I forgot to address this:

Gannon wrote:

I've been saying for many years - since HMV thought it was acceptable to sell albums for £15.99 all the way to the present day where many outlets offer physical new release albums for £7.99 - that if you lower costs in this industry sales will rise. I don't really have the stats to back it up. However, I know my spending habits. If physical CD albums were to cost £4.99 blanket price across all retailers I would definitely buy more from them than I do now. I spend a lot of time scouring the Internet rummaging through bargain bins and promo haunts for cheap albums. If there were the blanket £4.99 price, for example, then my efforts would be reduced in certain areas and increased elsewhere.

Also, as the article says, most money is made on merch and gigs these days anyway. Spending less on CDs will give me more cash to spend on tickets and t-shirts. And I will spend on those items, providing they're not increased at the same rate as CD prices decrease.

All business at one point or another need to make a choice between low profit margin - high turnover, and high profit margin - low turnover. When you talk about an industry that has countless participants, there's two main ways to remain competitive: undercut the opposition, or provide far superior service.

Furthermore, in an industry where 'service' is neglible, the obvious choice, then, is to undercut opposition. Enter places like Amazon, here in Oz it's currently JB Hi-Fi. Massive conglomorates with huge purchasing power who can not only afford to buy in bulk, thus reducing their overall unit price, but also to take a loss on some products to get people in, buy other products while they're there and ultimately develop a loyalty. Smaller chains and independent retailers have one option: reduce their prices or get out of the business. Most go with option A, much to their detriment and eventually have to settle for option B, but the damage has been done - as competition increases, prices get lower and lower, and unless it's an investment geared industry, raising prices is unthinkable. The cycle is great for the consumer, from the hip-pocket point of view, but while less money per unit may increase sales, it doesn't increase profits.

This applies to the pricing at the manufacture level, as well, not just the retail outlets.

And I disagree that it will help prevent piracy. As you know, the download for HANL's Deathconsciousness is a paltry $5, and you receive the PDF of that essay/book. The other day, I had a look at their last.fm page. Several people on there asking for a pirated file of the PDF because their original pirated file contained a corrupted PDF file. (Sidenote - how bloody rude!).

Downloads for $1? I almost gurantee it will see people go - "they're only missining out on a dollar if I pirate it, so who cares?" People who do the wrong thing will always find a way to justify it, no matter how attractive you make the alternative.

Edit: Oh, and I'd say more profits are made via gigs and merchandise these days because you can't download a T-shirt or a genuine live experience from the internet.

Last edited by Gone Wishing (2010-10-15 08:53:49)

Gannon wrote:

Uh oh, I woke the beast!

Indeed. Luckily I have enough music to keep me from getting too savage.

(Apologies if I come across as combative - it's not intentional, but I have to admit to being particularly shocked at the proposition. So much so that in all of those words up there, I only touched half the reasons why I think this is a bad, bad idea. I shall attempt to explain my position with a little more focus. It's likely to be lengthy, but there's so much at stake here - Also, please don't think that I don't appreciate your response, as I do, even if this doesn't make it look like it ).

This idea, if ever implemented, will affect the entire system as it stands, quite obviously. As you point out, those of us who take particular interest in smaller circles, recognise that even when we pay comparitively premium prices for an independent release, the artist and/or label is making little, if any, profit.

What I want to particularly address is this (emphasis mine, obviously):

Gannon wrote:

If the above is adopted as a marketing strategy by the major labels for major releases it will be interesting to see how sales respond. Initially I imagine they would rise, perhaps not to level Dickens forecasts, but novelty will drive sales up. Longterm, I also predict higher sales - time would tell how many. What would be very interesting is to see how the small end of the market would then respond. Knowing it can't follow suit, I suspect it would soldier on as it always has done.

The current pricing of standard albums allows our much beloved smaller companies to cover as much of their costs as possible without appearing 'greedy' by comparison to the average punter who has little insight into the fact that mass production and mass sales on the scale major labels are capable of means that on their $10 CDs, they're still making a good profit. It is also what makes independent releases, the likes of which struggling artists who make their music freely available in an attempt to even get noticed, more attractive. Remove that balance, and the scales tip decidely in the favour of those that can afford to advertise globally to a massive audience.

What will happen if only major label releases suddenly become available for next to nothing? Their sales will increase, undoubtedly. Good for them, good for the lucky few artists who are popular enough to ultimately still make a decent living from the overall profit from said sales. But where will that leave the average artist?

If the casual consumer can get ten major releases for the same price as a more obscure independent release, not only will they more often than not choose the option that is obviously of more benefit to them, but it is human nature to compare on a basic level and ultimately, whether the pricing of a $10 independent release is actually wholly justifiable or not, the question will become "why the hell should I pay ten bucks for one release, when I can get all these hot new releases for the same amount of money?" Answer could quite possibly be decreased piracy for major label releases, increased piracy for the already struggling independents.

It's likely well known that I greet the attitude of the casual music fan with chagrin, but if the industry starts pumping out $1 album downloads, how will that affect the way music is viewed on a more general level? It becomes even more of a disposable consumable that many already view it as, thus it will contribute to the general devaluing of all music, whether it still has a higher price tag or not. Suddenly it becomes a plastic spoon instead of art. Plastic, I should point out, is the end result of sucking one of the most precious and valuable resources we have out of the earth, but when you ditch a plastic spoon or fork after eating some takeaway, how many people give any thought to what went in to making it? Not many, I warrant, because the stuff is so darn cheap and prevalent we place little value on the overall cost, in fact, if a shop wanted to charge you even say 25 cents (or pence) for one, many would baulk in sheer indignation. (Though, in all reality, you do pay for it, just not separately).

