What? I'm not even sure where to begin to ripping apart your rant.
That's the great thing about AppleInsider... always a great place to make new friends.
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Competing formats? Why would the record companies want competing formats? Answer: they don't. That's the problem right now with HD DVD. Competing formats are bad for the content providers because it splits their potential market. CD's never competed with tapes because the albums for a long time came out on both formats.
Actually, tapes did compete with CDs for awhile, because you had the choice of buying an album you wanted on tape for 10 bucks or so, or on CD for 18 bucks or so. Hmm, I wonder which format the music companies wanted you to choose there?
And today, we do have competing formats again, with online downloads beginning to challenge CDs. Sure, it's early days yet, but with online downloads being cheaper and more convenient, one can see which way the pendulum is swinging. Of course, again, the music companies don't much like online downloads, as they don't make as much money as they'd like off them, and they don't have complete control over distribution. Sound familiar? \
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For the most part, the record companies do have complete control. It's quite obnoxious how these articles make it sound like Apple has the record companies by the balls when it comes to negotiations.
I'd agree that the big music companies still have plenty of power, but complete control? Nah. They've wanted variable pricing from Apple for ages now, and only recently got it in the lone case of EMI, and only in exchange for offering DRM-free music. They also want Apple to start doing subscriptions, something Apple has not given them. Apple has said 'no' to them quite a bit, yet the iTunes store is still around, happily selling songs at about a two billion-a-year pace. I would define that as less than complete control.
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iTunes accounts for a whopping 8.5% of music sales, hardly a particularly strong bargaining position. The big 3 could easily just pull their music and watch the iTunes Store dry up practically overnight. Would doing so lose them money? Probably, but could it be worth it to them to do so? Quite possibly.
I dunno Cal... iTunes is not huge yet, but it's sure growing, and the music industry knows it. And they've tried to come up with their own alternatives to it, and failed. They seem to feel that they need Apple, and Apple's bargaining position certainly has been strong enough that Apple has gotten away with saying no to them an awful lot.
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Some people might turn to piracy, but the people pirating are probably not buying from iTunes in the first place.
In the absence of any reasonable alternatives, there's a real tendency to turn to piracy over time. If all online stores had ridiculous pricing, and yet you wanted to do online downloading, and you know about Limewire, etc. etc., the chances of you eventually doing the wrong thing increase. And there is certainly a number of people using iTunes that used to pirate, or still pirate if they can't get the track they want off of iTunes.
Sadly, I know people who will still pirate on occasion if the song they want is 'Album Only' on iTS.
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What "safety net" does online sales provide?
The fact that as CD sales have been declining, legit online downloading has been on the rise. The revenue replacement hasn't been 1 to 1 (and shouldn't be, as CDs are overpriced in most cases), but its definitely better than nothing at all. The major labels seem to concur, as they haven't told Stevie J to hit the road.
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I don't think piracy or even crappy music is the reason for the decline in album sales. It's market saturation, the same thing that is now slowing down DVD sales. People already own most of the music they want to own, so there's only new albums left to buy. When CD's came out, there was 3+ decades worth of albums to purchase, now people are left with only buying what's new. This is the reason movie studios are anxious to get people on HD, so they can re-buy their content all over again on the new format and start the sales cycle all over again.
While the reasons you cite are a factor, a great many people disagree with you regarding crappy music not being a reason for declining CD sales. And the record companies would certainly throw a fit over your belief that piracy is not a factor.
Personally, I think your reason is a secondary factor. If you truly love music, you'll never get to the point of "owning most of the music you want to own", as you state... you're always listening to, and buying, new stuff.
Far as declining album quality and piracy being non-factors... c'mon, let's be real here. Nearly everyone has had the following unfortunate experience: You hear this awesome song on the radio, in a video, in a TV show or movie, or whatever, then run out and drop 15 bucks on the CD. You take it home, listen to it, and yeah, that one track is great, but the entire rest of the album is not fit to wipe your dog's patoot with. Congrats, you just paid 15 bucks for ONE good song. There's no stats as to how many customers the major labels have turned into iTunes Store 'cherry-pickers' (people who seldom/never buy complete albums, but only the best songs), but I bet it's considerable.
And piracy, a non-factor? LOL. I know people who are approaching the 100 gig mark in mostly pirated songs. Would they suddenly start buying all their music legit if they couldn't pirate? No, certainly not... they'd borrow and rip friends CDs as much as possible, and swap mp3s with buddies ad nauseum, but if they couldn't get tracks they wanted that way, they'd likely buy 'em. These people are, after all, music lovers, even if they are 'dirty pirates', as a friend called 'em.
