Two Tiered Future of CDs?

Discussion in 'Archived Threads 2001-2004' started by Lee Scoggins, Aug 27, 2002.

  1. Lee Scoggins

    Lee Scoggins Producer

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    Friends,

    I have been thinking about the popularity of the Stones SACDs and the generally aweful music retailing situation as discussed in the Wall Street Journal today.

    Some food for thought:

    I wonder if we might see soon a two-tiered approach to the market:

    Tier 1 - High Resolution Audio (no need to debate which or if both) that people purchase to listen to their favorite bands in greater sonic detail. Premium is paid for high quality graphics, jewel cases, DSD or PCM recording, etc. Copyright protection cuts down on pirating, but likely does not eliminate it. Digital outs eliminated from CD players. In essence, one pays to have own copies of music but is rewarded by great quality with bulk of CDs now in "hybrid" format. Money drives more classic titles into campaigns similar to Rolling Stones remasters. High rez players drop dramatically in cost as decoding chips hit high volume plane. User can copy music but only in analog output form.

    Tier 2 - Downloadable MP3 type music, offered on websites by labels for small per song charge, or free for a couple of "teaser tracks" from record label. Sharing is encouraged as way to rebuild label goodwill, but quality is limited by low-rez nature although perhaps with better compression scheme. Labels use tracks as loss leader to create interest in the premium-priced (but reasonable) high rez album verions.

    Do you share my view of one possible audio future?

    Why or why not?
     
  2. KeithH

    KeithH Lead Actor

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    Lee, there are two key issues that a format switch will not address. One is the paucity of quality new music coming from the major record labels. The record labels don't want to face the (bad) music, but they must. Lagging music sales are in part due to the record labels putting out bad products.

    The second issue is the high price of music (CDs). A premium-priced format or two such formats is not the answer, even if it/they offer higher resolution than CDs or MP3s. The record labels want everyone to believe that the proliferation of the MP3 is hurting album sales. Well, high prices of CDs are, in part, driving more and more people to download and copy MP3s. This is a subject that I don't want to dwell on here further.
     
  3. Micahel C

    Micahel C Stunt Coordinator

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    Lee, I really don't see hybrid cd's becoming standard in the foreseeable future. Not because of retail pricing, but due to the fact that all of the record labels have been paying royalties to Sony & Philips since the advent of the cd. Patent rights for the cd format have now expired, so all record labels are now able to issue redbook cd's without royality fees. While many may issue sacd's or dvd-a's as an addition to their normal releases, going to a hybrid disc for the bulk of their sales would mean going right back to paying royalties again. I just don't see that happening any time soon.
     
  4. Lee Scoggins

    Lee Scoggins Producer

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  5. Jagan Seshadri

    Jagan Seshadri Supporting Actor

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    I'm curious, do DVD-Audio discs command royalties from record companies? If so, who gets the gold?

    -JNS
     
  6. Mike Broadman

    Mike Broadman Producer

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  7. Lee Scoggins

    Lee Scoggins Producer

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  8. Jeff Ulmer

    Jeff Ulmer Producer

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  9. Lee Scoggins

    Lee Scoggins Producer

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    Jeff,
    Check in the aisles under The Rolling Stones [​IMG]
     
  10. Thomas Newton

    Thomas Newton Screenwriter

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  11. Rachael B

    Rachael B Producer

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    Jeff makes a good point about marketing. It used to be that whatever got airplay sold. That's over, apparently. First, much of the music they're pushing is so bad that no matter how much it's played people won't buy it. Secondly, the younger set wants downloads. They are very cool on even buying CD's. They might warm up if CD's went way down in price but maybe not.
    The labels have no viable business model until they sell downloads with no strings attached. I believe that's the only way they can get the all-important youth market back. Physical media might gradually become an audiophile only market?
    I saw an article somewhere that suggested that by and largely that the labels only prime market left is lower socio-economic folks without computers. They can only get music via physical media, but they can't afford much.
    The big five have made every mistake possible bullying the market. And, then there's the prices....![​IMG] I believe "payola radio" is obsolete too. I haven't listened to anything but the University of Tennessee's 2 stations (New Rock 90.3 & 91.9 classical & jazz) in ten years. There's a growing disdain for payola radio with it's limited playlist and horrendous commercials.
    The music industry's future is bleak, the big five's anyway. They have no viable business model just decaying markets based on gouge prices to maintain earnings. That's about the limit of my brain's power to reason this night. Anyway, my brain is more intrested in HOT ROCKS at the moment. [​IMG] The labels wish that audio-vidiots like me were a dime-a-dozen but they're not. Bullying the market won't make it so either.
     
