy. Is that representative of a trend, or was the buzz so bad that they had to drop the price to assure sales? I think it may be a trend.

The last new CD I bought was the Zeppelin HTWWW CD set (OK, strictly speaking its not NEW). It was about $14, but that was 3 CD's. To me that was a good value.

BGL

 

[Lee Scoggins]

And in response to that competition I think the music industry should lower the price of CDs to $10. That way an album looks even more attractive to the consumer.

Yes, and maybe enhance the product offering by making it high resolution which also distinguishes the product further.

 

[Joseph Bolus]

These days my cutoff point on purchasing a CD is $10.00.

There *are* some exceptions, such as artists I like on the Telarc label, (mostly due to the fact that I really respect the perceived quality that I get from that label) and I'll go as high as $18 on some of those.

Now, as to MP3's: I don't mind paying around a dollar each on those (as long as DRM in some form is not attached), due to the fact that I'm getting what I want, and only what I want, and in a format that's convenient to my versatile listening needs.

With just about any CD, I'm usually lucky to find more than five songs that I really like; so, if I'm paying ten dollars for that vs. five dollars for just those same five songs in MP3 format, then I'm already five dollars behind the current "going rate" from my perspective. Now, in some cases, it's worth it to me to get those same five songs on the CD for double the price due to the higher quality, (thus the willingness to pay extra for Telarc discs), but usually not. (Of course, in many cases right now the songs may not be legally available for purchase in the MP3 format, so that might also influence me to purchase the CD, but I'm thinking that in the very near future that will no longer be the case.)

Anyway, that's my current thinking on the issue.

 

[Gary->dee]

I like holding those shiny discs in my hand, reading the liner notes, and looking at my CD collection.

I totally agree. I mentioned in another thread that I recently downloaded 5 entire Pink Floyd albums(Piper, Saucer, More, Obscured, and Final Cut). I hadn't heard those specific albums and once I started listening to them I knew I had to have them. So I went into Ciruit City and Best Buy and bought 3 of those albums because I wanted everything that goes along with the CDs and not just the music. I plan on buying the last 2 albums I downloaded as well because again, I want that extra material and I feel these albums deserve nothing less than the factory packaging. Definitely not some home burned CD with a marker label.

 

[David Lawson]

I've gotten to the point where I have a difficult time paying over $10 per CD unless it's either SACD or something I'm really looking forward to (such as the Uncle Tupelo remasters and the forthcoming Guster album).

I used to be an impulse buyer at concerts until the artists started charging more than B&M stores. There's no way I'll purchase a CD at a concert for $15. Jack up the T-shirt prices instead. :rolleyes

As far as "new music" is concerned, eMusic and an MP3 deck in the car have gone a long way towards destroying my need for a physical disc. It's almost disposable now; I'll burn 12-15 albums onto an MP3 CD and listen to everything a few times. If I don't like it, I delete it. If I like it, I keep it, and stream it to my home system or burn it to an audio CD. If I really like it, I'll purchase the CD to have an uncompressed copy. Everything but the CD purchase (of course) is covered under eMusic's $10/month plan.

$13 for a CD? It had better be something special, Jeff.

 

[Jeff Ulmer]

MP3s shouldn't be viewed as theft, they should be seen as competition.

I fail to see how illegally distributed material should be viewed as competition. Legal downloads are one thing, but the majority of mp3s on the net were not legally licensed. However, let's not get off on that tangent.

I would agree that the cost of production isn't really an issue with the consumer, except when they get a disc that has either too few tracks to seem appealing for purchase, or that the recording is of inferior quality. I hear talk of added value, but that really equates to increased production cost, such as hi res, multichannel mixes, making releasing these product that much less viable.

 

[LanceJ]

While in the past I have said it would be nice to see CD's regularly priced at $10, I knew in my gut that even non-greedy labels could probably never manage this.

MP3 is CD's competition? Yes. Is it an equal competition? Absolutely not. For an MP3--even from Applemusic.com--there is no "production" of any kind: that MP3 song is simply a binary file spinning around a big ol' hard disc. To deliver it to the customer requires no packaging; no physical handling (i.e. a paid human stock person); & a big hidden fee, no expensive shipping costs. A compact disc can't possibly compete with such a business model. And that's the LEGAL model! And most MP3s sound crappy on a real stereo system so while they are cheap you are losing quality in the process, so for me CDs are the better choice.

See I don't think any of that pertains to me as a consumer. Trying to compete with the major labels, amount of revenue, units sold, advertising, radio saturation etc. You're thinking about it from the artist/distributor's point of view because that's your playing field. When contemplating whether to buy an album I don't factor in what the struggle was to make an album, what the costs incurred were, and how independent the artist is so I have an estimate as to the percentage that artist keeps.

Sorry if I sound like a smart ass but I think people DO need to think of the artist's point of view when purchasing music, especially the independents. How come so many people think they are entitled to free and/or obscenely cheap products these days???

I do think some kind of sampling service, using very lo-rez RealAudio or WMP files, of entire songs would help a lot as far as checking out new music (EDIT: ESL Music still does this). Someone wrote here recently that if he bought a receiver & he realized after using it that it was a lousy product, he would fully expect to be able to return it--a good argument......but only to certain point. How many people blindly buy something without turning some knobs or at least asking for other's opinions? So what I'm saying is if I was the seller & that person is returning something he had better really, really hate it because life isn't always 100% fair, especially if they did no research beforehand. What about the producer of that product? Or the retailer? How about a thought for their existence? Anyway, you have to take some chances sometimes.

My top limit for a CD or hi-rez disc is $20. And if it is really rare, then around $25. People forget that these things don't wear out like tape or vinyl does, so repeat business is almost zero I'll bet. Product pricing--especially when dealing with artistic property--is definitely a grey area thing but that's what my gut tells me is fair.

LJ

 

[Jeff Ulmer]

I think one key to my question is the assumption that you are buying something you will like, and also with the idea that you've either heard it before, have samples available to judge from in some form, or have some pretty convincing reviews or recommendations to go by, or a combination of the above. If I really like something and have to have it, there is pretty much no limit to what I'd pay to own it.

As for the $10 mark, that would be a nice target to be able to hit as a seller, but in order to do that I would need to know that my sales volume would warrant the decreased margin. I wouldn't have a problem selling at that level if my business could remain viable while doing so.