I do agree with you that the major labels would LOVE to be in the position of re-selling to us all of our favorite music again in a different and allegedly superior format to CD. It would certainly light a rocket under sales for them, but its not going to happen. The industry did too good a job of convincing people that CD was the 'perfect format' and could not be significantly improved upon, quality-wise.
So with that fantasy out of the way, the industry needs to deal with its real problems head-on: piracy, quality, and making the best out of online distribution. But I think they'll continue to whine about how they're being screwed for quite some time instead.
My take is that the labels are dead, or at least dieing.
They are trying to charge for a service that is simply no longer needed. The internet provides more than adequate exposure and distribution, and it does it almost for free.
And don't even get me started on copyright (prevention) law. Our society and economy would be better off without our the current, absurdly inequitable, copyprevention system. It is accomplishing the exact opposite of the original goal, to foster artists and writers by providing them with economic incentive. Instead, copyprevention laws are foisted upon us for the benefit of large corporations and at the expense of individual creators and consumers. Copypreventions are making the distribution of wealth less equitable while simultaneously stifling creativity. (I told you not to get me started. )
I don't think piracy or even crappy music is the reason for the decline in album sales. It's market saturation, the same thing that is now slowing down DVD sales.
... Refusing to sell what customers want to buy, and accusing them all of being criminals when they choose to take their money elsewhere also has a lot to do with this. The industry attitude for decades has been "we will tell you what to think, and you'll pay us for the privilege". Well this generation has woken up, and they aren't going along. So like any good megalomaniac, the industry has responded with threats and accusations. Everybody is evil, except for themselves.
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Originally Posted by TBaggins
Actually, tapes did compete with CDs for awhile, because you had the choice of buying an album you wanted on tape for 10 bucks or so, or on CD for 18 bucks or so. Hmm, I wonder which format the music companies wanted you to choose there?
Especially when the manufacturing costs for CDs are (and always were) significantly lower than cassette. They didn't charge a premium when transitioning from vinyl to tape, so nobody had a problem. With CD, they doubled their prices and didn't do a single thing to deserve it. The songs are still being recorded only once, the artists are getting the same (lack of) royalties, and their costs are lower.
There is no (and never was any) justification for the high price of CD. I'm shocked that it's taken 20 years for this to actually hurt the labels.
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Originally Posted by TBaggins
Of course, again, the music companies don't much like online downloads, as they don't make as much money as they'd like off them, and they don't have complete control over distribution. Sound familiar? \
With iTunes, they make 65 cents per track, or $6.50 for a typical 10-track album. This is more than what they make for a CD. According to Billboard, for a $17 disc, $6.23 goes to the store, $3.34 goes to the distributor, and the remaining $7.43 goes to the label. Now subtract the costs that don't apply to iTunes, like physical manufacturing ($0.75) and kickbacks to retailers ($0.85), and we get $5.83 revenue per CD.
(BTW, this is why companies like BMG can sell closeout CDs for $6.50-7.00 per disc. Simply eliminating a store and distributor knocks almost $10 off of the price without changing anything else.)
So the labels make 67 cents more per album on iTunes than with CD. And they're complaining that it isn't enough.
Quote:
Originally Posted by TBaggins
I do agree with you that the major labels would LOVE to be in the position of re-selling to us all of our favorite music again in a different and allegedly superior format to CD. It would certainly light a rocket under sales for them, but its not going to happen. The industry did too good a job of convincing people that CD was the 'perfect format' and could not be significantly improved upon, quality-wise.
They're trying again with SACD and DVD-A. The problem is that most people can't hear much difference between the two, and even those that can aren't going to consider the difference enough to justify paying $22-25 for an album they already own.
Case in point: I bought two Yes albums on DVD-A ("Fragile" and "Magnification"). Fragile sounded incredible, because they did a lot of remixing and remastering from the original 70's multitrack recordings. Magnification, on the other hand, sounded exactly the same as the CD, because that album was originally recorded digitally, and the CD shipped with a surround (Dolby Pro Logic) mix.
In other words, customers are not likely to see any good reason to migrate away from CD unless the industry forces them to by halting CD production altogether. IMO, all of the improvements people are seeing with newer audio media are coming from remixing and remastering, which can be (and often are) done for ordinary CDs today.