  12. Lee Scoggins

    Lee Scoggins Producer

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  13. Mike Broadman

    Mike Broadman Producer

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    Lee, now you're talking. That's a more accurate description of what the problem is. I don't think high-res will come into play. It's all about the business model.

    NP: Miles Davis, We Want Miles
     
  14. Jeff Ulmer

    Jeff Ulmer Producer

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  15. Lee Scoggins

    Lee Scoggins Producer

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  16. Rachael B

    Rachael B Producer

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    Lee, there are plenty of intresting musicans on College Radio. I never find out who all of them are because of the industry's failure to implement the RADIO DATA SERVICE and poor anouncing. There are more intresting musicans than ever, but the vast majority are ignored by the majors. If somebody doesn't fit in their little stereotypes (formats), they're right out. If you want these obscure artist's albums, you can't necessarily get them.

    People want downloads and internet radio as means to discover lesser known music and the major put up every roadblock possible. They've made their bed! Best wishes!
     
  17. Lee Scoggins

    Lee Scoggins Producer

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  18. Jeff Ulmer

    Jeff Ulmer Producer

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  19. Lee Scoggins

    Lee Scoggins Producer

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    Jeff,
    I am not sure about this. If the majors don't start developing good talent, how are we going to hear a better selection of music?
    I guess that I may be suggesting that there be smaller contracts with higher quality artists, rather than this "top heavy" pyramid of just a handful of over-exposed artists who receive a vast proportion of the label development dollars. In other words flatten the pyramid as much as possible to allow easier moves up and faster moves down the pecking order. There will, of course, always be superstars that are very well paid, but more diversity would result from a flatter artist structure and damn do we need more diversity!
    If you take what you said to the extreme, we would have a world of mostly indie artists which is not bad from a content standpoint but I think distribution would be very limited and local in nature. And there would be far less economic incentive to be a musician.
    [​IMG]
     
  20. Jeff Ulmer

    Jeff Ulmer Producer

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    I think we already have enough diversity, what we don't have is a business model where independent acts can get better distribution. It would be nice to think the majors would be willing to foster develoing artists, but let's face it, that is not what they are good at, at least not any more. Now, the majors are the powerhouse behind one hit wonders, good at the glitz and the gloss, but not for making sure talented individuals get the exposure they deserve. Hell, these days, the majors spend more money making mini movies than records.

    Realistically, there has never been a sound financial incentive to be a musician, other than the myth that selling a million records will make you rich - it doesn't, it makes the record company rich. Properly approached, an artist can make MORE money selling independently than they can on a major, since they are taking a larger share of every record sold.

    For the sake of argument, let's assume that the same artist is selling parallel albums both independently (ie direct) and via a major. The net price is $10 (after cost of production to keep the math simple). Chances are the artist makes $1 per CD on a major label (I'm being generous, since unless the artist has some business savvy, they are getting paid a percentage of wholesale, not retail), while they would make $10 per CD direct. It takes a whole lot fewer sales to make the same net income as an independent. However - and it's a big however - as an indie, the artist has to foot all the costs of making the CD up front, then has to finance that until the CD sales recoup the investment (if they ever do).

    Advances aside, the chances of the artist ever seeing an additional dime from all those CD sales on the major are slim to none (expenses, deferrals, hold backs...). I recall a conversation with a certian lead singer of a very popular 1970s band, where nearly 10 years after releasing their previous LP, their label still owed them somewhere in the neighborhood of $32 million in unpaid royalties, which they were holding as leverage against a new album, but I digress...

    Of course, without a decent promotional campaign, the indie isn't going to see a dime either. However, this is where the internet could be of use, assuming people didn't feel it was their right to just take whatever they want from the artist without compensation. Since you can reach a global market on the net, your distribution potential is unlimited, either selling direct to fans, or to disributors in different markets.

    You likely aren't going to move the same number of discs you could through a major, but you don't need to make equivalent income. If the busines model were to move in a direction where it became the norm to buy directly from the producer, the industry would thrive with fresh talent, who aren't being coerced into homogenising their music on the whims of some guy on the 14th floor of a Manhatten office complex, and the playing field would level, since delivering the goods means putting up a website, licking some stamps and paying a visit to the post office.
     

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