uummmm....buddy....not sure if you read maximo's email or not but he didnt
question your logistics on the digital audio....he questioned you telling
Jeff that he as no idea about that costs of putting out cds....i think
overall that is pretty ignorant on your part.....you are nearly 100% correct
about the digital format information...but Jeff knows what hes talking about
100% for physical media, and maximo didnt even comment on your info on
digital audio.....it is the wave of the future and its great...but i dont
think its wise to call people liars....especially when they are very
knowledgable and outright have no reason to lie....
-brock
----- Original Message -----
From: "Intermodal" <Chrome3@ix.netcom.com>
To: "Maximo J Mihelik" <bzrec@juno.com>
Cc: <idm@hyperreal.org>
Sent: Saturday, May 20, 2000 1:43 AM
Subject: Re: [idm] mp3s and change in the music industry
quoted 10 lines Maximo J Mihelik wrote:
> Maximo J Mihelik wrote:
> >
> > Hello,
> >
> > Jeff Waye/Ninja Tune wrote:
> > >
> > > Just to shed some light on the breakdown of a list price....
> > >
> > > -I set domestic CD lists prices as $14.99 not $16.99
> > > -yes, it does cost $1-$2 in production cost depending on the
packaging.
quoted 6 lines There is also the recording fees, studio costs, mastering, etc...
> > > There is also the recording fees, studio costs, mastering, etc...
> >
> > This is bullshit.
> >
> > Actually It isn't. You think that the money for advertising, promotion,
> > and everything just appears? No. you have to make that money back,
jsut
quoted 97 lines as you have to make the money from production. The cost of a CD is the
> > as you have to make the money from production. The cost of a CD is the
> > cost of what it takes to produce, and sell it as a whole. Studio time,
> > air play, promo copies, postage...
>
> Ok, lets think about this.
>
> Downloadable digital audio..does it make sense that the pressing and
> shipping costs are cut out? I will say it slowly for you, the costs for
> the physical medium are gone, this means labels do not pay pressing
> costs. The other costs are still there obviously, but 2/3rd of the
> retail price of a CD have nothing to do with what it took to make that
> CD.
>
> The cost to a consumer of a CD is not what it costs the label. the cost
> of a cd is roughly:
>
> 1/3 the labels costs (artist fees, promo, pressing, all the stuff you
> already have to pay for, exactly what you are talking about...)
>
> 1/3 the distributors fee (warehousing, promotion, shipping...)
>
> 1/3 the retailers markup (brick and mortar costs...)
>
> I will say this slowly for you again. 2/3rds of the cost to a consumer
> of a cd has nothing to do with the label, IOW the label is not seeing
> 2/3rds of the retail price of a CD. Once again, all the stuff you pay
> for as a label is covered in your 1/3rd, the distributor and retailer
> mark-ups do not pay for you to produce a CD.
>
> A label has to pay for everything on this 1/3 of the retail cost of a
> CD.
>
> once again, it means that the label has to pay for everything with 5
> dollars out of a 15 dollars CD. That means that the consumer is paying
> 10 dollars for the physical media to be put within their reach.
>
> If we go to a non-physical media, like say...downloadable digital
> audio...you can automatically cut out 10 dollars of the cost of music by
> removing distributors and retailers. A CD only costs 5 dollars from a
> label, you as a consumer are paying another 10 dollars to have this CD
> brought to a store where you can buy it. If you cut out the system that
> gets the CD from the label to the store, you don't have to pay them
> their 10 dollar cut, doesn't that make sense?
>
> Remember, the CD is only a container, it isn't the actual product.
>
> If you charge 5 dollars to download the audio, you are making just as
> much money as you would with a physical release, but the consumer is
> only paying for the label costs, not the costs of the distributor and
> the record store...that's why it costs a third as much.
>
> Now say you charge 7 or 8 dollars to directly download the audio from
> your site. You are making 3-4 dollars more per unit than you were
> selling it to a distributor, and the consumer is still spending less
> than he would if he bought the CD from a record store.
> Obviously there are costs in the digital realm, but those costs would
> still be less per unit than the pressing and shipping costs of physical
> media.
>
> Remember, the CD is only a container, it isn't the actual product.
>
> the whole point of my post was that if you can sell your product
> directly to consumers without having to go through
> middle-men(retailers/distributors, which is where 2/3rds of a CD's final
> retail cost comes from) you can charge more per unit, and the end
> consumer will still pay less than if he had gone through the standard
> distribution system. It is the whole factory direct idea, labels make
> more because they are selling direct, and consumers pay less because
> they are buying direct.
>
> The technology is not there yet, digital audio is not going to be decent
> until we get better resolution and bandwidth with data compression.
> Perhaps some kind of anti-copy encryption, and a digital watermark is
> you want to be anal. I know the digital-audio-as-a-source-of-revenue
> idea is not quite ready yet, but wait another decade. We are not there
> yet, but we will be. Your kids might even find the idea of record stores
> kind of strange and antiquated.
>
> >
> > I happen to run a small label, and I know.
> >
> > Even these costs have nothing to do with the reason why a CD costs 15
> > dollars at the store.
> >
> > Actually they do, he wasn't lying, and he has no reason to do so.
