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Cost Per Minute: Are Compact Discs A Good Value?

Since its tuneful Tuesday (see our earlier discussion on XMSR) lets revisit the concept of value and music. This meme is increasingly infiltrating the mainstream.

Today's question: "Are Compact Discs A Good Value?"

No, and the tale below is a classic example of not just that, but why the industry continues to stubbornly insist on losing sales:

You’ve heard many times on the pages of AVRev.com about how the woes of the music industry can’t be placed solely on the shoulders of peer-to-peer file swapping or piracy. The fact that the compact disc is still a poor value was never more evident to me than when I was at the mega electronics store WOW! in Long Beach, California this weekend. This staggeringly large store features a fully stocked Tower Records/Video, along with the newly merged CompUSA/Good Guys! I went in to pick up some toner for my laser printer and, for some reason, the once familiar but long forgotten desire to browse the CD racks came over me. I realized that in my collection of “must have” music, I had a gaping hole. I didn’t have the Metallica CD … And Justice for All, and I wasn’t about to break out my worn-out cassette version or download the album from Limewire for fear of Metallica’s strong-armed legal team, so I figured I’d pick up a copy at Tower Records.

I wandered up and down the aisles, remembering the days when I would actually care and get up for the upcoming release of a new album by a band I thought was amazing. Perhaps I’m showing my age as I hit my early thirties, but I just found it hard to get excited about anything I saw on the “new releases rack.” Then again, finding the next big thing wasn’t my goal. I wanted one of the best metal albums of all time and before I knew it, I was at the Metallica rack. Flipping through the CDs, I found that oh so familiar album cover with the crumbling statue of the Lady of Justice on the cover and almost didn’t flip the disc over to check the price, assuming it would be somewhere in the $11.99 to $14.99 range. Curiosity got the best of me and I flipped over the disc. To my amazement, the price tag read a staggering $18.99 and there was not the typical yellow “sale” sticker that I am so accustomed to seeing. If I wanted to rock to some “Shortest Straw” and “Harvester of Sorrow” in my car, I would have to plunk down quite bit of dough.

I have never considered myself cheap, but I found myself with a little case of sticker shock. In retail, there is a price where almost anything will sell. List your house at $50,000 over market value and, unless it’s a scorching hot market, the offers won’t come pouring in. For me, with this CD purchase, the decision came down to something simple: the $20 bill in my wallet. To go along with my craving for this Metallica disc was also craving for a strawberry smoothie at Jamba Juice. Had Tower priced the disc at what I felt to be a fair amount for a back catalogue record ($9.99 to $13.99), I would have bought it without hesitation. Because they swung for the fences, I left the disc in the bin, doing the retailer, the label and a reportedly financially starving Lars Ulrich no good whatsoever. I did buy the over-priced drink and then went home to purchase the exact disc I wanted, used, from eBay, for a little bit over $5 with $2 shipping. I know arguing over $10 here and there seems like I might be cheap, but I am not. I lunch in Beverly Hills every day, paying easily what the album would have cost me. I was making an economic protest about the value of the album. I understand overhead and royalties with the best of them, but at the same time the label has long ago paid for the production costs of such a great, multi-platinum heavy metal record. With CDs in jewel cases costing about $0.50, I was getting ripped off and I wasn’t going to stand for it, nor was I going to do anything illegal or immoral in response.

This lost “brick and mortar” sale due to an overpriced disc is becoming a common occurrence. I have often heard my friends saying, “ I just don’t buy music any more, because it’s too expensive and just not worth it,” or “Why don’t you just get it used?’ People are still buying DVDs by the millions each week, with “King Kong” selling a reported 6.5 million copies in its first week. A number-one-selling compact disc might be lucky to do 10 percent of that amount. Of course, this number could be a little skewed, as there are many more music releases in a given week than there are mainstream DVD releases, but the days of N’Sync or Eminem having first week sales well north of a million copies seem to be a thing of the past. It seems lately that even the biggest-selling albums in a particular year barely sell more than Peter Jackson’s big-budget thriller did in seven days.

The labels and retailers are committing suicide. Theyt ultimately will reap what they have sown: financial irrelevance and replacement by more competitive entertainment and digital media.   

Source:
Cost Per Minute: Are Compact Discs A Good Value?
Bryan Dailey
AV Revolution, April 20, 2006
http://www.avrev.com/news/0406/20.metallica.shtml

Tuesday, April 25, 2006 | 01:30 PM | Permalink | Comments (52) | TrackBack (1)
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Comments

Funny, that. Because when I was in New Orleans on hurricane relief, I was driving literally 11-12 hrs per day and wanted some tunes to play in the rental.

