economic data wanted

[Doom9]

I'm wondering. I have a feeling that the music and movie industry are only insignificant when compared to the entire US economy but I'm wondering if there's any useful data on this.

Similarly, I'm wondering if there's any data on the cost of producing a CD, from what goes to the artist, what it costs to press the CD and booklet, how much the designer and photographers get for the booklet, what the distribution costs are, etc.

[Joe Fenton]

The RIAA waves their hands a lot, but only gives this for hard info:
Clearly there are many costs associated with producing a CD, and despite these costs the price of recorded music to consumers has fallen dramatically since CDs were first introduced in 1983. Between 1983 and 1996, the average price of a CD fell by more than 40%. Over this same period of time, consumer prices (measured by the Consumer Price Index, or CPI) rose nearly 60%. If CD prices had risen at the same rate as consumer prices over this period, the average retail price of a CD in 1996 would have been $33.86 instead of $12.75. While the price of CDs has fallen, the amount of music provided on a typical CD has increased substantially, along with higher quality in terms of fidelity, durability, ease of use, and range of choices, including multi-media material, such as music videos, interviews and discographies. Content of this type often requires considerable production expense and adds a whole new dimension that goes beyond conventional audio.

Aren't we lucky? We should be paying almost $34 a CD! :rolleyes:

To get pressed CDs, most maunfacturers are like this one:
http://www.warehouse-studio.com/cddup.html
Pressed CDs run from about $3 each for low quantity with a four page color insert, to less than $1 for a bulk pressed CD and no insert. Manufacturing was given as the reason for high prices by the RIAA initially. They promised that when it cost less to make CDs, the price would come down. We are still waiting.

You can get a pie chart of the info you want here:
http://www.cnn.com/interactive/entertainment/0101/cd.price/frameset.exclude.html

Note that retail markup is the single largest contribution to price at 36.7% the total cost. Company overhead is next at 19.7%. Next is marketing and promotion at 12.7%.

Note that the cost of making the CD and inserts is only 75 cents. When you own your own CD pressing facilities, it's dirt cheap to make your own discs.

[Doom9]

$1.99 in royalties? There must be something wrong with that. It's been a couple months but I ran a story including what artists get paid per song (the story was about studios not paying royalties for a low quality PC capable version of the music on audio CDs)... it's a couple cents per song, so if we assume the average CD has 15 songs, we're still below a dollar in royalties unless the artist gets 8 cents (I think the value was around 5 cents).

[mudda_t]

Here's a nice little read (http://www.hollywoodreporter.com/thr/pwc/talking_display.jsp?vnu_content_id=1878277)
.
...According to the "Copyright Industries in the U.S. Economy: The 2001 Report," these industries -- which include motion pictures, television, theatrical, and home video, records, tapes and CDs; music publishing; book, journal and newspaper publishing; computer and interactive entertainment software; legitimate theatre; advertising; broadcast and cable television and radio -- accounted for 5.24% or $535.1 billion of the U.S. Gross Domestic Product (GDP) in 2001.
...
The report further states that the creative industries -- theatrical films, TV programs, home video, DVDs, business software, entertainment software, books, music and sound recordings -- "contributed more to the U.S. economy and employed more workers than any single manufacturing sector, including food and kindred products, industrial machinery and equipment, electronics and other equipment, fabricated metal products, and chemicals and allied products."
.
Also found this
www.iipa.com/pdf/2002_SIWEK_FULL.pdf (http://www.iipa.com/pdf/2002_SIWEK_FULL.pdf) it's the 2002 report.

[bond]

When talking about CD prices the consumers have to pay, its also important to mention that in some european countries (dunno if thats the case in the us) a part of the payed price for a CD-R goes directly to the music industry, because these cds can and will be used for copying music (legally for private use/backup copy) on which other people have a copyright on (which are organised mainly in national "MPAA"-like organisations)!

of course that doesnt only go for cds, but also for (video-)cassettes aso and also for devices, which are there to make copies (ie vcr)...

checkout the copyright law in your country

[Doom9]

hmm.. like studies sponsored by the music industry, I don't particularly trust data by the International Intellectual Property Alliance (that's another organization you should be worried about). Isn't there any data from the US government or even better, independent sources (since the US government is exporting the DMCA, I don't consider it very trustworthy either).

