Why DVDs are thriving while CDs tank (1 Viewer)

[Jeff Ulmer]

The problem with singles on CD and retail is that they take up the same amount of space as a regular CD which a store gets more profit from. Also, they are additional inventory that has to be projected for.

Also, from a replication standpoint, it costs the same to produce a disc with one song on as it does a whole album, so the economic benefit of singles is lessened.

As for any so called tax for the RIAA - the artists who are being ripped off will never see a dime of that money. That is another industry scam.

 

[Damin J Toell]

By the way, if people indeed paid a "copying" fee for blank media, then using it for such a purpose would most certainly not be piracy.

The price you pay for items at a supermarket also factors in the cost of shoplifters. Does that make it OK to steal?

DJ

 

[MichaelAW]

I'm curious about buying used CDs. I remember about ten years ago Garth Brooks tried to stop the process, because artists weren't getting royalties from second-hand sales. And then, well, nothing happened.

I bought a used CD the other day: White Lillies Island by Natalie Imbruglia. Rather than pay about $20 (including tax here) for it new, I paid about $5, of which 100% of that money went into the pocket of the store owner. Not a single dime (or kronor, the local currency) went to pay for royalties.

And, to add insult to injury for the record label, the CD I bought appears to have been a promo version, meaning that there was no "original sale" on it for the label to make money on. (Of course, the fact that promo CDs aren't allowed to be sold isn't really enforced: about half of my used-CD-store bought CDs are promo versions.)

So, my question to those who vigorously defend artist royalties (as small as they are) is: How is that any different than just downloading the album?

 

[Damin J Toell]

So, my question to those who vigorously defend artist royalties (as small as they are) is: How is that any different than just downloading the album?

Sell a used CD: one person ends up with the CD.
Rip a CD and make it available online: millions of people can end up with the CD.

DJ

 

[Wayne Bundrick]

I'm curious about buying used CDs. I remember about ten years ago Garth Brooks tried to stop the process, because artists weren't getting royalties from second-hand sales. And then, well, nothing happened.

There was a quick but intense flare-up of backlash negative publicity for Garth and so he backed down.

He hasn't tried it again, so perhaps someone showed him 17 USC 109, the section of copyright law which says that the copyright holder is entitled to diddly squat once an authorized copy is sold. Also known as the "first sale doctrine". Selling (and buying) used CDs is absolutely 100% legal. You don't need the copyright holder's permission and you sure as hell don't owe him a royalty. He got paid when it was sold the first time.

The music industry would jeopardize its position with respect to antitrust allegations if they were to refuse to distribute new CDs to stores that sell used CDs.

 

[Mark Cappelletty]

I heard from my friend at Rhino that a supposed tax or penalty fee has been proposed to be levied against stores that sell used CDs, but I'm guessing that stands the proverbial snowball's chance in hell of being passed. Then again, I live in California...

 

[Keith Paynter]

Oh, there is a tax alright (at least in Canada).

It was legislated by the Canadian government to take effect Jan. 01, 2000. I work in retail and remember this very clearly.

The only reason CD-R's are so cheap is because there are so many of them manufactured now. Several years ago a single CD-R cost about $5-8 each, and if you wanted to buy a CDRW that was 80 minutes long, you would expect to pay up to $80 apiece because very few companies were making 80 minute CD-r's, let alone CD-RW's of the same length. Only a handlful of name brand manufacturers we making them (TDK, Maxell, etc.), but now you could buy blank packs from somebody with a name like GYKHUHJST and have no idea who they really are and what their quality is like, and you can buy spindles of 100 for between $40-60. That's why you don't notice the levy.

 

[Jeff Kleist]

The problem with singles on CD and retail is that they take up the same amount of space as a regular CD which a store gets more profit from

That's because they're using 5cm discs for 3 songs and full size jewel cases. In Japan they use the 3cm discs for virutally all singles, and they come in cases only a little wider than a credit card. Since 3cm discs are now "cool" in the US (note the 3cm CDRs!) they can start selling singles that way.

 

[DeathStar1]

>>Give up on pop idols >>
How about give up on Teen Bands like N Sync, who, once their fan base grows up, will be long forgotten. You don't have bands like the Beach Boys anymore, who last more than a few years in terms of song popularity.
As far as CD's go, myself, I have about 100 or so DVD's since 1997, and about 30 or so CD's. That gives you an idea of what I like better . I guess I'm not that much of a music fan, since I usually only hear what sounds like love songs on the radio, and I like something with a good beat, like Disco, or some old Dance song on CBS FM. Not your typical Twenty Something here ..
Anyway, here's my idea. Offer a music CD creation service. The Customer has thousands of songs to choose from, they pick their favorites, the company gives them a burned CD with their choices, and a customizable cover to go with it, and boom, instant customer satisfaction. Make it, say, $5's per song..

 

[Joe McKeown]

In my entire collection of CD's roughly 80% have songs I hate enough to skip over every time thy come on. Less than 10% have songs I REALLY like all the way through.