I went to a store thinking I'd replace my lost copies of And Justice for All, Ride the Lightning, and Master of Puppets that disappeared back in grad school. The cheapest was 17.99 and these are what...15year old discs? Screw em, I ended up buying some local funk/brass stuff (Soul Rebels, Meters) and some mint used Coltrane, Kenny Burrell, Grant Green, Dr. John for $7/per and a new Pavement double disc reissue of Slanted and Enchanted for $19.

One more thing on Metallica...if you are even a casual fan, check out the documentary film on them "Metallica: Some Kind of Monster". It's a great flick...not alot of music footage, more "inside the band" and all the dysfunctional BS (and I'm not a metal head by any stretch, but i love this film).

Posted by: Alaskan Pete | Apr 25, 2006 2:04:40 PM

Hearing that people suggest buying used raises this question for me: is the durability of CDs and DVDs an issue for new sales? CDs have been out for many years, and if taken care of, they more or less last forever. Is the problem with back-catalog CD sales that they are now competing with the used market? Will DVD sales drop off eventually as the back-catalogs end up in used-DVD stores?

Posted by: JohnG | Apr 25, 2006 2:29:05 PM

I'm working on a big research piece on this;

Here's the early look at it part I: Dynamic Pricing: DVD versus CD Strategies

Posted by: Barry Ritholtz | Apr 25, 2006 3:01:12 PM

One of the very first CDs of mass issue was Pink Floyd's Dark Side of The Moon. Mine still plays flawlessly to my ear. I'll pop it into a Mac and bit slice it for any data loses out of pure curiosity but I'm not worried as I immediately digitize using redundancy software anyway.

Music just isn't worth as much anymore and the music industry is late to that realization. One need only look at the market for royalty and royalty free images to see where the music market should be.

Posted by: Robert Cote | Apr 25, 2006 3:24:06 PM

I haven't bought a CD for serveral years back to when they started putting on copy protection schemes that hosed your computer.

I buy the concert DVD and enjoy the video and audio. I rip tunes from the DVD to CD for the car.

You can get a 2 1/2 hour live concert cheaper than a 10 song CD. Usually the concert includes they best music and the Cd offers tow hits and 8 stinkers.

Posted by: me | Apr 25, 2006 3:47:37 PM

I had the same Tower Records experience four years ago, the last time I ever set foot in one of their stores. I looked at the sticker prices, cracked up laughing, and never came back. They are in a long, slow death spiral--brick and mortar music retail will probably only survive as a low margin add-on or a loss leader (Best Buy, Circuit City, Wal-Mart, Barnes & Noble...)

On the subject of pricing CDs like DVDs, I wonder--is Amazon.com already doing it? Consider these variations:

Metallica, And Justice for All: $13.96

Rage Against the Machine, self titled: $8.97

Pink Floyd, Dark Side of the Moon: $12.98

Pink Floyd, Momentary Lapse of Reason: $8.97

What could the differentiations be based on, other than some form of popularity metric?

Also note that all those are available used, through Amazon, at 50% off give or take.

The "buy it used" phenomenon might be the real nail in the coffin for the bad old ways. Used CDs used to be sold by quirky stores in strip malls. Now you can find most anything you want online...

Posted by: trader75 | Apr 25, 2006 4:12:18 PM

Saying music isn't worth as much actaully has two meanings. First is that people aren't willing to pay the same high prices they once were. And the second that music doesn't mean as much to us as it once did.

This second meaning is the most interesting (as I recently posted). Does the fact that music is so easy to make and easy to get result in a music experience that necessarily less valuble? Are the cheaper prices we expect more a reflection of a cheapening music listening experience than a reflection of economics?

Posted by: niblettes | Apr 25, 2006 6:49:32 PM

Most digital media appears to be quite fragile, at least when compared to many of the analog alternatives (books, records, etc., see for e.g., http://www.itl.nist.gov/div895/gipwog/StabilityStudy.pdf).

Given reasonable care - no extremes in temperature, humidity or light - but not necessarily TLC the average CD may last as few as 10 years before film degradation or delamination cause significant errors or make it unusable; the plastic itself may last a long time but that has nothing to do with data integrity. The situation with digital data archives is even more serious since format obsolescence is as big a problem as media degradation (e.g., http://www.d-archiving.com/digitallongevity.htm).