[Neo Neko]

Clearly there are many costs associated with producing a CD, and despite these costs the price of recorded music to consumers has fallen dramatically since CDs were first introduced in 1983. Between 1983 and 1996, the average price of a CD fell by more than 40%. Over this same period of time, consumer prices (measured by the Consumer Price Index, or CPI) rose nearly 60%. If CD prices had risen at the same rate as consumer prices over this period, the average retail price of a CD in 1996 would have been $33.86 instead of $12.75.

What this neglects to mention is that when it comes to technology as it evolves it devalues itself. Saying that the the cost of CDs in 1996 could/should have been 33.86 is like saying that an 8088 PC introduced in the same aproximate time for about $3000-$4000 would today cost upwards of $6000-$8000 today. Which is ludicris. Just as the technology to produce PCs has gotten cheaper and more efficient so have the technologies to press and produce CDs. The one thing that does not specifically devaluate in regards to the CD is the content it sometimes holds. But since 1996 the average cost for CDs has increased from $12-$13 to $15-$16+ today. Did CD presses get more expensive all of a sudden? Did the materials get more scarce? Did they revert to older mor dificult technology? No. No. No. So why the increase in cost durring a time of recession?

While the price of CDs has fallen, the amount of music provided on a typical CD has increased substantially,

This must have been an old quote because the cost of CDs has gone up being much closer to mid 1980's cost than mid 1990's cost. And the content on CD's has not increased that substantially. One or two more songs I don't considder that substantial.

along with higher quality in terms of fidelity,

Highly compressed audio dynamics equals quality? BS I have heard CDs released in 1986 that sound every bit as good if not better than the majority of albums released today. It's a fact that most albums especially those of the "pop" genera always have the dynamic range crushed out of them before being force fed to the public. Go ask any professional audio engeneer. Some will even proudly admit to doing butchering music in this fassion first hand. CD quality has seriously dropped on most albums over the last 10 years.

durability,

Never seen a difference.

ease of use,

Grasping at non-existant straws.

and range of choices,

It is a fact that in the last half decade or so the range of choices has largely decreased since the mid 1990s.

including multi-media material, such as music videos, interviews

Such releases at best make up 2~3 percet of the total content as a generous guestimate. Pitifull.

and discographies.

ROTFLMAO! Discographies? In all the albums I have bought "0" contain discographies. And of the few I have seen discographies with I have seen fanboy discographies on the internet that are far more complete and correct. And for free no less.

Content of this type often requires considerable production expense and adds a whole new dimension that goes beyond conventional audio.

Considdering that most of the videos and interviews would be made regardless of the rare occasion they are packaged with an audio album I find justifying increased cost due to them utterly laughable.

Originally posted by Joe Fenton
The RIAA waves their hands a lot, but only gives this for hard info:

Actually since 1999 RIAA membergroups and the RIAA themselves have released little to no solid numbers on any aspect of their businesses whatsoever. That information is just not made avalible to the public. Instead they ask us to take them at their word that they are bing abused and attacked. HA!

Originally posted by Joe Fenton
To get pressed CDs, most maunfacturers are like this one:
http://www.warehouse-studio.com/cddup.html
Pressed CDs run from about $3 each for low quantity with a four page color insert, to less than $1 for a bulk pressed CD and no insert. Manufacturing was given as the reason for high prices by the RIAA initially. They promised that when it cost less to make CDs, the price would come down. We are still waiting.

Well playing devils advocate there is a bit more that goes into the production of an album. You pay for cover art etc. Then there is the process of audio mastering/butchering. And the pittance paid to the artist. So it is safe to assume since the manufacturing costs themselves have gone down so much that we should see some high paid graphic artists and sound engineers. Or rather not. So where does the cash go? Oh that's right company coffers and bigwig pockets.

I am with ya Doom9 on getting the info. All I can say is good luck. Most of the info we would want simply does not exist for the public. Which says more about that data than we would probably see had we actually seen it.

[Kedirekin]

I've always found it suspicious that the music industry never tried to justify the cost of CDs by explaining how much it costs to produce them. With all that is going on, why do they never even mention it?