Regardless of Napster or other sharing technology, the record industry needs to get a grip on the fact that people hate buying songs they don't like.

My music collection would expand greatly if the record industry would give me a cost-effective way of buying the songs I want and not the ones I don't

Home-made compilations are the future. While no one says they HAVE to cater to their Customer's listening habits, basic Marketing says they should.

 

[Brian Bunn]

Jeff Ulmer brought up a very valid point that I was going to touch on before reading his post. There is a big difference in the DVD and CD formats that are in favor of the CD: CD's have a much greater replay value than do DVD's. And don't discount the "cool factor" of the DVD that Jeff mentions. DVD is just now taking off with the general public, with players priced so cheap and the software very reasonable. But this cool factor WILL die down. I know when I first got into DVD I was buying up DVD's left and right. I couldn't get enough. Even of movies I didn't really want to watch more than once. But now I buy very few DVD's and have sold off most of the ones I bought over the last few years. I only kept those movies I know I will watch numerous times, which are very few. I mostly rent now. Mostly I buy music DVD's and Box Sets of TV shows I enjoy like The X Files and STTNG. So my initial great thirst for DVD's after I bought a player wore off to a very great degree, and fairly quickly. Same thing happened with a friend of mine...he was all into it the first few months after getting a player, buying tons of DVD's, getting into Columbia House DVD club numerous times. He even tried to get me into the club so he could get a free DVD! I didn't because there was just nothing I wanted and I had been through the frantic DVD buying stage. I told him it would wear off for him soon too. And sure enough it did.

But music CD's don't share this with DVD's. People play CD's much more than once or twice. So they DO have a better value than DVD in that respect. The "replayability" factor is heavily on the side of the CD in my view. They have that going for them. So one can't say that the CD is not a value for the money medium. Not to say that prices are not too high...for the most part they are. You can even make the argument that the DVD is NOT a value for the money medium when all this is considered. So...the cool/new factor is probably what is driving the DVD to the heights it is seeing today. I have little question about that.

But what about CD's? Why aren't they selling? Well, the major record companies are most concerned with their biggest CD buying group, of course. (Or should I say what WAS their biggest CD buying group. That market segment seems to be rapidly drying up.) And what is this group? Teenagers and those in their early twenties...16-25 year olds. The very ones that are burning them at the stake, so to speak. They are the very group that is mostly into downloading MP3's off the internet for free. An album they are pushing onto this group may contain one or two songs that they like. Why buy the CD for just one or two songs when they can get it for free on the internet? So...record companies push stuff like Eminem, NSYNC and Britney onto this group, they hear it on MTV and download the one or two songs they like for free online. It is VERY prevalent among the very group that they are targeting to purchase their product. Don't think it is only a small percentage of this group doing it. The ones that aren't doing it get it from friends that are. Do not discount this phenomenon. It is obviously hurting CD sales.

All that being said, I am a big fan of "the album". I guess it is a product of growing up in the 70's. Even on the major record labels back then it seemed many more musical acts were putting out an albums worth of great music. Today it seems very few acts on the major labels are doing this. Major labels are pushing these overall low-talent acts onto its most dominant CD buying market group and basically they are just bringing it to their attention and they run off and get it free online. I think that sums up the situation fairly well.

I love music and have NO problem at all finding great albums being put out even today, mostly on indie record labels. There is SO much stuff I want to get it is ridiculous! You just have to search around the interent, subscribe to good magazines that review CD's of the type of music you like that include releases from the indie labels. I buy TONS of CD's...getting good deals online at sites like Ebay, Half.com or direct from the artists' website.

If record companies were smart they may want to shift their marketing strategy away from the very group that is "burning" them (pardon the pun) and tap into this older, good-music thirsty group. There are a ton of great bands/musical acts out there just screaming for an audience...in all genres...putting out very good stuff...entire albums worth of stuff. I am not sure how they should go about trying to tap into this segment, but I believe it is there...just waiting for good quality stuff they can sink their teeth into. Especially after the initial DVD buying frenzy begins to die down.

Me? I am a very happy CD buying fool! I have so much stuff to listen to I barely have time to listen to it all. And there is tons more I want to get. Surely I am not alone and there IS a large market that major record labels are not tapping into. The Indies have stolen their thunder and are beating the majors to this market. Which is just fine with me. Just as long as it is out there for me to snatch up.

 

[Wayne Bundrick]

Anyway, here's my idea. Offer a music CD creation service. The Customer has thousands of songs to choose from, they pick their favorites, the company gives them a burned CD with their choices, and a customizable cover to go with it, and boom, instant customer satisfaction. Make it, say, $5's per song..

I thought I read somehwere that this is something they are trying. A CD-burning kiosk in the music store with hundreds of thousands of songs to choose from. But did you say $5 per song? No sale! Make it $1 (or less) per song, plus not more than $2 for the cost of the disc and fixed overhead. $12 for a disc with 10 good songs ("good" by your own definition and nobody else's) is a great deal compared to $18 for a disc with one song you consider good and the rest is absolute crap.

