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Free Market forces CD prices down - Adam Smith silently rejoices from the great beyond.

By Andrew Pollack on 09/04/2003 at 08:15 AM EDT

Universal Music Group lowered its prices on CD's by $3 to retailers, and suggests retailers take another $3 off as well. By putting a suggested price on the cover of the CD's, Universal is putting pressure on retail chains to make a little less per unit on these things while at the same time taking less themselves.

In practice, this brings CD pricing in-line with the $1/song pricing that iTunes and others are seeing success with -- but its still not quite right. With iTunes you can pick the songs you want. For that same 10-15 bucks, you can assemble a "perfect" cd. While the pricing cuts are great, ultimately the marketplace will now have to vote on the value of the album overall verses the value of the individual tune.

Lets face it, not all albums are great. How many have you seen with one or two good bits of work, and a ton of filler? The market isn't going to accept that. Its clear that even near term those one or two hits are going to be purchased on-line or shared. Only solid albums will be purchased. This isn't new though. The hit single 45 rpm record was the way to buy these kinds of 'one hit wonders' years ago.

The music industry faces not one but two challenges from the on-line downloads. They're focused on the first -- offering a value proposition that favors paying for music over piracy. Ultimately, legal challenges are going to fail and they'll have to increase their own value or lower their price. The newest tactic, using a hash value of downloaded music to prove its being traded won't work long. The nature of the technology is such that someone will write a filter that randomly changes files as they are downloaded in very small ways and the whole hash comparison will be out the window. The longer term challenge -- and a much harder one -- is that they'll have to re-evaluate what value they add to the musicians. When a musician can take advantage of secure technology and allow their own music to be directly downloaded at 50 cents per song and there is no major production cost, there is no major transportation, warehousing, or distribution cost -- what is the value the record industry adds? Marketing. The record industry becomes a for-hire marketing business. That's half of what they are now. Right now, they offer marketing and distribution. For that, artists fork over the majority of revenue from their work. That is, of course, totally antithetical to what copyright laws were intended to do (IMO).

Cost cutting is just beginning in this, the last industry to have essentially unlimited funding for its marketing, research, and grossly inappropriate spending departments.

http://www.nydailynews.com/business/story/114452p-103281c.html


There are  - loading -  comments....

re: Free Market forces CD prices down - Adam Smith silently rejoices from the great beyond.By Gabriella on 06/23/2004 at 11:21 AM EDT
:I think the music industry being forced to bring their prices down isn't
something any one in their right mind would disagree with. What does worry me
is the idea of these 'perfect' cds you can create yourself on iTunes and the
comment that most CD's contain a couple of good tracks and mostly filler.

What ever happened to the idea of an album hanging together as a whole rather
than being a series of singles that can chart and sell individually?  Most of
my CDs don't have anything that could chart as a single (and not much you'd
sing to yourself) but artists and producers work hard to give you a whole 70
minute music experience you can listen and which can take you through an
emotional arc (beep beep beep pretention alert!!).  For example I bought the
David Bowie album Heathen in 2002 because I love Bowie and his voice but never
played it enough until a few months ago when I spent a whole Saturday just
listening to it and allowed myself to 'learn' how it plays - now I love it but
there wouldn't be a single solitary track I'd download off iTunes and I'd be
hard pressed to find anything for a playlist.

If we follow through the idea of 'make your own' CDs then those artists that
are still trying to create entire albums that express something or evolve will
be forced into shunting out "Now That's What I Call Radiohead Vol 92" - !
iTunes has it's place but it's not to replace CDs.


------------------------------------------------------------------------------
in response to
------------------------------------------------------------------------------
Universal Music Group lowered its prices on CD's by $3 to retailers, and
suggests retailers take another $3 off as well. By putting a suggested price on
the cover of the CD's, Universal is putting pressure on retail chains to make a
little less per unit on these things while at the same time taking less
themselves. In practice, this brings CD pricing in-line with the $1/song
pricing that iTunes and others are seeing success with -- but its still not
quite right. With iTunes you can pick the songs you want. For that same 10-15
bucks, you can assemble a "perfect" cd. While the pricing cuts are great,
ultimately the marketplace will now have to vote on the value of the album
overall verses the value of the individual tune. Lets face it, not all albums
are great. How many have you seen with one or two good bits of work, and a ton
of filler? The market isn't going to accept that. Its clear that even near term
those one or two hits are going to be purchased on-line or shared. Only solid
albums will be purchased. This isn't new though. The hit single 45 rpm record
was the way to buy these kinds of 'one hit wonders' years ago. The music
industry faces not one but two challenges from the on-line downloads. They're
focused on the first -- offering a value proposition that favors paying for
music over piracy. Ultimately, legal challenges are going to fail and they'll
have to increase their own value or lower their price. The newest tactic, using
a hash value of downloaded music to prove its being traded won't work long. The
nature of the technology is such that someone will write a filter that randomly
changes files as they are downloaded in very small ways and the whole hash
comparison will be out the window. The longer term challenge -- and a much
harder one -- is that they'll have to re-evaluate what value they add to the
musicians. When a musician can take advantage of secure technology and allow
their own music to be directly downloaded at 50 cents per song and there is no
major production cost, there is no major transportation, warehousing, or
distribution cost -- what is the value the record industry adds? Marketing. The
record industry becomes a for-hire marketing business. That's half of what they
are now. Right now, they offer marketing and distribution. For that, artists
fork over the majority of revenue from their work. That is, of course, totally
antithetical to what copyright laws were intended to do (IMO). Cost cutting is
just beginning in this, the last industry to have essentially unlimited funding
for its marketing, research, and grossly inappropriate spending departments.
http://www.nydailynews.com/business/story/114452p-103281c.html
re: re: Free Market forces CD prices down - Adam Smith silently rejoices from the great beyond.By Andrew Pollack on 06/23/2004 at 11:21 AM EDT
 