I firmly believe the are intentionally, desperately hiding the information because they do not want the consuming public to know just how much money they are making. With as much public ill will as they've garnered over the past couple of decades (especially recently), I don't blame them for trying to keep it secret. I wonder when they'll wake up and realize that you don't make money (at least, not for long) by making potential customers hate you.

Music is supposed to be fun. Law suites, trying to choke P2P, and pure unadulterated GREED is taking all the fun out of it.

[Joe Fenton]

Read this. Be sure to check the follow up links at the bottom.

http://www.azoz.com/music/features/0008.html

Although the pie chart I posted seems to say the artist gets about 13 cents per song on average, remember that this is the GROSS income. They then must pay taxes (probably about 40% since I doubt the RIAA contributes towards the SS fee by saying the artist is a contract worker), then they must pay back the RIAA for EVERY LAST CENT the RIAA ever spent on them, including snack trays set out during recording sessions. After all expenses are accounted for, the left-overs are probably down to 2 cents per song.

The RIAA is known for pulling numbers out of their @$$. Their piracy figures don't add up, even if you believe that every single download is a lost sale. Looking at the figures they have to publish for gross sales as done in the link above, you can see that the RIAA is full of s**t. It's just corporate greed at its worst. The RIAA lost a lawsuit last year for price fixing, but you probably didn't hear about that on the news. I know I didn't. Unless you constantly scan interested sites on the net, you'd never know anything but what the RIAA tells you - which is what they want. In fact, they even convinced the government to allow them to preach their gospel to grade-schoolers. They are trying to brainwash the next generation into supporting a corrupt institution.

[Doom9]

btw, what I'm looking to proof here once I have the data isn't as much as the RIAA is lying to us (we know that) but I have a suspicion that they're actually making more money from online sales with current prices, so I'd like to have an idea of how much online music distribution costs (anyone having experience with enterprise grade hosting.. let me know the price for a 19" rack with a 100mbit connection or better). I once had a hosting offer where I was told how much the company paid for their connections, and it was next to nothing (okay, it was quite a bit but ran a really high bandwidth outfit), so if you break that down to the individual song, you add up the cost of converting a CD to MP3/AAC/whatever, you add the cost of maintenance (also quite low I guess since a couple of blade servers aren't that expensive anymore so you can just buy a few extra in case one craps out), you substract all the costs for a real CD (pressing, making the booklet (that requires a photographer, an illustrator, etc.)... in the end I think it plays out to the RIAA making at least as much as from a CD, but for an inferior product. So, they chain you with DRM, they give you lower quality but they still make the same amount of money, which doesn't quite seem right, does it? But anyway, at this point this is a supposition I'd like to support with hard data.

[Mug Funky]

FWIW, the uni course i finished last year raised the money to press 500 CDs by selling chocolate and asking companies like macromedia for sponsorship (which seldom included anything but "we give you a copy of studio MX you can raffle off, and you have to put our posters up).

it does _not_ cost much at all to release a CD, including things like cover art (well, not hard as it was a multimedia course), special features, etc. printing is dead cheap for realy good deals, even cheaper if you limit your colours. mastering costs jack-all, considering if you get a hobbyist to do it, you'll probably get a better sounding disc.

i think the total cost of producing 500 CDs was about AUD$3.50 per disc.

if poor students can do it, then i'm sure the RIAA can do it for much less. of course there's executive costs involved there... things like new boats and cocaine.


[edit]

hmm... the costs listed above by the RIAA don't count for anything even close to their entire collection.

think "back catalogues"... almost nil in advertising, nothing on production, maybe something on remastering, getting the RMS value up to "standard" (ie. killing the sound), nothing on cover art, nothing on special features. i wonder what percentage of RIAA's catalog is _not_ brand spanking new? all the back catalog really costs is distribution and manufactiring, plus _maybe_ a tiny bit of advertising, but i think that's all done by the music stores themselves (those ads on TV with spinning CDs...)

[theReal]

Aren't we lucky? We should be paying almost $34 a CD!

Well, newly released CDs by big artists sometimes almost do cost that much in Germany (and weirdest thing about it is that people still buy it like crazy - they complain, but they buy it...)

