"Rosen said she expected the relative costs of delivering music online to mirror the costs of selling CDs."
May 4, 2001 3:04 PM   Subscribe

"Rosen said she expected the relative costs of delivering music online to mirror the costs of selling CDs." Please, can someone lock Hilary Rosen away right now? (The subtext: "we can't admit that we've been screwing the public with CD pricing, so they'll have to suffer if and when we deign to offer digital distribution.)
posted by holgate (15 comments total)
Rosen says "Emotionally, Napster is over. We've moved on already."

she's right. I've moved on. to gnutella.
posted by brucec at 3:08 PM on May 4, 2001

gnu-frickin-tella, baby.
posted by jpoulos at 3:22 PM on May 4, 2001

A) Does anyone think MP3s will ever truely die? I've read a couple encryption technologies (besides SDMI), like making CD burners unable to burn MP3s... or make CD tracks not able to create mp3s... But as long as people have the ability to make MP3s from CDs, can MP3 trading ever end? If they're emotionally over napster, aren't they just going to move onto Audiogalaxy? Or what about Bearshare (Gnutella), or OpenNap, or anonymous Freenet??

B) Uhm, why would you pay for mp3s if they cost the same as a CD?
posted by gramcracker at 3:29 PM on May 4, 2001

emotionally napster is over?

are they going to bring in counsellors? can i sue someone for the mental stress and emotional damage?
posted by th3ph17 at 4:44 PM on May 4, 2001

Gnutella, and record company greed aside, Rosen's talking about the total costs to record companies for distributing music, not the cost of music to the consumer (though she clearly implies that "if our costs stay high, yours should to"). The cost of printing & shipping cd's vs. the cost of server farms and software for internet distribution are probably a wash. The real cost to the record companies is paying independent promoters to get their music on the radio - paying concert promoters to get their acts on stage - paying record stores slotting fees to get their records good shelf position. The costs of marketing music won't go away just because pre-recorded cd's do. Rather than paying Tower Records to stock the music and Clear Channel to play it, they'll have to pay Amazon, Yahoo and Napster.

Musicians don't sign major label contracts to have cd's printed, they sign with major labels hoping that the record company will promote the hell out of them and get people to listen to their music. That's what record companies do. That's what musicians want them to do. It costs money. Now, what'll happen if that cost can't be recovered is...
posted by dchase at 5:29 PM on May 4, 2001

Retail Unit Price for a CD in canada: $16.99
Pressing costs: $1.75, give or take
So, we're getting screwed..

But it's more complicated then that.. It costs an insane amount of money to sell records.. Even after the insane costs of recording, mixing and mastering a commerical quality release, there is the insane cost of all the endless promo you need to do to get attention..

If it was just a question of ripping everyone off, some label would sell CDs for $13.99 and do that much less promo.. Everybody wins.. But as it turns out, that pretty much doesn't work.. Funny world..

The thing with mp3s is that well the pressing costs go to almost nothing, the promo costs are about the same.. Since the unit price has also gone to almost zero, it doesn't add up.. This is what makes the RIAA insane, and I can't really blaim them..

That said, nothing can stop it, evolve or die.
posted by Leonard at 6:46 PM on May 4, 2001

dchase it is certianly true that Tower and Clear Channel wear black hats here, along with Hillary. In fact stores are probably the biggest villian because they take half off the top and get the cash first.

But what is the basis of your statement -- costs of marketing music won't go away just because pre-recorded
cd's do --

Tower and Clear Channel exploit aggresively the physical world in which music has existed in the past. No doubt they will remain influential. If you no longer need to go to the store to buy music, Tower's power is limited. If you can be exp[osed to music on your computer, as well as your car, Clear Channel is limited. (although I realize that computers won't be in cars for a bit, and so clear channel will have an influence for a period)

Artists, record companies, fans can start websites and offer mp3's. Artists, fans and record companies could never start radio stations or record stars without tremendous costs. Yes, a website costs as we all know, but never as much as a national retail operation. If a Amazon or Yahoo tries to become the new Tower, they would face competition and thus will not be able to command the same discount. So there is a significant difference between the CD marketing costs, and those of mp3's.

Given this, we should not expect that a group of mp3 files will ever cost $16.99
posted by brucec at 6:55 PM on May 4, 2001

It costs an insane amount of money to sell records..

that may be, but most of those costs are paid by the artist.
posted by jpoulos at 7:15 PM on May 4, 2001

Paid by the artist? They're paid by everyone involved.. When all is said and done, artist gets their cut..