Now, as to this:

8m x £10 = £80m
200m X £1 = £200m

For the sake of ease, I will keep this strictly to major label downloads via iTunes (I'm also going to use $'s, because those percentages/prices are what I am familiar with, plus I don't have the pound symbol on my keyboard and I'm too lazy to continually copy/paste it ).

On a $10 CD, the label makes about $2, the average artist a few cents more than $1. On a $10 download from iTunes, the label makes about $6, the artist on the same kind of contract that sees them yield a little over a dollar from a CD, will actually get about 95 cents.

How will that break down when the price is $1? (and while it's probably not necessary, I'll just point out return doesn't = profit).

Here's the first part
8m x $2 = $16m return on a CD for the label
8m x $1.05 = $8.4m return for the artist

8m x $6 = $48m return on a DL for the label
8m x .95 = $7.6 return on a DL for the artist

Using the same percentages on a $1 download and the rather generous estimate of 200m in sales.

200m x .60 = $120m for the label
200m x .095 = $19m for the artist

Those figures, are however, unrealistic, because there's actually the same cost involved to sell the product per $1 download as there is per $10 - the others involoved may be willing to take a smaller cut in favour of higher total profits, but not that much - things cost what they cost.

If, say, the breakdown was more like this:

200m x .40 = $80m for the label
200m x .065 = $13m for the artist

Using a more conservative sales figure, which is still more than 10 X an increase in overall sales, more than directly proprtional than the actual decrease in price

100m x .40 = $40m for the label
100m x .065 = $6.5m for the artist


Supposing that $120m figure isn't unrealistic - looks great for the labels and the lucky few artists who are actually able to generate that amount in sales, but as you say, it's wishful thinking to hope that will in turn subsidise smaller releases. What it's actually likely to do is cause major labels to increase the push on music that has mass marketability, thereby increasing their bottom line and flooding the market with brainless, insubstantial, low-cost  but appealing pop rubbish that can be continually churned out to keep sales up. Expenditure is likely to increase in other areas, like advertising, CEO "bonuses" for coming up with such brilliant ideas and reward programs (for every 10 albums you buy, get one free! or join our exclusive club and get 100 free albums! - and they'll do that so surface figures will still reach the targeted estimate of 200m or whatever the goal is, since if many major label albums are $1, massive targets will need to be reached before it actually becomes profitable overall) and they'll do all this because the major labels will have no one left to compete with but themselves. The little guy needing to still charge $10 for an album will present little opportunity to take interest and therefore sales away from the $1 downloads.

Devaluing art stifles the incentive for innovation and creativity, because the rewards for doing so decrease in greater amounts and at the same time the effort required to stand out and be chosen above the cheaper and/or mass produced options increases. I'm not just talking about financial rewards, either. There will always be those that buck the trend, that say hell no, and fight against the mainstream current, and there will always be those who seek out quality over quantity, but each time that mainstream current gets stronger, it washes a few more away and our choices become that much more limited.

People like us are in the minority, it is, unfortunately, the mass market that dictates the state of the industry, but the state of the industry affects everyone.

Do I think this will be the death of small scale, independent artists? No. But what you mass produce and make readily available to the general public is what most will in turn feed upon and therefore expect. When something is so prevalent and readily accessable, standards and expectations are lowered and the public at large will ignore other options. What can the small labels realistically do to survive in an environment like that? Aside from the obvious, that being continuing to back quality - but quality is actually the variable here, and subject to the limits of what people are made aware of.

We are in a situation now where it's become necessary to educate the general public about the many health hazards involved in eating junk food, and that's because those said same people grew up with it being offered as the quick, easy and cheap standard.

Shudder to think if we may one day have to educate people what art once was.


Lastly....

Gannon wrote:

the "real" music fan

Oh, oh, oh... You are so lucky you encased real in quotation marks!

I might have agreed a few years' back...but now I am involved in the creative process rather than just a consumer I see things very differently.

Gone Wishing kind of sums it up for me:

"I never quite understood that just because art is “art” it should be freely available to all and sundry. Accessable, sure, so on one level I undertsand the position, but just because something can be classified as art, it doesn’t mean that the amount of time and money gone into creating it doesn’t deserve to be honoured and compensated for in  kind when you get to have a part of it. Yes, there’s lots of different ways you can show your appreciation for an artist and their work, but the most effective one, like it or not, is money. It goes towards paying the costs involved in producing the work, but also hopefully helps ensure they will have the means to continue with their art. Win – win as far as I’m concerned. If you consider that an album – in whatever format you purchase it – is the end result of all that hard work, why wouldn’t it be worth paying for? Jeez, I would much more resent paying $5 for a hamburger than $5 for a download – low-grade meat, greasy and horribly limp vegetables, processed cheese….cheap cheap cheap and little to no effort, creativity or inspiration involved in slapping one together, yet no one objects to the cost. Stuff that, music is far more substantial and nourishing, be it on CD, vinyl or in digital format."

The water comment wasn't the best choice of analogies, IMO. . But it was the best way to summarise the con argument - rarely does one value precious commodities if a)you can get it elsewhere for free, and b) the purchase price is negligible. The thing that really bugs me about this, to be honest, is that as consumers with limited disposal income, most people would be thrilled to bits if the prices of things we want or need come down, but for some reason that manifests primarily as minor complaints that are an aside. When it comes to music, though, it's like a constant demand, and I';m not quite sure why.

I don't think I should contine to rant on, though I'm a little more calm and less OMG IMPENDING DOOM, but the wheels are still clicking. ^_^

I spent a little time yesterday reading through some blog posts and forum topics where this has been the instigator of further discussion, though. Primarily, I was looking for valid counter-arguments that addressed my primary concerns...couldn't find any. Which, by the way, I don't take as them to be non-existent, more of a case (from what I've found thus far, anyway) is that the proposal spurs debate, but not concerning the actual topic at hand!