>
> If he can find me a distributor that will buy my records for 15 dollars,
> and sell it to a record store for 15 dollars, who will sell it to a
> consumer for 15 dollars, I will fly out to his pad and mow his lawn for
> the rest of the summer.
>
> Music costs so much because of middlemen, not record labels. remember,
> 2/3rds of the price you pay is to get that container from the label to a
> store where you can buy it.
>
> >
> > > -when you put it all together is equals a pretty significant amount
per
quoted 7 lines CD.
> > > CD.
> >
> > not really, you have been doing it on what, 5 dollars a unit or so all
> > this time.
> >
> > The whole remainder of this message is just stupid. CDs are shitty
> > quality? Vinyl is better, are you aware that CDs are 44000, and Vinyl
is
quoted 105 lines a bit more than half of that?
> > a bit more than half of that?
>
> Vinyl still has a better resolution than those 16-bit stair steps your
> ears have become accustomed to. Despite what you have been told by the
> record industry, CD audio is not the holy grail of audio standards. I
> personally believe that old synths, recorded on tape, mastered from tape
> to plates to vinyl sound better than DDD records and CD's. We are
> holding on to this antiquated 17 year old format because of money, not
> because the quality of the format. Honestly, as a generation, we have
> been robbed of good audio. Our grandkids will look back at 16-bit 44.1
> khz the way we look back on the old "reverb and echo" production
> techniques from the 50's. in 2000 we could be doing a lot better than 16
> bits and 44.1. It is sad that an entire generation of music has been
> castrated of its upper and lower inaudible harmonics.
>
> There is a reason why a symphony in a good hall will always sound better
> than a site recording of the same performance. 44.1 audio means that in
> reality you have about a 22khz frequency response when the Nyquist
> Theorem kicks in. Which on the surface of things makes sense, most of us
> can only hear to 20 khz as kids, and 15 khz as adults. The problem is
> that what you can't hear effects what you can hear, the harmonics
> outside of our hearing range reach into the harmonics we can hear. That
> is why the hall sounds better than the site recording, because all of
> those overtones are present in the hall and that makes the sound richer.
> 22khz cuts out a huge part out the audio spectrum out, making acoustic
> recordings sound less rich, and I will not even go into modern studio
> equipment. It is a good thing that the newer boxes are breaking with 16
> bit resolution, which hopefully we will be past in a decade.
>
>
> >
> > All I know is mr ninja speaks the truth. And if you'd done a little
> > research before sending your message you would have found that out.
>
> I have read This Business of Music and more articles on the music
> business than I care to admit to. As a musician of 10 years, I would
> like to think I have some idea of how the record industry works.
>
> >
> > But, I did a little for you.
> >
> > cdman.com - a cd manufacturer.
> > 500 CDs, jewel cases, 2 page booklet and a tray card. $889. That
> > doesn't include the films for the booklets, studio time, postage,
> > promotion or advertising. But I think you get the point. It's not
> > cheap. Most labels are justified in the prices they charge.
>
> you forgot mastering lab costs, paying your graphic designer, advances
> and all the other fun things that come with running a label. I never
> said that indie labels charge too much for records, I know the reality
> of the business(I know it is a business and I know just how grim it is.)
> Most of the label owners I know are really good guys with good
> intentions who are fighting hard just to break even and pay their
> artists. trust me, I have no illusions that indie label owners take
> monthly trips to the bahamas and support coke habits on the backs of
> their artists.
>
> What I have a problem with are major labels and their distributors who
> screw their artists over. the whole 12 point minus recoupables system is
> a very real part of the music industry and it does not amount to much
> more that indentured servitude for the vast majority of signees. Groups
> like TLC went bankrupt for a reason, and TLC sold more records in a
> month during their peak than I will sell in my career as a musician. The
> major label and distribution system is set up to make money off of the
> back of artists.
> They have the system locked up from labels, to distributors, to record
> store payola, to every form of promotional media Sony,
> BMG,Universal/MCA, Time-Warner, and Virgin have the industry locked
> down.
>
> That system has to be stopped, and I believe that digital audio is the
> way to do that. It strikes me as being the most equitable way to
> distribute music while allowing the most consumer friendly avenue to
> purchase music. I am sure Jeff from Ninja Tune has good intentions, and
> I was wrong to take that tone with him, but the fact remains that the
> industry is rotten. It is set up for the most part to gouge the artists
> and the public, and that is wrong. The artists should be making more
> money and the public should be paying less for music. I think
> downloadable digital audio is the best way to accomplish this.
>
> I respect labels that do 50/50 profit splits, or 20 percent off the top,
> but the vast majority of the industry is not set up this way. It is set
> up to screw artists, and that is a fact, that system needs to change. It
> is not that I think profit is a horrible thing, I just do not believe
> you need to screw over other people in order to survive. A 12 point
> major label deal is prostitution is every sense of the word.
> I will not be pimped by the record industry, and I do not think this
> should happen to any other artists. One day there will be a system where
> artists and labels can deal directly with their fans and make money from
> it. I believe that is the ideal system, and it is what we should be
> shooting for as business people/artists.
>
> mt
>
>
> --
> Michael Taylor : Chrome3@ix.netcom.com
> http://homes.arealcity.com/Intermodal/index.html
> http://www.mp3.com/TheMSProject
>
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