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Music sharing doesn't kill CD sales, study says


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#1 of 39 Marc Colella

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Posted March 30 2004 - 12:19 AM

http://news.com.com/....l?tag=nefd_top

Not surprising as many of us have been saying the same thing from the beginning.

I'm sure the RIAA will disagree and will try and counter with their own study, which I'm sure won't be biased in any way Posted Image

#2 of 39 Garrett Lundy

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Posted March 30 2004 - 12:42 AM

Sometimes I download songs just to piss the RIAA off. Posted Image

Or even better, borrow my friends physical CD and rip all the songs to AAC for iPod use.


$17.99 an album my ass.Posted Image
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#3 of 39 Brian Perry

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Posted March 30 2004 - 12:56 AM

I think the study is BS. (However, I don't think downloading is the sole or even primary cause of the record industry's malaise.)

Quote:
Even in the most pessimistic version of their model, they found that it would take about 5,000 downloads to displace sales of just one physical CD

Yeah, sure.

#4 of 39 Lee Scoggins

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Posted March 30 2004 - 01:19 AM

There was another factor in declining CD sales a lot of people have missed-there are fewer albums being released!

Wired magazine had a great graph on this a few issues back and I think I posted the raw data in another thread.

It's easier to blame downloading for the executives than their own failing business model.

What other industry sues its customers? Posted Image
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#5 of 39 Michael St. Clair

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Posted March 30 2004 - 02:04 AM

Even if the MP3 services like iTunes become the norm, music sales are not going back to what they used to be.

The paradigm has shifted, and pop buyers can buy the 3 or 4 songs that they really want. They used to be forced to buy an album that had a bunch of extra songs they didn't really want in order to get the 3 or 4 that they desired.

$4 for the 4 songs you want, or $16 for 12 songs?

While not all pop buyers are of this mentality, I believe there are enough to take a substantial chunk out of the bottom line.

#6 of 39 Marc Colella

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Posted March 30 2004 - 02:25 AM

Quote:
"While downloads occur on a vast scale, most users are likely individuals who would not have bought the album even in the absence of file sharing."


I agree with this statement.

I know quite a few people who download MP3s, and none of them purchased CDs for years before they began filesharing.

While the study isn't definitive, I believe the RIAA needs to get a grip and realize that filesharing has a small factor in the decline of music sales.

I've got some old Stereophile magazines dated back from '96 and '97 which had articles about the concern of the considerable decline of music sales. Filesharing wasn't popular until '99, and obviously wasn't a factor then.

Time for the RIAA to look from within for a solution.

#7 of 39 LanceJ

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Posted March 30 2004 - 06:00 AM

I was at a locally-owned budget music store last night & they had an eight foot wide section of CD singles (a lot more than my local Best Buy). What a good selection, I thought to myself.....until I looked at the prices: six to eight dollars apiece. Am I being cheap or does that seem ridiculously high? There would have to be one heck of a good song on there for me to buy one of those. No wonder these things (probably) haven't helped reduce single-song downloads.

And what happened to those 3" CDs that were supposed to be the replacement for the 45rpm single?

LJ

#8 of 39 Thomas Newton

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Posted March 30 2004 - 06:27 AM

Quote:
The paradigm has shifted, and pop buyers can buy the 3 or 4 songs that they really want. They used to be forced to buy an album that had a bunch of extra songs they didn't really want in order to get the 3 or 4 that they desired.

$4 for the 4 songs you want, or $16 for 12 songs?

Well, there are several ways to increase value ("lower price per good song"). Here are a few that come to mind:

You can drop retail prices on CDs. There's an awful lot of difference between manufacturing cost and retail cost there. However, a CD occupies the same amount of shelf space regardless of price; if (turnover * retail_margin) isn't good enough, a store won't stock CDs.

You can keep the per-song price high, but sell music in smaller units. This is the iTunes Music Store (or "convenience store") approach. "Pay ONLY for what you want, because it's too expensive to spend any money on duds."

You can drop the per-song price by an order of magnitude (7-10x) and make up for it by selling music in much larger packages and higher volumes. Since the music industry has studiously ignored this option, let us call it by its real-world analogy: the Sam's Club ("wholesale club") approach. A DVD-ROM disc full of uncompressed CD-quality .WAVs is an example of a carrier that would make this possible. If you pay $4 extra (total: $18) for a 10-album DVD, and half the songs are garbage, you are still only paying $3.60 per "good" album.

