quoted 7 lines -----Original Message-----> -----Original Message-----
> From: Jeff Waye/Ninja Tune [mailto:jeff@ninjatune.net]
> Sent: Saturday, May 20, 2000 3:46 AM
> To: idm@hyperreal.org
> Subject: Re: [idm] mp3s and change in the music industry
>
>quoted 10 lines -people argue right now that online distribution of MP3 sales eliminates> -people argue right now that online distribution of MP3 sales eliminates
> a lot of those costs and makes it cheaper. That would be marginally
> correct for now, but if it takes off as a viable revenue source, then on
> top of my expenses now, I ad the following....hiring additional employees
> to take care of on-line business, advertising on the web, co-ops with web
> companies, more promos sent to online media and radio....
> essentially what I'm getting at is that the digital world will become
> just as expensive as the real world to sell records in, and maybe it will
> level out to be about $11.99 a record but you don't get the packaging.
>
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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