:

If anything, I think this will force the record industry to produce more albums
that good if they want to continue to sell full length works.  Albums like
"Brothers in Arms" will still sell.   Other crap full of filler cuts will not.

-AP

------------------------------------------------------------------------------
in response to
------------------------------------------------------------------------------
:I think the music industry being forced to bring their prices down isn't
something any one in their right mind would disagree with. What does worry me
is the idea of these 'perfect' cds you can create yourself on iTunes and the
comment that most CD's contain a couple of good tracks and mostly filler. What
ever happened to the idea of an album hanging together as a whole rather than
being a series of singles that can chart and sell individually? Most of my CDs
don't have anything that could chart as a single (and not much you'd sing to
yourself) but artists and producers work hard to give you a whole 70 minute
music experience you can listen and which can take you through an emotional arc
(beep beep beep pretention alert!!). For example I bought the David Bowie album
Heathen in 2002 because I love Bowie and his voice but never played it enough
until a few months ago when I spent a whole Saturday just listening to it and
allowed myself to 'learn' how it plays - now I love it but there wouldn't be a
single solitary track I'd download off iTunes and I'd be hard pressed to find
anything for a playlist. If we follow through the idea of 'make your own' CDs
then those artists that are still trying to create entire albums that express
something or evolve will be forced into shunting out "Now That's What I Call
Radiohead Vol 92" - ! iTunes has it's place but it's not to replace CDs. in
response to Universal Music Group lowered its prices on CD's by $3 to
retailers, and suggests retailers take another $3 off as well. By putting a
suggested price on the cover of the CD's, Universal is putting pressure on
retail chains to make a little less per unit on these things while at the same
time taking less themselves. In practice, this brings CD pricing in-line with
the $1/song pricing that iTunes and others are seeing success with -- but its
still not quite right. With iTunes you can pick the songs you want. For that
same 10-15 bucks, you can assemble a "perfect" cd. While the pricing cuts are
great, ultimately the marketplace will now have to vote on the value of the
album overall verses the value of the individual tune. Lets face it, not all
albums are great. How many have you seen with one or two good bits of work, and
a ton of filler? The market isn't going to accept that. Its clear that even
near term those one or two hits are going to be purchased on-line or shared.
Only solid albums will be purchased. This isn't new though. The hit single 45
rpm record was the way to buy these kinds of 'one hit wonders' years ago. The
music industry faces not one but two challenges from the on-line downloads.
They're focused on the first -- offering a value proposition that favors paying
for music over piracy. Ultimately, legal challenges are going to fail and
they'll have to increase their own value or lower their price. The newest
tactic, using a hash value of downloaded music to prove its being traded won't
work long. The nature of the technology is such that someone will write a
filter that randomly changes files as they are downloaded in very small ways
and the whole hash comparison will be out the window. The longer term challenge
-- and a much harder one -- is that they'll have to re-evaluate what value they
add to the musicians. When a musician can take advantage of secure technology
and allow their own music to be directly downloaded at 50 cents per song and
there is no major production cost, there is no major transportation,
warehousing, or distribution cost -- what is the value the record industry
adds? Marketing. The record industry becomes a for-hire marketing business.
That's half of what they are now. Right now, they offer marketing and
distribution. For that, artists fork over the majority of revenue from their
work. That is, of course, totally antithetical to what copyright laws were
intended to do (IMO). Cost cutting is just beginning in this, the last industry
to have essentially unlimited funding for its marketing, research, and grossly
inappropriate spending departments.
http://www.nydailynews.com/business/story/114452p-103281c.html


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