#9 of 39 John Berggren

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Posted March 30 2004 - 06:31 AM

Quote:
And what happened to those 3" CDs that were supposed to be the replacement for the 45rpm single?

They aren't really cheaper to produce (you can make a 5" for pennies) and are a pain in the ass for users.

Try putting a 3" in your car dash.
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#10 of 39 Brian Perry

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Posted March 30 2004 - 06:40 AM

Quote:
I know quite a few people who download MP3s, and none of them purchased CDs for years before they began filesharing.

Are they young people who haven't bought much of anything yet? I know very few adults who have not purchased CDs, albums, or tapes at least occasionally.

Plus, the implication is that your friends do actually listen to music, just not from CDs they purchased themselves. But even if they were boycotting CDs on principle, does it justify the downloading? If you acquire something illegally, you can't justify it by saying it wasn't something you wouldn't have bought anyway.

Now whether someone would have bought one song instead of being forced to buy an entire album is another story, as Michael said. I think that is what future studies need to look at.

As I think about this issue more, I think a good analogy is cable TV or satellite TV. Right now, I am "forced" to pay for a hundred stations I don't want. I would love to pay $10 a month and only get the stations I want a-la-carte, but that option is not available. I could protest by cancelling my service and getting a pirate card, but that would morally be no different than downloading just the songs I want from an album I don't want to pay for.

#11 of 39 Thomas Newton

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Posted March 30 2004 - 06:49 AM

Quote:
And what happened to those 3" CDs that were supposed to be the replacement for the 45rpm single?

I heard that the retail stores didn't like them -- too easy to shoplift.

You can buy 3" CD-Rs ... they're just the right size and capacity for including a "roll" of digital photos in a letter or card. There are even 3" DVD-Rs -- but the ones I saw were something like $8/each.

Quote:
Try putting a 3" in your car dash.

Depends on the CD player. I know that at least some slot-loading iMac G3s officially supported standard (round) 3" CDs.

There are mini-CDs out there that have non-standard shapes (business card, or worse yet, shapes with all sorts of sharp pointy edges). Those CDs should never go into slot-loading drives.

#12 of 39 LanceJ

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Posted March 30 2004 - 08:27 AM

Oops--forgot about car decks & 3" discs.

Just a thought to increase a CD's value a little bit: why don't more labels use that CD text feature? I know its not a very glamorous thing but it is a nice little extra to have & seems cheap to implement. And a lot of players, especially car decks, already include the decoder for it.

Here's something funny: I was playing that RS500 sacd sampler on a Panasonic S35 dvd-player on a Bose/Harmon Kardon kiosk at Circuit City and all of a sudden on its LCD monitor the words "Bob Dylan" and "Simple Twist Of Fate" appeared!

LJ

#13 of 39 Marc Colella

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Posted March 30 2004 - 08:44 AM

Quote:
Are they young people who haven't bought much of anything yet? I know very few adults who have not purchased CDs, albums, or tapes at least occasionally.

Plus, the implication is that your friends do actually listen to music, just not from CDs they purchased themselves. But even if they were boycotting CDs on principle, does it justify the downloading? If you acquire something illegally, you can't justify it by saying it wasn't something you wouldn't have bought anyway.


Most of them are in their late 20's to late 30's.

I'm not trying to justify what they're doing, because it is stealing. I'm just saying that the RIAA shouldn't be looking at it as "lost revenue" due to filesharing - since it wasn't going to be revenue in the first place.
The RIAA needs to halt the massive slide of music sales, and they're barking up the wrong tree. The more time/money/energy they spend barking up the wrong tree - the worse it gets for them.

I can't help but sit back and laugh at their stupidity and greed.

#14 of 39 Lee Scoggins

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Posted March 30 2004 - 09:55 AM

As background info for people, on a major release the all-in cost of CD production per disc is often between $0.50 to $1.00. The rest is artist royalty and label profits.

Expect a bit more for audiophile, jazz and classical releases due to lower volumes.

My point is that there is lots of room for improved pricing. Posted Image
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#15 of 39 John Milton

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Posted March 30 2004 - 11:15 AM

Quote:
What other industry sues its customers?

