CD prices set to take a plunge

[h2lentino]

Excerpts from:<p><a href="http://www.zdnet.com/zdfeeds/msncobrand/news/0%2C13622%2C2835076%2C-hud00025nshm3%2C00.html" target="_blank">http://www.zdnet.com/zdfeeds/msncobrand/news/0%2C13622%2C2835076%2C-hud00025nshm3%2C00.html</a><p>CD prices set to take a plunge<p>By Reuters <br />December 28, 2001 5:06 AM PT <br /> <br />Shoppers may think they have seen enough bargains this holiday season, but CDs at $9.99 may soon be a standard offer at music stores as retailers slash prices in bid to battle the scourge of online music piracy. <br />So for studios, artists and retailers alike, 2001 is closing out as a year of few sweet notes as the industry is also being hit by a lack of blockbuster pop music releases. <p>"It looks like it will be another year of flat CD sales and I think to some degree that''''s got to be attributed to the fact that there''''s so much music available online," Tom Adams, president of entertainment industry research and consulting firm Adams Media Research said. <p>"I also think (the price cutting) is also as much to do with the fact that the economy is terrible and holiday sales were off overall," he told Reuters. <p>Price wars beginning?<br />Just to show how edgy the retailers have become, popular music retailer HMV already has a sale offer on its Web site dubbed the ''''02 Blowout Sale'''', while rival Virgin--part of Richard Branson''''s Virgin Entertainment Group--calls its markdown blitz the Red Sale. <p>Virgin, which has a megastore in New York''''s Times Square, is offering CDs priced as low as $3.99, with more other popular hits priced at $9.99. <p>Discounts of up to 80 percent is a far cry from the average prices of newly released CDs of $17.99 to $14.99, a step which analysts said is bound to stifle profits for both retailers and recording companies. <p>"The record company is going to make their profit one way or another on a per CD basis, but they need to reevaluate their business model on the whole because it''''s clear that these free online services have eviscerated a large part of their market," said Kenneth Freundlich, an entertainment attorney in Los Angeles. <p>If a CD sells for $13, a record company takes in about $8, of which it deducts artist, publishing royalties and manufacturing, promotional and marketing costs. <p>The artist generally makes between 50 cents and 75 cents per CD, while the record company clears between $3 and $4 per CD. The artist has to pay back advances paid by the record firm, further cutting the artists'''' royalty, which often dwindles to nothing, according to music industry insiders. <p>"(We) believe music software CD prices may soon permanently decline to $9.99 given weak sell-through of new artists and continued Internet piracy that appears unstoppable," Peter Caruso, a retail analyst at Merrill Lynch said.

A couple of misconceptions are always thrust upon the consumer when an article like this is run.<p>First, a CD in a store from a major manufacturer will cost the retailers about $11.40. That is for a $17.98 MLP disc. And prices adjust accordingly. Therefore, when the retailer sells that disc for $9.99, they take a big loss.<p>The mass-merchant retailer is not so concerned about loosing that margin. They are more concerned with market share. How many people came in the doors? When they came in to buy a $9.99 CD, what else did they buy? How many blank CDs can we sell them? How many diapers?<p>In the meantime the small independent retailer can not afford to price a CD at that kind of loss.<br />The consumer bypasses them and eventually, they go out of business. Thus forcing us all to buy from the mass-merchants who only stock a small percentage of new music that is available. Hundreds of small record vendors have subcome to the price wars and have been put out of business. No more is the local shop there to carry the coolest stuff and have a knowlegeable staff.<p>The second misconception that is perpetrated on the consumer is this great profit made by the record companies.<br />Although the record company may make $8 a disc, the public never gets to see how that $8 is spent on publicity, radio promotion, television appearances, distribution fees, promotional touring, free radio shows, advertising and merchandising.<p>Does the public know that it cost a record company $1 million to launch a single? And only one in 50 may actually get to a point where is could sell an album?<p>Does the public know that everytime they see a CD placed at a mass merchandiser''s end cap that it costs the label over $40,000 to put it there?<br />And that''s just for ONE retailer!<p>Anyone can plainly see that after those expenses, the "profit" on a CD is far less than the public is lead to believe. That is why the record company looses more money on most new acts.<br />One Britney Spears can pay for 10 failed acts. If record companies stopped putting out music that people DON''T buy then there would be lot''s more profits. And there would be lot''s less music for you and I.<p>What remains unchanged is that people continue to steal the music they want. No getting around that one. Once people found out that they can get any piece of music they wanted for free everything changed. And the record companies will have to find a way to stay in business while that continues to happen. One thing that will surely happen is that you will see less new bands make it to market. That will hurt music lovers far more than paying $15.00 for a disc.

