RE: average loop music CD price

[Hoover Alan <HooverA@tce.com>]

Sean-

I think you are right about the competition part.  I was playing devil's
advocate just to illustrate the additional costs involved in bringing a
product to market.  (Also, my numbers were wrong due to a typo.  I meant to
add $1 for studio time, mastering, not $2, making the total original cost
$3. Actually, to this must be added overhead, advertising, etc.)

Clearly, the cost of software (any kind) to the consumer is much higher 
than
many manufactured products, considering original cost vs. retail price.
Certainly for most electronic products.  Not for drugs, for example, and
other manufactured products.

In the case of CD's vs. vinyl, the cost of CD's has stayed way up while the
cost of producing them has gone way down.  Record companies certainly own
monopolies on particular performers.  An individual can record a CD and
market him/herself, and keep the price down.  But individuals don't have
ready access to the market machine like record companies do.  Record
companies pay a high price to gain this access, which is a significant part
of their cost. They get a following for their product, and are able to sell
it at whatever the market will pay.  There is probably a certain amount of
"price-fixing", too.  I think that the many "mini-monopolies" is the key.  

The system works, basically.  You don't have to pay $17 for a CD.  You 
don't
have to pay $100+ for a Bulls ticket, either.

-----Original Message-----
From: buzzard@world.std.com [mailto:buzzard@world.std.com]
Sent: Thursday, July 30, 1998 9:27 AM
To: Loopers-Delight@annihilist.com
Subject: RE: average loop music CD price


>In order to make something, you must sell your product with a profit.
>Assuming that the raw cost of making copies is $2, plus to cover the
expense
>of studio time, mastering, etc., let's say it is $2.  Since you want to
make
>a profit, you would normally charge twice what it cost you.  This used to
be
>standard, but is being eroded in the equipment manufacturing industry, but
>not the software industry.  That makes it $6 to the retailer, who also
wants
>to mark up 100 per cent to cover his overhead.  Now you have $12 at 
>retail,
>assuming everybody gets "fair" markup.

Great logic, but clearly the numbers are wrong, as CDs
are supposed to be cheaper to manufacture than vinyl LPs
were.  As you should recall, it was claimed when CDs were
introduced that their significantly higher cost was a
temporary measure until they became popular.

Apparently, though, they determined that the market would
bear the higher price, so they didn't bother lowering it.

It's basically the law of supply and demand when there's
no competition.  (Sure, there's plenty of competition for
your generic music dollar, but if you want to buy an album
from musician Z, you pay a price determined by the sole
manufacturer of that music.)

Sean