With iTunes, they make 65 cents per track, or $6.50 for a typical 10-track album. This is more than what they make for a CD. According to Billboard, for a $17 disc, $6.23 goes to the store, $3.34 goes to the distributor, and the remaining $7.43 goes to the label. Now subtract the costs that don't apply to iTunes, like physical manufacturing ($0.75) and kickbacks to retailers ($0.85), and we get $5.83 revenue per CD.
(BTW, this is why companies like BMG can sell closeout CDs for $6.50-7.00 per disc. Simply eliminating a store and distributor knocks almost $10 off of the price without changing anything else.)
So the labels make 67 cents more per album on iTunes than with CD. And they're complaining that it isn't enough.
Yes Shamino, but you also have to take into account 'lost' sales due to folks cherry-picking tracks on iTunes. With CD, they'd have to purchase the entire album to get the song they want (unless there was a CD single out, but those are not doing well as a format). With iTunes, consumers bypass all of that.
Given that, CDs appear to be more profitable overall than downloads for the music industry. Which would better explain the whining and crying and repeated attempts to bully Jobs into raising iTunes' prices... though given that this is the music industry, simple-minded greed comes into it too, no doubt.
On all your other points, I concur.
ps- Given how much the major labels would stand to save by cutting out stores and distributors, its a wonder that they haven't tried harder to sell the bulk of their CDs through their own online stores. They could hit much sexier pricepoints ($9.99 for new music), which would very likely boost sales, while still making more money per CD.
But, of course, they have become so dependent on a few large store chains (Wal-Mart, Target, Best Buy, etc.) that they're probably terrified of the retribution that would ensue, even though long-term it'd probably be better for them to go that way. And of course Amazon would be pissed about being undercut as well.
Yes Shamino, but you also have to take into account 'lost' sales due to folks cherry-picking tracks on iTunes. With CD, they'd have to purchase the entire album to get the song they want (unless there was a CD single out, but those are not doing well as a format). With iTunes, consumers bypass all of that.
I'm not certain of that either.
Sure, one person will buy 1-3 tracks instead of all 10, but others will buy those 1-3 tracks instead of not buying anything. If there are 4 "bought 3 instead of nothing" people for every "bought 3 instead of 10" person, then the overall number of tracks sold will be greater, and profits will be higher.
I wonder if anyone has done the research to see if this is happening. It wouldn't surprise me if the music industry doesn't want to know the answer.
Comments
What? I'm not even sure where to begin to ripping apart your rant.
That's the great thing about AppleInsider... always a great place to make new friends.
Competing formats? Why would the record companies want competing formats? Answer: they don't. That's the problem right now with HD DVD. Competing formats are bad for the content providers because it splits their potential market. CD's never competed with tapes because the albums for a long time came out on both formats.
Actually, tapes did compete with CDs for awhile, because you had the choice of buying an album you wanted on tape for 10 bucks or so, or on CD for 18 bucks or so. Hmm, I wonder which format the music companies wanted you to choose there?
And today, we do have competing formats again, with online downloads beginning to challenge CDs. Sure, it's early days yet, but with online downloads being cheaper and more convenient, one can see which way the pendulum is swinging. Of course, again, the music companies don't much like online downloads, as they don't make as much money as they'd like off them, and they don't have complete control over distribution. Sound familiar?
For the most part, the record companies do have complete control. It's quite obnoxious how these articles make it sound like Apple has the record companies by the balls when it comes to negotiations.
I'd agree that the big music companies still have plenty of power, but complete control? Nah. They've wanted variable pricing from Apple for ages now, and only recently got it in the lone case of EMI, and only in exchange for offering DRM-free music. They also want Apple to start doing subscriptions, something Apple has not given them. Apple has said 'no' to them quite a bit, yet the iTunes store is still around, happily selling songs at about a two billion-a-year pace. I would define that as less than complete control.
iTunes accounts for a whopping 8.5% of music sales, hardly a particularly strong bargaining position. The big 3 could easily just pull their music and watch the iTunes Store dry up practically overnight. Would doing so lose them money? Probably, but could it be worth it to them to do so? Quite possibly.
I dunno Cal... iTunes is not huge yet, but it's sure growing, and the music industry knows it. And they've tried to come up with their own alternatives to it, and failed. They seem to feel that they need Apple, and Apple's bargaining position certainly has been strong enough that Apple has gotten away with saying no to them an awful lot.
Some people might turn to piracy, but the people pirating are probably not buying from iTunes in the first place.