When the industry introduced CDs, a vinyl record was about 7-8 Euro (at that time it was still German Marks).
CDs started at something like 15 Euro, eventually went down to 12 but that was it. At the same time vinyl still cost 7-8 Euro even the production cost for a vinyl record are higher than the production cost for a CD. People complained, but still bought CD's...

[Neo Neko]

Originally posted by Doom9
btw, what I'm looking to proof here once I have the data isn't as much as the RIAA is lying to us (we know that) but I have a suspicion that they're actually making more money from online sales with current prices, so I'd like to have an idea of how much online music distribution costs

Well without going into the bandwidth and hosting charges just yet I think it is important to reitterate that after a site pays their extorted RIAA protection money they make nothing or less than nothing off the sales. Apples Itunes for instance can't quite cover it's operating costs after paying it's RIAA dues. And by everyones account Itunes is wildly sucessfull. In terms of cost and product quality anyone who buys from all but one site that I am aware of [opperated in Russia] Is getting a rather bad deal. First of all they are paying basically as much as they would had they gone out and bought a CD. But instead of getting the so called "lossless" quality of CDDA they are getting quality that varries from Apples AAC being one of the better all the way to the worst AKA Windows Media. None of which holds a candle to CDDA. But you are paying practically as much at 99 cents a song. And for all that you don't even get a physical product or things like artwork etc. On top of that retailers don't have to deal with overhead or many other traditional costs for selling media. Then there is the issue of DRM. On CD DRM is a joke and on the rare occasion it is found rather easily bypassed. [*shift* OMFG have I violated the DMCA?!] This is not the situation for online digital distribution. The DRM is not only more effective [yet still innefectual] but more restrictive. So as a rule you are better off purchasing an actual album whenwver possible than buying on line. Thus supporting the RIAA/friends traditional distribution methods.


Originally posted by Doom9
(anyone having experience with enterprise grade hosting.. let me know the price for a 19" rack with a 100mbit connection or better).

A 19" rack would only be used for colocation which means that the customer would be responsible for the upkeep and matinance as well as their hardware and software. I have rather large doubts that most of these online music stores colocate their opperation. Apple for one I suspect has their own datacenter. And even the RIAA got dedicated no colo hosting in the basement of a vietnam vets house over a DSL line. :p


Originally posted by Doom9
I once had a hosting offer where I was told how much the company paid for their connections, and it was next to nothing (okay, it was quite a bit but ran a really high bandwidth outfit), so if you break that down to the individual song, you add up the cost of converting a CD to MP3/AAC/whatever, you add the cost of maintenance (also quite low I guess since a couple of blade servers aren't that expensive anymore so you can just buy a few extra in case one craps out), you substract all the costs for a real CD (pressing, making the booklet (that requires a photographer, an illustrator, etc.)... in the end I think it plays out to the RIAA making at least as much as from a CD, but for an inferior product. So, they chain you with DRM, they give you lower quality but they still make the same amount of money, which doesn't quite seem right, does it? But anyway, at this point this is a supposition I'd like to support with hard data.

Well getting hard data is easier said than done it seems. For hard data you are going to need some rather specific requirements. I talked with the former VP of a professional hosting company. And he said geographic location of the hosting alone can have a great impact on the cost. But he suggested looking at www.servercentral.net www.above.net www.paix.net www.nac.net. I'll talk to him again before we likely play a few rounds of counterstrike later tonight.

[Nic]

(my dad used to work in the computer games industry...apparently it used to cost 26 pence (0.26 of a GB pound) for the CD and game box. So I assume it would be the same for the music industry and probably even less now (this was around 5+ years ago))

[ultimatebilly]

Sorry for not contributing anything useful, but I just had to thank Mug Funky for the first really good laugh today:

of course there's executive costs involved there... things like new boats and cocaine.

Great one, thanks!!! :D

[manono]

You might find this useful. It partially backs up Joe's figures, except that she comes up with about 35 cents artist royalties per CD, and for really big artists. I'm sure that lesser known artists make less. Say what you will about Courtney Love, she's not stupid. The article is almost 4 years old now, but still relevant to this discussion:

http://dir.salon.com/tech/feature/2000/06/14/love/index.html?pn=1

[Mug Funky]

@ manono:

great link!