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Saturday, April 13, 2002 |
"since 1995-96, when both the FTC and 28 states' Attorneys General maintain that the major record labels colluded to fix prices for compact discs, the RIAA's figures show a steady increase in the average price of a CD. the numbers also reveal that while the labels were engaged in price-fixing the overall sales of CDs slowed relative to the preceding period of aggressive price competition.
from 1992-96, a period that saw cut-throat price competiton from discount retailers like Best Buy and Target, sales of CDs grew 371 million units (from 400 million units to nearly 780 million units). once the labels started to enforce "minimum advertised pricing" (MAP) on the retailers, that sales growth started to slow. the RIAA reports that from 1996 to 2001, annual sales went from 780 million to 880 million units, an increase of only 100 million CDs in five years.
another interesting fact: the years with the steepest price increases also corresponded with declines in the number of CDs sold. 2001, the year that the RIAA's been trying to make the "Year of the Peer", saw the largest average price increase since the price-fixing began (around $.62 per CD)." [http://scriban.com/movabletype/, via Matt Goyer]
I'm wholesale quoting George, so I hope he doesn't mind, but he makes a very important point. I remember buying new CDs at Best Buy for $9.99. I spent a lot of money on CDs back then. A year later, I remember looking at the price tags and thinking to myself, what happened to all of the $10 CDs? Since then, I've bought fewer and fewer, to the point where now I don't buy any at all.
It used to be that a trip to Best Buy for me started in the music section, and then took me over to computers, software, video games, and then a general walk-around to look at new technology. I went to Best Buy the other night and skipped the music section altogether, in part because I refuse to pay $14.99 minimum for a whole album anymore.
CD prices are ridiculous, and the music industry refuses to take responsibility for their own pricing plans as a major cause of their industry's decrease in sales. Note the following quote from Steven Page, lead singer of the Barenaked Ladies:
"We really are all just label employees, without the benefits. As rich as you think some of us are, for every $18.99 CD you buy, the artist usually sees [$2] or so. Pay your producer out of that. Then your manager. Then split it five ways among your band mates. Now don't act surprised when you the drummer of a platinum-selling Canadian rock band behind the drive-thru window at Tim Hortons." [also via Matt Goyer]
But despite all of the industry's doom and gloom talk, and despite the fact that many of us are buying fewer CDs, the record industry is still making as much money as it did four years ago, thanks to the higher prices making up for fewer buyers. Just think how much more money they could be making in the digital world.
11:15:45 AM Permanent link here
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One of the many great things about being friends with Kate and her daughter Clare is the window I get into Clare's world. You see, Clare is 16 - a teenager. Recently, Kate decided that she needed a cell phone, and since Clare already had one and they both use the cable modem at home to access the internet, she got rid of their land-line.
Fast forward a couple of months to Kate opening her third cell phone bill under this new arrangement and watch Kate's jaw drop as she realizes they both went well over their allotted minutes. Kate is rectifying this situation now with a new pricing plan, but Spring PCS won't implement the plan until the next billing cycle. On top of this, it turns out that the two of them are already over their minutes for the current month, so Kate told Clare she couldn't use her phone until after 9 o'clock at night.
Clare's response: well, then I'm grounded. This is just like being grounded.
She can't gab on the phone with them, but what's worse is that she can't call her friends after school to arrange the evening's events. An unintended consequence of cell phone pricing plans. Clare is very good at instant messaging, but obviously the phone is still the main connector between her and her friends.
This also illustrates how important price point will be for the adoption of high-speed cell-phone connections. A year from now, Clare should be able to use her cell phone to call or message her friends via a faster connection. But if she (actually, her mother) has to pay by the minute, rather than by bandwidth (especially when the phone companies round up on the minutes), she'll be far less likely to make constant use of these services. Just as with CDs (more on that topic later), the price has to be affordable for the mainstream or else consumers won't consume it. Europe and Asia have learned this lesson in regards to wireless, so I hope we start from that premise in the U.S.
Kate adds: Clare is essentially grounded because she has no "shifted presence." Sure, she could message her friends from her PC, but then she isn't mobile, which is the whole point for a teenager. Also, when Clare's 77-year old grandmother found out that she was going to be without a phone between the hours of 4 and 9pm, Grandma gave her cell phone to Clare.
10:52:57 AM Permanent link here
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© Copyright 2004 Jenny Levine.
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