What? How can people who illegally download music be considered customers? I'm not saying I'm against the practice. Posted Image If all new release CDs were $9.99 and catalog titles were even less, that'd be quite reasonable pricing IMO.

#16 of 39 Benjamin Ricci

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Posted March 30 2004 - 11:47 AM

As someone who works in the music industry, I'd like to help correct the mentality that "CDs only cost 5 cents to make and record companies are selling them for $18 a pop" First of all, while CD-Rs may cost you 5 cents a piece at Staples, the cost of manufacturing an album can cost tens of thousands of dollars for higher profile artists. Add to that the enourmous money spent on advertising and promotion, and the cost of producing an album is NOT 5 cents, no where near that figure most of the time. Secondly, record lables DO NOT make $18 per album. At best, they bring in about $7 per CD, and the retailers jack up the prices. Best Buy and other chains typically pay only $7 or $8 per disc. The $18 price tag you may see does not go to the record labels. I'm not defending the (sometimes ludicrous) costs put into an album, I'm just trying to get a point across.

On a side note, anyone paying $18 for a CD is a moron. I have absolutely no idea how stores who charge that much stay afloat when you can go to BB and pick up CDs for $5 less. Who's paying that much!?!?

#17 of 39 Marc Colella

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Posted March 30 2004 - 02:44 PM

Quote:
Add to that the enourmous money spent on advertising and promotion, and the cost of producing an album is NOT 5 cents, no where near that figure most of the time.

I find it funny and a helluva coincidence that advertising and promotion costs increased dramatically when CDs hit the market. Why weren't these costs applied to vinyl and cassettes?
The music industry took advantage of consumers by charging prices that weren't justified to what their costs were.

#18 of 39 LanceJ

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Posted March 30 2004 - 03:14 PM

Quote:
Why weren't these costs applied to vinyl and cassettes?


My theory on this (& sort of being a devil's advocate):

Because vinyl & cassettes eventually wear out but CDs can remain playable much longer. Hence, the music companies would receive less money over the long run--relatively speaking--since replacing them would happen less, so they thought they would lose too much money & kept CD prices high.

LJ

#19 of 39 Benjamin Ricci

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Posted March 30 2004 - 03:17 PM

I find it funny and a helluva coincidence that advertising and promotion costs increased dramatically when CDs hit the market. Why weren't these costs applied to vinyl and cassettes?
The music industry took advantage of consumers by charging prices that weren't justified to what their costs were.


The increase in promotion costs didn't coincide with the release of the CD, they rose exponantially as a result of the rise of MTV and a much more image obsessed public. And again, if you take into acount the costs of producing the average major label album, along with the fact that CD prices have not risen all that much in the past 20 years, and I think you'll see that $12 per CD (at a good retailer)is hardly un-justified.

What IS unjustified is folks who steal, yes STEAL, music using the excuse that CD prices are too high as a way of making it "OK" to STEAL music. No matter what your opinion is on the price of CDs, there is no justification for theft.

#20 of 39 RobertW

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Posted March 30 2004 - 03:21 PM

no, it's not 5 cents, but you're also not spreading the costs to produce that album out over the number of units pressed and sold.

everything from studio time, to artist's advance, even those very same advertising and marketing costs, as well as the pressing and packaging costs of the discs are often charged back to the artist. let's just say it costs maybe $200,000 out of pocket label expenses, money they can't recoup from the artists via royalties. it's probably even less than that. if the album sells 200,000 copies, we're talking about $1/copy. at $7/album of record company take, they only need to sell about 28,500 copies to break even.

not to mention, all these costs are offset by the multi-platinum mega smashes that sell 10 million copies. now we're really talking cheap, .02 cents/disc. if they are getting $7/disc, they've just made $70,000,000 minus their initial $200,000 investment, for a grand total of $68.8 million. not a bad payoff for one album. meanwhile the band is paying off their $2 million advance, their $300,000 recording budget, the multimillion dollar ad campaign, and the production and packaging costs from their $1(maybe?)/copy contract. which means after selling 10 million copies, they could still possibly be in the red to the record company.

now very few albums sell 10 million copies. but all it takes is one mega seller to offset many hundreds of releases that barely, or even fail to, break even.


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