If you're looking for longevity in a digital music collection better make periodic copies of ALL the valuable pieces using a utility with good redundancy and data loss algorithms (standard rippers or copy utilities lack this and copies of copies will become error prone); CD's and other digital media break down over time even if stored appropriately and seldom or never used.

Personally I think that many years from now people are going to be surprised at how much information is lost from this century; on a proportional basis - % loss vs. total information generated - it wouldn’t surprise me if the loss is right up there with the burning of the library at Alexandria; say maybe half of all knowledge recorded at the time?

Maybe that speaks to niblettes' point also: Why pay up for that which is ephemeral by its very nature?

Posted by: RW | Apr 25, 2006 7:00:30 PM

In response to RW - sure, CDs die in the long run, but they are definitely more durable than records ever were in the short to medium term. I mean i have never seen anybody treat CDs with the tender-loving-care that we all had to use with LPs, to avoid scratching the darn things.

Anecdotally, when i was a record-buying teenager, there were virtually no used record stores, whereas now there are all kinds of used CD stores. This would seem to reflect the fact that people can use CDs for a while, perhaps rip them, and then resell them.

So, i would still argue that the relative durability of CDs, and the ability to duplicate them or rip them, and their compactness (which makes them easy to ship) all may pose a problem for sales of new CDs. And this problem may loom in the future for DVDs once enough are in circulation.

See this piece from a few years back: http://www.signonsandiego.com/news/business/20020614-9999_1b14usedcds.html

Posted by: JohnG | Apr 25, 2006 7:39:57 PM

What makes the pricing of DVDs attractive is that the price of most movies are reasonable compared to renting (usually about 2-3 times rent). So if you are going to watch a movie a few times buying makes sense. DVD pricing is attractive compared to renting or buying used.

The other reason is that a DVD movie is not a bundle. A $60 five-movie combo of a one hits and 4 average movies would be a poor sell, or a $1 single hit song CD would sell better than if it were in a bundled CD.

This is why used CDs are not the problem for the CD market - the CD pricing and bundling is killing the CD market.

Posted by: billy | Apr 25, 2006 8:37:21 PM

I don't think I've paid list price for a CD in years unless it's out of print. I definitely don't buy from retail shops (except every now and then Target will have something interesting on sale), which everything is overpriced. Better to join a CD club or buy from half.com/amazon.com and buy it used or new from internet resellers. Can't imagine why anyone would visit Tower ever.

I own well over 700 CDs and the average per-disc price was about $6... not $18. I don't believe in ripping off the musicians and I don't think the problem is with the manufacturers if the CD clubs are offering the same discs at $6 per (after you factor in discounts and freebies). I think it's Tower that's giving the whole shebang a bad name.

Posted by: Andy | Apr 25, 2006 8:51:41 PM

"A $60 five-movie combo of a one hits and 4 average movies would be a poor sell"

The DVDs even bundle a new one on sale for $14.99 and throw in an oldie for $5. So for $19.99 you get two good flicks.

The music industry is about as unimaginitive as it comes.

"And the second that music doesn't mean as much to us as it once did."

Great point. Now we have digital music at home or on the computer and satellite for the home or car.

They refuse to change with the times.

Posted by: me | Apr 25, 2006 9:32:07 PM

I buy almost all my CDs used at the local used CD store the run from $4.99 to $8.99. I end up thinking twice about the $8.99 discs (but I get a free one for every ten). I've also bought some off ebay, but that ends up being more effort than the "CD Go-round".

The selection seems to come from two sources, buy and rip where the new cd is purchased (new or used) ripped to mp3 and resold, newer artists/CD box sets are in this category. Then theres the collection clearout where someone rips their entire collection and sells the CDs, here we see how weird taste can range (12 Paul Revere and the Raiders CDs came in from one seller).

We have two of these stores in the RDU area. One in North Raleigh, where the buy and rip kids like the metal/country/country rock/speed rock. One in Cary where they buy and rip kids like the r&b/pop/classic rock/emo. Jazz/Blues selection is about the same both stores and less expensive than the pop/rock.

Posted by: Steve | Apr 25, 2006 10:01:29 PM

how many people are going to be buying King Kong in 15 years' time? The CD/DVD comparison never fails to annoy me; they are completely different goods.

Furthermore, (and apologies to Barry; I have made this joke before), I object to the "bundling" in movies. All I really want to see in a film is two car chases, a fight, a big explosion and a Hollywood starlet taking her top off. That's like maybe ten minutes of action, and yet these movie people expect me to pay for a whole 90 minutes of movie Rip Off.