In the absence of any reasonable alternatives, there's a real tendency to turn to piracy over time. If all online stores had ridiculous pricing, and yet you wanted to do online downloading, and you know about Limewire, etc. etc., the chances of you eventually doing the wrong thing increase. And there is certainly a number of people using iTunes that used to pirate, or still pirate if they can't get the track they want off of iTunes.
Sadly, I know people who will still pirate on occasion if the song they want is 'Album Only' on iTS.
What "safety net" does online sales provide?
The fact that as CD sales have been declining, legit online downloading has been on the rise. The revenue replacement hasn't been 1 to 1 (and shouldn't be, as CDs are overpriced in most cases), but its definitely better than nothing at all. The major labels seem to concur, as they haven't told Stevie J to hit the road.
I don't think piracy or even crappy music is the reason for the decline in album sales. It's market saturation, the same thing that is now slowing down DVD sales. People already own most of the music they want to own, so there's only new albums left to buy. When CD's came out, there was 3+ decades worth of albums to purchase, now people are left with only buying what's new. This is the reason movie studios are anxious to get people on HD, so they can re-buy their content all over again on the new format and start the sales cycle all over again.
While the reasons you cite are a factor, a great many people disagree with you regarding crappy music not being a reason for declining CD sales. And the record companies would certainly throw a fit over your belief that piracy is not a factor.
Personally, I think your reason is a secondary factor. If you truly love music, you'll never get to the point of "owning most of the music you want to own", as you state... you're always listening to, and buying, new stuff.
Far as declining album quality and piracy being non-factors... c'mon, let's be real here. Nearly everyone has had the following unfortunate experience: You hear this awesome song on the radio, in a video, in a TV show or movie, or whatever, then run out and drop 15 bucks on the CD. You take it home, listen to it, and yeah, that one track is great, but the entire rest of the album is not fit to wipe your dog's patoot with. Congrats, you just paid 15 bucks for ONE good song. There's no stats as to how many customers the major labels have turned into iTunes Store 'cherry-pickers' (people who seldom/never buy complete albums, but only the best songs), but I bet it's considerable.
And piracy, a non-factor? LOL. I know people who are approaching the 100 gig mark in mostly pirated songs. Would they suddenly start buying all their music legit if they couldn't pirate? No, certainly not... they'd borrow and rip friends CDs as much as possible, and swap mp3s with buddies ad nauseum, but if they couldn't get tracks they wanted that way, they'd likely buy 'em. These people are, after all, music lovers, even if they are 'dirty pirates', as a friend called 'em.
I do agree with you that the major labels would LOVE to be in the position of re-selling to us all of our favorite music again in a different and allegedly superior format to CD. It would certainly light a rocket under sales for them, but its not going to happen. The industry did too good a job of convincing people that CD was the 'perfect format' and could not be significantly improved upon, quality-wise.
So with that fantasy out of the way, the industry needs to deal with its real problems head-on: piracy, quality, and making the best out of online distribution. But I think they'll continue to whine about how they're being screwed for quite some time instead.
.
They are trying to charge for a service that is simply no longer needed. The internet provides more than adequate exposure and distribution, and it does it almost for free.
And don't even get me started on copyright (prevention) law. Our society and economy would be better off without our the current, absurdly inequitable, copyprevention system. It is accomplishing the exact opposite of the original goal, to foster artists and writers by providing them with economic incentive. Instead, copyprevention laws are foisted upon us for the benefit of large corporations and at the expense of individual creators and consumers. Copypreventions are making the distribution of wealth less equitable while simultaneously stifling creativity.
I don't think piracy or even crappy music is the reason for the decline in album sales. It's market saturation, the same thing that is now slowing down DVD sales.
... Refusing to sell what customers want to buy, and accusing them all of being criminals when they choose to take their money elsewhere also has a lot to do with this. The industry attitude for decades has been "we will tell you what to think, and you'll pay us for the privilege". Well this generation has woken up, and they aren't going along. So like any good megalomaniac, the industry has responded with threats and accusations. Everybody is evil, except for themselves.
Actually, tapes did compete with CDs for awhile, because you had the choice of buying an album you wanted on tape for 10 bucks or so, or on CD for 18 bucks or so. Hmm, I wonder which format the music companies wanted you to choose there?
Especially when the manufacturing costs for CDs are (and always were) significantly lower than cassette. They didn't charge a premium when transitioning from vinyl to tape, so nobody had a problem. With CD, they doubled their prices and didn't do a single thing to deserve it. The songs are still being recorded only once, the artists are getting the same (lack of) royalties, and their costs are lower.
