In general, I wouldn't like to go on commenting on this thread as 1) I'm not
involved in music industry and 2) my interlocutor runs one of the best
record labels available. And my only intention was to point out the benefits
which introduction or total switch to online distribution might bring to a
regular record label. Then I'd like to put a couple more words on it.
quoted 8 lines -----Original Message-----> -----Original Message-----
> From: Jeff Waye/Ninja Tune [mailto:jeff@ninjatune.net]
> Sent: Tuesday, May 23, 2000 9:37 PM
> To: Konstantin Minko; idm@hyperreal.org
> Subject: RE: [idm] mp3s and change in the music industry
>
>
> the $11.99 figure comes from my thinking that...
at first, I am sorry for such an inapproprite question - of course pricing
policy is a confidential data for any company, especially in such a tricky
business as music industry is.
quoted 12 lines -in the end I think all online distribution will cut out is the packaging>
> -in the end I think all online distribution will cut out is the packaging
> cost, so that's the figure I derive minus the packaging.
> -you say the it takes less people to employ to run a digital side. I
> currently run our entire U.S/Canada operation with 5 people. Most web
> sites I know have a lot more working for them. Neither of those 5 people
> have anymore time on their hands. To ad digital distribution I would need
> to hire more people and essentially become self-distributed (there's a
> reason I don't distribute our records directly and it's purely
> financial). If I don't do that, I license the right to a company....a
> company that needs to also make money to survive (ie. get their cut in
> the markup)
If your operation require such few people then online distribution may add
maximum one-two persons to your rooster which is enough to run even more
comlicated and staff ample businesses in their online version. If you are
worried on how this would complicate your business you could start this
operations from zero. Paid online downloads is just another version of the
software for your web site and online shop billing system and a guy to watch
if it runs smoothly. I don't think that this guy's salary and new software
shall not be covered with what direct net distribution to almost unlimited
audience of Internet might bring in proceeds terms to your business. Of
course this is just an option but I do believe that digital net distribution
is a future of music industry, though I admit that packaging (especially on
Ninja releases I own) is excellent and shall not be replaced by self made
CDRs.
quoted 6 lines -I think generally the digital world is skewed in perception right now.> -I think generally the digital world is skewed in perception right now.
> Most companies seem to have a good deal of private investment, or are
> public companies and can afford to operate at a loss for awhile. Once
> that dries up and all the web companies need to maintain a revenue stream
> then the cost will level back up to the current 'real world' costs (but
> yet then I employee twice as many people).
One of the best advantages an online can bring to B2C (business-to-client)
businesses is a direct contact with millions of customers browsing online
nowadays. That is why many online companies operate from the start on
no-profit level. The direct access to audience and increase in customers is
a general booster to online companies' share price and operation policies.
In your case what you will loose, only a person who would buy online (let's
say $5) version of new Amon Tobin or Funki Porchini instead of buying them
on CD for $15. But this losses shall be covered with lots of people who
would not like to spend $15 in any case and prefer to buy everything cheaper
but do not have access to pirate sites or just do not want to deal in
illegal way. I, personally have CDRs of Ninja stuff from originals from my
friend's collection (he's a Ninja maniac trying to gather all Ninja Tune and
Tone releases in originals), but with all the piracy in my country and
totally lower than yours level of life in here I do own several original CDs
of Funki Porchini, Amon Tobin and Animals on Wheels though I could easily
copy them on CDR. I just want to have them in original. I know that I'm not
the one.
quoted 9 lines -okay what I didn't factor in is the convenience of 'stock on demand',> -okay what I didn't factor in is the convenience of 'stock on demand',
> but I'm pretty tight with the pressings so I'll give another dollar
> off....so $10.99.
>
> Look I could be totally full of shit on this, I don't have any experience
> in the web world expect based on what I see now. I can appreciate it from
> a marketing standpoint and that it does give us higher visability, and if
> 100% of my sales become digital than it's all good and easy but until
> then it's a lot of financial juggling between the two.
Look I may be totally full of shit too. I did not want to offend anyone and
especially you. Just telling what I know about it.
Take care and go on ninjing...
Alien
quoted 76 lines Okay, I'm done now.>
> Okay, I'm done now.
>
> Jeff
>
>
> >With all due respect, I do not think this is correct. In the macro scope
> >getting your business online nowadays gives benefits from thousands of
> >directions and lowers business expenses to impossible minimums. It is a
> >general trend and publicly available facts.
> >
> >Let's look in the music industry using your scale of price content.
> >
> >Eliminated components: Production costs. Physical distribution.
> Paying for
> >overstock. etc...
> >
> >Components that remain on the same level are: recording fees,
> studio costs,
> >mastering, print
> >ads, tour support, co-ops, promo copies, print media publicity, radio
> >publicity, postage.
> >
> >Componets that are lowered in cost: number of employees (online business
> >needs 10 or 20 times less employees to run), office overhead costs,
> >management costs, etc.
> >
> >New components: online ads (can easily be avoided at all or put
> inside the
> >same physical ad budget), web co-ops (can be avoided at all or
> minimized on
> >less costly basis with physcal co-ops, online promos (can be
> avoided or put
> >inside the same physical promos budget).
> >
> >PLUS: A huge rise in sales due to increased avalability of your products
> >which is the most important benefit of online business.
> >
> >And that's a look from the person who's not involved in music
> industry (I am
> >a financier and involved in online business). If to take into
> account that
> >only 1/3 of CD price is generated by record company... This means that
> >digital music can be available less than for 5 bucks minimum. Where is
> >figure of $11.99 is generated? Please explain.
> >
> >Let's just guess how much a record company would benefit if not
> only a part
> >of its business moves online but all physical sales are suspended and
> >switched to online... You just have to keep your recording, mixing,
> >mastering, etc. phase and then have a couple or more employees
> responsible
> >for sales!!! Other parts of infrastructure like advertising or promoting
> >will remain and/or be adapted to online which provides additional
> >cost-effective schemes.
> >
> >this message is pure MHO not intended to hurt anyone but please
> do not hide
> >the truth from us.
> >
> >take care
> >
> >Alien
> >
> >np. MP3's of U-ziq's "In Pine Effect" which is pretty shitty for me in
> >comparison to his later works and which I could have bought if
> not for mp3s!
> >God bless MP3.
> >
> >btw: Ninja is a great label and is not particularly a subject of our
> >discussion.
>
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