But considering how little it would cost to distribute new music into these kiosks (a download unicast over satellite IP in the middle of the night), perhaps $1 per song is too much.

 

[Joseph Bolus]

I thought I read somewhere that this is something they are trying. A CD-burning kiosk in the music store with hundreds of thousands of songs to choose from. But did you say $5 per song? No sale!

I've read about this as well. The price I heard was $4.50/song; but I agree that this is too expensive.

$2.75/song seems about right; and they could impose an 8 song minimum. Since these would be recorded on the disc at very high bit rates and would be comprised solely of favorite songs of the purchaser, something like this could really take off.

But I agree that a charge of $4.50-$5.00 per song will crush this idea in its infancy.

 

[James Reader]

The amount of 'replayability' doesn't enter the equation when discussing the value of DVDs and CDs.

See the credits at the end of a movie, see how many people have worked on creating the product you can buy for less than $20. They all want paying - before the movie can make profit.

Now read the credits on the back cover of a CD insert. There's like what, 1/20th the people involved in the creation of an average CD than the creation of an average movie. And yet they still cost more than a DVD movie!

Plus films have to pay to license the music appearing in the film (which is also available to buy FOR MORE MONEY on the soundtrack CD!)

It quite clearly is madness, and most people refuse to pay to subsidize madness!

 

[Steve_Ch]

Many good points, but one thing that haven't been touched on yet is demographics. I beleive the "golden" years of buying music is from early/mid teens to may be the mid 20s. For some of the older folks here, just ask yourself at what age when you start to loss touch of the latest pop charts. Personaly, aging and the rising price combine just stopped me from going to record store altogether. And once that habit is broken, the industry lost me as a customer forever. With the rise of internet and MP3, I actually brought some newer music, but that all but stopped when the hype died down.
With movies and DVDs, it had us (the boomer generation) behind them, as we are all getting older and have been trained since childhood to become coach potatoes (we are really the first TV generation). Withotu any price "fixing" on DVD certainly has helped too.

 

[Jeff Ulmer]

James, you are overlooking the fact that DVDs are a secondary market for films - the primary still being the theater. A film looks to recoup its costs in a matter of weeks at the boxoffice, home video is the gravy, though it does push some films into a profit that were otherwise unsuccessful.

The CD does not have another outlet to recoup its investment, such as a pay per listen model like the theater.

The worth of an item depends on its preceived value to whoever uses it. If an $18 CD nets you several hundred hours of entertainment, while a $15 DVD nets you 4 or 5, which is the better value?

DVDs will wane in sales as the novelty wears off. I doubt CD sales are "tanking" but I'll bet the growth rate has stagnated.

 

[Dome Vongvises]

The CD does not have another outlet to recoup its investment, such as a pay per listen model like the theater.

That's why I think bands and/or record companies should do some "reverse engineering" here: earn your money through live music.

 

[Tom Ryan]

What I'm curious about is the licensing of music when you purchase a cd. Technically, you're paying for the right to listen to that music, you're not actually "buying" the music, right? So if you lose your cd, you can get the mp3s off the internet and just burn a new one, and that isn't piracy, is it? I did that with a U2 cd that my roommate lost, and it was really nice to get that cd back.

 

[James Reader]

James, you are overlooking the fact that DVDs are a secondary market for films - the primary still being the theater. A film looks to recoup its costs in a matter of weeks at the boxoffice, home video is the gravy, though it does push some films into a profit that were otherwise unsuccessful.

I don't think this is quite true.

1) I really can't cost that much (relatively) to record tracks for a CD. It should be possible to cover the costs of the recording session quite easily. Music video's on the other hand can cost a lot of money... but these are promotions and should not be included in the costings.

2) Pop also has other methods of generating income. Every time a song is played on the radio, in a shop or on a tv program or film the artist and record company get paid.

3) Live tours can also bring in a lot of money, not only through ticket sales, but selling licensed products as well.

What's happened with the music industry (IMHO) is that the executives have forgotten what music is. If they are complaining about low sales, then get out and promote the music. Go and book the talent in live concerts. It doesn't matter where... do it in a field if need be, but get them out there to connect with the public. Don't just stick them in another expensive video which everyone will forget in a few weeks. Let the public actually 'experience' the music.

Over in the UK - and I suppose it's the same in America - we seem to see singers on TV doing just about anything, acting, presenting, being interviews. Anything that is apart from actually singing.

People seem to think that the only way to get a hit is to throw money down the drain promoting the talent. (Notice that they don't promote the music, but the talent.) Then when they have to charge close to $20 for a CD to offset their spending, they complain when people suddenly realize that they're being stung and refuse to jump through the record companies hoops.

 

[luke cav]

I used to download a lot of albums but have stopped and only bother with a few cool albums every few months. I still buy a lot of music on cd, but the vast majority of it is promo or advance copies. That way I have found a lot of new acts i would not have listen to or now like.