There is no (and never was any) justification for the high price of CD. I'm shocked that it's taken 20 years for this to actually hurt the labels.
Of course, again, the music companies don't much like online downloads, as they don't make as much money as they'd like off them, and they don't have complete control over distribution. Sound familiar?
With iTunes, they make 65 cents per track, or $6.50 for a typical 10-track album. This is more than what they make for a CD. According to Billboard, for a $17 disc, $6.23 goes to the store, $3.34 goes to the distributor, and the remaining $7.43 goes to the label. Now subtract the costs that don't apply to iTunes, like physical manufacturing ($0.75) and kickbacks to retailers ($0.85), and we get $5.83 revenue per CD.
(BTW, this is why companies like BMG can sell closeout CDs for $6.50-7.00 per disc. Simply eliminating a store and distributor knocks almost $10 off of the price without changing anything else.)
So the labels make 67 cents more per album on iTunes than with CD. And they're complaining that it isn't enough.
I do agree with you that the major labels would LOVE to be in the position of re-selling to us all of our favorite music again in a different and allegedly superior format to CD. It would certainly light a rocket under sales for them, but its not going to happen. The industry did too good a job of convincing people that CD was the 'perfect format' and could not be significantly improved upon, quality-wise.
They're trying again with SACD and DVD-A. The problem is that most people can't hear much difference between the two, and even those that can aren't going to consider the difference enough to justify paying $22-25 for an album they already own.
Case in point: I bought two Yes albums on DVD-A ("Fragile" and "Magnification"). Fragile sounded incredible, because they did a lot of remixing and remastering from the original 70's multitrack recordings. Magnification, on the other hand, sounded exactly the same as the CD, because that album was originally recorded digitally, and the CD shipped with a surround (Dolby Pro Logic) mix.
In other words, customers are not likely to see any good reason to migrate away from CD unless the industry forces them to by halting CD production altogether. IMO, all of the improvements people are seeing with newer audio media are coming from remixing and remastering, which can be (and often are) done for ordinary CDs today.
With iTunes, they make 65 cents per track, or $6.50 for a typical 10-track album. This is more than what they make for a CD. According to Billboard, for a $17 disc, $6.23 goes to the store, $3.34 goes to the distributor, and the remaining $7.43 goes to the label. Now subtract the costs that don't apply to iTunes, like physical manufacturing ($0.75) and kickbacks to retailers ($0.85), and we get $5.83 revenue per CD.
(BTW, this is why companies like BMG can sell closeout CDs for $6.50-7.00 per disc. Simply eliminating a store and distributor knocks almost $10 off of the price without changing anything else.)
So the labels make 67 cents more per album on iTunes than with CD. And they're complaining that it isn't enough.
Yes Shamino, but you also have to take into account 'lost' sales due to folks cherry-picking tracks on iTunes. With CD, they'd have to purchase the entire album to get the song they want (unless there was a CD single out, but those are not doing well as a format). With iTunes, consumers bypass all of that.
Given that, CDs appear to be more profitable overall than downloads for the music industry. Which would better explain the whining and crying and repeated attempts to bully Jobs into raising iTunes' prices... though given that this is the music industry, simple-minded greed comes into it too, no doubt.
On all your other points, I concur.
ps- Given how much the major labels would stand to save by cutting out stores and distributors, its a wonder that they haven't tried harder to sell the bulk of their CDs through their own online stores. They could hit much sexier pricepoints ($9.99 for new music), which would very likely boost sales, while still making more money per CD.
But, of course, they have become so dependent on a few large store chains (Wal-Mart, Target, Best Buy, etc.) that they're probably terrified of the retribution that would ensue, even though long-term it'd probably be better for them to go that way. And of course Amazon would be pissed about being undercut as well.
.
Yes Shamino, but you also have to take into account 'lost' sales due to folks cherry-picking tracks on iTunes. With CD, they'd have to purchase the entire album to get the song they want (unless there was a CD single out, but those are not doing well as a format). With iTunes, consumers bypass all of that.
I'm not certain of that either.
Sure, one person will buy 1-3 tracks instead of all 10, but others will buy those 1-3 tracks instead of not buying anything. If there are 4 "bought 3 instead of nothing" people for every "bought 3 instead of 10" person, then the overall number of tracks sold will be greater, and profits will be higher.
I wonder if anyone has done the research to see if this is happening. It wouldn't surprise me if the music industry doesn't want to know the answer.