Maybe sometimes corperations manage money better then rock stars..
posted by Leonard at 7:23 PM on May 4, 2001

"artist gets their cut"

Ha! Sometimes it just happens to be their throat that receives the cut.
posted by websavvy at 8:21 PM on May 4, 2001

Artists "get their cut" only after being charged for recording, promotion, touring costs, etc. Sure, the labels have to eat the costs of those artists who don't sell enough records but, then, those costs are kept much lower. The label has the artist essentially sign them a blank check. A small percentage of artists make good money, while virtually all the major labels, in the end, rake it in.
posted by jpoulos at 9:05 PM on May 4, 2001

But what is the basis of your statement -- costs of marketing music won't go away just because pre-recorded cd's do --

Ahhh - note the ellipses at the end of my statement ("Now, what'll happen if that cost can't be recovered is..."). The costs of marketing music in today's world are very, very real. They will not go away if the only thing that changes is the mechanics. They definitely won't go away soon since most people (present company excepted) want to be told what to listen to. Your examples are excellent & I'd gamble that we'll see a lot of changes over time. But, unlike technology, people don't change that quickly. I have no idea how the marketing equation will change in the long-term (if I did, I'd be doing something with that knowledge rather than making statements on mefi<g>), but, right now, musicians want record companies to sell them and people want to be told what's cool to listen to. Someone's got to pay for all that effort. Historically, it's been the consumer. In the future it will be... (sorry, 'nother ellipses<g>)

When all is said and done, artist gets their cut..

In my experience, some artists get a fair cut (though not necessarily while they're alive), a few get an obscene cut and most get a little something for their effort (after expenses)
posted by dchase at 9:39 PM on May 4, 2001

gramcracker: A) I think it'll be like the story of GIFs. Unisys tried to exert too much control over their format which annoyed some so a free alternative was made. PNG has GIFs legacy to overcome but if viewers can do both it's transparent to the user and PNG will slowly become more popular.

Fraunhofer (sp?) owns mp3 and wants payment for mp3 encoders (and soon players - or is that already the case?). Projects like Ogg Vorbis have sprung up. Vorbis has better quality/per meg and has more features. When comparing tracks I find MP3 sounds duller than Vorbis (MP3 doesn't change sounds quick enough).

I remember reading somewhere that the physical CD product costs about 50c(NZ) to make while the current price is $35(NZ). Lets say MP3s cost 1c - wouldn't this mean we expect mp3 albums to cost $34.51? The product has always been so little of the price. I wouldn't expect them to end their bloated prices - it doesn't have much to do with mp3s.
posted by holloway at 10:48 PM on May 4, 2001

When we buy a CD from a store, we are paying for a small percentage of every cost effort to get that CD from the band to the store. Paying for the guys in the sound booth and all the people who wired up the recording equiptment, and the countless people in the record labels office and in the field, all the promotion and the wheeling and dealing it took to get the contracts signed and figure out whose gonna sell it where and the international distribution and all the public appearances for the band and all the roadies and other people which go along with that, and the people who put the CD package together and get it to the press and the people at the press and the people who manage all the machinery that gets the CD from the press, into the jewel case with the insert and then packaged in boxes to be shipped to the music stores. Oh, and the people who made the jewel boxes and the people who made the CD inserts. And the truck drivers who got the boxes from the press to the store.. Oh, and Hillary Rosen's shopping sprees. And all the executives and their assistants and everybody at RIAA and all the big record labels. It's a very top-heavy industry, but there's thousands of people down that line from band to consumer. A lot of middlemen. A lot of jobs. A lot of families to feed.

What the RIAA is fighting to protect is not a black hat situation from their perspective. Remember: to them WE are the enemy. By downloading mp3s and listening to our own opinions instead of mindlessly following the top 40 trends and buying what they tell us to, they believe we are stealing money from them. Money that they believe to be rightfully theirs, because they do not want to see the status quo change. However, they have failed to properly perform their service for decades. To big business it's all about the money. To the audience and to the band, it's all about the music. So as long as the industry puts money in front of music, true music lovers will simply go elsewhere.
posted by ZachsMind at 1:47 AM on May 5, 2001

I *am* a recording artist so I can clear some of this debate a little.

The pressing cost is actually one of the smallest charges in making a CD. Just because it costs $2 or whatever to press the CD doesn't mean that it costs $2 to record the album.

Albums can cost hundreds of thousands of dollars to record when you factor in the original advance payment to the band for their living expenses, all the staff, studios, equipment and so on. That's not to say there's not a lot of waste in the recording industry. A decent band could record a good album for just a few grand, so it doesn't NEED to be expensive. And as someone else here said, all the recording costs ultimately get charged back to the artists before they see a penny in royalties.

The most expensive thing of all is marketing - and you need a lot of marketing to get noticed in the music world these days. Some of these are charged back to the artist as well (50% of music video costs, often 50% of live touring costs, 50% of independent promotion to the radio stations.) But when a video can cost $70,000 and the same amount paying a Clear Channel type promoter, you get an idea of how the costs mount up.

I'm not saying it's right. What I'm saying is that is how it is. And don't think for a moment that the average band whose CD you buy is earning any more than any web designer. They're not. Few artists in the world earn more than their record company exec bosses. The Metallicas and Madonnas in the music business are few and far between.

Back to the original topic, though: if I can distribute an MP3 at no cost via Napster or for the cost of bandwidth and hosting via my own site, why on earth does Hilary Rosen think she can fool me into paying CD prices for her digital music files? It won't happen.
posted by tobyslater at 3:24 AM on May 5, 2001

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