Nobody seems to have a problem with the fact that ordinary retailers price-discriminate between customers who are prepared to pay up to have the thing now, and those who are prepared to wait until it comes on sale. I think that this is actually a mixture of a) people seem to lose all sense of rationality when it comes to the music biz and b) people aren't accustomed to think of themselves as "someone who would rather wait for a sale" even though with respect to music, they actually are.

The music industry has always been marginally profitable for shareholders and fantastically profitable for successful artists and managers and I don't see that much reason to believe it's changing all that fast.

Posted by: dsquared | Apr 26, 2006 2:25:02 AM

Here's a question for you.

A DVD for Titanic can be had for cheaper than the Titanic CD. The Titanic movie was one of the most expensive ever. How come we see DVD's for movies priced below or near the price of CD's, when the movies behind them cost so much more to make than the recording's do?

And don't tell me it's because of expensive musicians. Actor's are expensive too.

I know a record executive for Sony and I understand the reason they are out of touch. Their dirty little secret is they get the records for free. They have stacks of free cd's at work and give them away to their family. If you never buy something, but get it for free then you don't understand the economics of it.

I've been using Yourmusic.com to get CD's for $6 including shipping and the funny thing is that I buy a ton of them from there. Before I signed up for that, I never bought CD's cause they were too expensive. They don't get it.

Posted by: Cliff | Apr 26, 2006 10:54:08 AM

Of course, if the additions to the DMCA pass as currently proposed, you won't be able to rip CDs to your computer without becoming a criminal.

Posted by: Crackity Jones Jr. | Apr 26, 2006 2:09:01 PM

"Of course, if the additions to the DMCA pass as currently proposed, you won't be able to rip CDs to your computer without becoming a criminal."

Now this burns my curlies. I've got a few hundred disks and not one of them - not ONE - has terms of use printed on it. Which to me implies its mine - to do whatever the fuck I want with it. They took my money - deal over.

How would it play if you bought a house and when you tried to paint it a new color the builder came back and told you that its not allowed.

Bullshit.

Posted by: iPod Fan | Apr 26, 2006 2:31:13 PM

Consider this. If the Metallica ...And Justice for All is $18.99 and there are 9 songs on the album that is $2.11 per song. Tell me if that makes any sense?

Posted by: GreenLantern | Apr 26, 2006 2:31:30 PM

I sell my CDs for .99 on Ebay all day long. It ends up being less than $4 with shipping nationwide. All my music is digitally "backed up" in my media server so I am dumping the original. I would consider purchasing new music in digital format for about $5-7 per CD and give them some business, but they are greedy and wont ever give in.

Posted by: mike | Apr 26, 2006 2:33:39 PM

Well, 9 songs, but the album is over 70 minutes long. Most albums are 40-50 minutes, tops. Still, $19 for a CD is ludicrious. Metallica has always left their CDs overpriced (generaly $2-3 above the store average).

Posted by: Jimbob | Apr 26, 2006 2:45:49 PM

And this is exactly why the CD Trading sites are going nuts. I'd rather pay the USPS or the trading site a buck, and get a pristine copy for my collection.

An 18.99 disc, or even a 15.99 disc is ridiculous.

Posted by: Jon | Apr 26, 2006 2:47:14 PM

Newer releases are priced lower to move millions of copies and generate record sales.
Old releases take time to print also and don't sell as many copies, hence the higher price.
Now, I'm not one to defend to majors but really, it's just common sense that you pay more for catalog, I feel.

Posted by: Jon'n | Apr 26, 2006 2:48:52 PM

The age of the middleman in music is dying.

Record production companies must die. They rip off the artist and the consumer, while providing little corresponding value themselves.

The record companies are chock full of incompetents and leeches, and I'm tired of having to go through them to get money to the artists I enjoy.

I recommend that everyone everywhere vote with their bit torrent software against the record industry as we know it.

Until their business model is rendered absolutely ridiculous, this crap will go on and on.

Posted by: Bitsy | Apr 26, 2006 2:49:12 PM

"...the tale below is a classic example of not just that, but why the industry continues to stubbornly insist on losing sales."

Did I miss the part about WHY the industry continues to insist on losing sales? All I saw was a bunch of griping (albeit justified griping) about how expensive CDs are.

Posted by: iain | Apr 26, 2006 3:03:02 PM

It's funny you mention King Kong. As it was released here (Germany) it was available for just 10 EUR, I think, maybe less.

Posted by: Julian | Apr 26, 2006 3:05:41 PM

December 2008

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