Anyone who knows me knows I’m old school and still buy music CDs (my collection at the time of this article is about 415 albums, some double, some triple, and some boxed sets, and that doesn’t include burned bootlegs, which is probably another 200-300 discs) and not digital music files (such as MP3s). The reason I do this is because I want to be able to do what I want with my music, I want the higher quality of the CD rather than a compressed audio file, and, honestly, I like the liner notes and being able to look at a physical collection of music. However, I don’t buy CDs very often anymore because they’re expensive. At $15-18 for a single CD, it’s not cheap (granted, I spend that amount on beer every week, but I like my beer). While I prefer new CDs (they’re nice, no scratches, and the whole package is in good condition), I have started buying a lot of used CDs from Newbury Comics. They’re a lot cheaper (especially the super cheap section at the one in the Providence Place Mall where they’re $3 each) and the money doesn’t go to the record companies, preventing me from feeling like I should boycott major label music (which I do on the new CDs I buy. Wal-Mart (of all retailers) is looking to change all of this.
Wal-Mart is the largest retailer of music in the country, accounting for about 20% of major label record sales. They currently sell CDs at a loss because they want people in their stores buying other things (disclaimer: I think Wal-Mart’s business practices are unethical and the company should be boycotted, which I do). They know people don’t want to spend more than $10 on a CD, and they’re 100% correct. Why do you think people have turned to illegally downloading music? The answer is simple - they can’t afford to buy it. Wal-Mart knows this and has supposedly threatened to take music off their shelves and replace it with something they can make money on. The labels know this will hurt them immensely and will do what Wal-Mart wants, but not without a fight.
This is all from an article in Rolling Stone entitled (you guessed it) “Wal-Mart wants $10 CDs“. The article is definitely worth a read for a little insight into the music industry and why music costs what it does. I’m all for lowering the price of the CD, but not at the expense of the artist… instead at the expense of the label. Here’s a breakdown of where the money goes from a $15.99 CD taken from that article:
This breakdown of the cost of a typical major-label release by the independent market-research firm Almighty Institute of Music Retail shows where the money goes for a new album with a list price of $15.99.
$0.17 Musicians’ unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists’ royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead
As you can see, the actual cost of making the CD itself is minuscule. The artists’ share is only slightly more. The rest goes to some other questionable accounts (publishers, labels, promoters, unions, etc.). With the internet, there is no reason artists need major labels to get a large audience unless they want to be quickly throw into the spotlight and get tons of radio play. If your music is good, you can go indie and still get a good-sized audience and sometimes even make a living off it. There’s a lot to be said about word of mouth and grass roots marketing of music.
Anyway, if you have any interest in the music industry, this article is a major eye opener. I found it on Slashdot.
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