CD Prices

In 2000, almost all of the state Attorney Generals filed suit alleging that record companies and distributors colluded to increase
the price of CDs between 1996-2000. Put simply, they told record stores, “You can’t sell CDs below $ price. If you do, you lose all the promotional money we pay you for a few months.

Yesterday, the record companies and distributors settled the suit, and agree to give the states about $75 million in free CDs for libraries and the like, and a bit over $65 million in compensation for those who overpaid.

$65 million may sound like a lot of money, but considering that over $65 billion dollars worth of CDs were sold in the US over this five-year period, even if the state Attorney General offices didn’t deduct their lawsuit expenses (which they certainly will), we’re talking about 1.5 cents per CD purchased.

The real benefit will likely come from future CD purchases, perhaps as early as the Christmas buying season.

What This Means

It means the record companies aren’t run by saints, which shouldn’t surprise anyone.

It probably means in a while, you’ll eventually see some CD prices drop, the more popular the act, the more of a drop you’re likely to see.

How much of a drop? Probably a few dollars, don’t be surprised to see some hit albums going for $9.95 at some megastore.

What This Does NOT Mean

It doesn’t provide the slightest proof that albums should cost $1-$3, like a lot of people out there apparently think.

A lot of people think the price of a CD should be a quarter-fifty cents for the physical CD, a dollar or maybe two to the artist, and that’s that.

Not going to happen. There are all kinds of costs associated with making an album which will not go away due to digital distribution.

You have the actual production of the album and tour support (and yes, that is usually set aside the artist’s royalty (which, BTW is normally somewhat higher than the two dollars the more generous are offering) but in most cases, artists never pay the advance back out of royalty inocme, so the record company has to eat that). More importantly, you have promotional costs, which are becoming a bigger and bigger factor.

Sorry, but that adds to the cost of the CD, too, and one way or the other, you pay for that just like you pay for all advertising for the products you buy.

You also have the cost of finding talent, which is also substantial, and again, you pay for it, just like you indirectly pay all the costs of employees in any business you patronize.

You may say the record companies are fat and happy and have bloated staffs and salaries, and to some extent, you’re probably right, but again, even a lean and mean music company will have very large and substantial expenses.

I went into a lot more detail on this about six months ago. The point is not that digital distribution won’t eventually lower prices, it will. But it’s just not going to cut prices to the extent people expect, and it won’t happen easily or quickly.

Turning Against The Artists

When I started talking about this, a substantial number of people at least expressed some level of concern about artists getting more money than they do under the present system.

That is changing. What is more often heard now is “Why should they be millionaires?” or “Artists should make a lot less money.”

First, most musicians probably don’t even make a decent living from it. Only a tiny, tiny fraction-of-a-percentage make it big.

For those few who do, so what? Nobody ever forced you to buy an album or concert ticket; it’s a purely voluntary act.

Frankly, I think the average musical superstar earns his or her millions a lot more than the average corporate CEO. He or she has to convince millions of people to lay out their money for his or her product, unlike the CEO who usually only has to persuade a board he pretty much appointed.

I think there is little economics and much envy at work here.


The computer hardware people (and those who make their living from it) are getting very nervous. Sales are slack, and show no signs of resuming a brisk rate of growth.

If advertising copy is any indication, a major selling point nowadays to Joe Sixpack (or at least his kids) is the ability to burn CDs. Next year, it will probably be the ability to burn DVDs.

It’s pretty strange seeing pillars of the establishment like The New York Times promoting what are usually illegal activities.

Most computer hardware websites either remain silent on the subject, or cautiously (or not so cautiously) egg people on, telling them that what they’re doing is fine and dandy, if not downright wonderful.

They leave out inconvenient little tidbits like its illegality. My God, even drug advocacy magazines like High Times point that out.

Over the past few months, even the computer magazines have fallen prey to this. They think all this CD burning is great now, too. The most recent example being John Dvorak’s idiotic column in which he says CDs shouldn’t cost more than $1.40 because of some bizarre calculations he made involving Thomas Edison and Elvis. I just can’t believe he’s that stupid, so all this is is pandering.

I’m sorry, I can’t do that. There was a time when adults felt the obligation to set kids and teenagers straight when they were going the wrong way, generally, for their own good. That’s how they learned, both informationally and behaviorally.

Now, of course, when adults smell money from the kids, they tell them whatever they want and suck up to their vanity while they’re sucking up the contents of their wallet. I’m afraid the adults in this community don’t do that very much anymore; I’m afraid the adults in this society don’t do that very much anymore.

You know why? They’re not the ones who stand to be busted; it’s the ones who buy that are on the front lines.

I’m sorry, but I can’t tell you something is right when I know it’s wrong. I can’t tell you you’re smart about something when I know you’re not. I can’t say you’re correct when I know you’re not.

And, nanny that I am, I can’t stand by, much less encourage you to piss on a fence I think will be electrified soon.

I’ll tell you one thing, if I got busted for doing this, I’d at least try to make the hardware manufacturers and the websites and anybody else who told me this was cool without mentioning it was illegal co-defendants. I’d definitely sue them all for it, makes at least as much sense as others I’ve heard.

Maybe that would bring back a little needed accountability to this business.


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