[Masherbrum]

I agree with the last post, there is no way the artists themselves would let this become a permanent fixture in the industry.<p>Masher

Wow!<br />And I was expecting to be flamed...<br /> smile.gif border=0

[h2lentino]

Cosmic Kid, that was a good point. What''s interesting about this new article is that it seems it''s coming from the industry itself. And the ball game is different now. I guess they are contemplating on the pricing to combat recent problems - the biggest one is piracy. <p>But I don''t think lowering the price will eventually hurt the artists. Most of the Companies spend a lot on marketing. These days, any artist can have their own web site without any help from the major labels. What is sad is that, through the Major Labels marketing efforts, I guess we the consumers in a sense subsidize other ''entertainers'' we don''t even like.

h2lentino,<br />if the article is coming from an industry, it''s the retail industry and not the recording industry.<p>The Labels are not going to be dropping the pricing of CDs soon, with the exception of deep catalog. Retailers are dropping the prices.<p>So, no, the artist will not be hurt by this because the record company continues to make the same profit. The retailer is the one using the CD as a loss leader.<p>and the subsidizing is a good thing. With out it, we wouldn''t get the really cutting edge stuff. we would only get the pablum that is played on the radio.

[h2lentino]

Cosmic Kid, I agree with you for the most part, but I beg to disagree on the subsidizing part. Mega-marketing Britney Spears and other entertainers the way the Labels are doing now will not give us cutting edge improvements. Radio play has not improve through the years. Truely deserving artists are pushed aside, and record mastering not state-of-the art.<p>The music industry (which the mega-retailers being part of it''s chain) is a business and like any business has to earn profits in order to survive. No questions about that. But I would be happier if they could price their CDs like COSTCO or SAMS CLUB @ $11.95

[Hot_Monkey]

Oh no I might get bashed for this one.<p>The quality of available music will always be limited by the fact that record companies are so obviously most concerned with bringing to market what has been carefully manufactured, marketed and targeted specifically at the most tremendously subsidised and viable consumer segment on the planet...<p>Middle to upper class suburban teenagers who frequent malls with financial support from mom and dad. <p>Let''s face it, that''s who buys the most records. We are hopelessly outnumbered in our representation as fans of all that is good about music.<p>That''s the ugly truth about "pop" music, and why it will always exist, stink, and stand in the way of countless talented artists who can''t shake their booty like Brittney and the Backstreet Boys. This has been going on for a few generations now, and frankly I''m pretty tired of it. While I generally ignore pop music, sometimes it''s hard to avoid... what''s the real difference between a pop music video, a Pepsi commercial, a song on the radio, the soundtrack to a movie.... it''s all the same big giant marketing game. These acts are living breathing advertisements for themselves... never actually performing... only selling their next product.<p>I know this is a little diversion from the original post, but I thought it was at least slighty relevent. I myself do not mix my computer with my stereo system... in other words... download (legally or not) music from the internet. I have not yet heard an example of a CD produced in such a fashion whose performance was up to that of a "studio" off the shelf CD. I am probably so far out of the technology loop that I am sure that some one will swear to me that perfect CD sound can be reproduced via MP3 (now or eventually), but I have not given up on shopping for CD''s the old fashioned way yet. The few examples of "burned" CD''s I have heard (on good revealing two channel systems) have been thin and without any of the life of the original version. This is coming from a guy who owns a nice Marantz dual tray CD burner, but really only burns CD''s for the car where my ears are not so concerned for fidelity.<p>I''m not entirely sure what to make of the "price dropping" move... I am sure I will take advantage of it... but I agree that it may not be the best thing for the long run. I have some friends who are involved in several aspects of the record industry... from behind the drums in a major signed band... to behind a mixing board in a very successful LA recording studio... and I am not really sure what a price drop will do to the industry and the hopes of the unknown band or artist. I have mixed feelings on that one. I kind of agree with some of both h2lentino and Cosmic.<p>I will certainly follow this post... you both seem to have a good handle on this one... keep us informed.<p>Monkey

[Masherbrum]

I will not reply to this one anymore. thnx. <p>Masher

h2lentino,<br />That''s way Sam''s only carries a very limited quantity of titles. And they still have to pay $11.47 per unit. The other retailers just can''t stay in business like that.<p>But I will agree that pop music sucks and always has. Nonetheless, there will be no cool music if not for the money generated by the "Where are they nows".<p>Hot Monkey,<br />True. Pre-teen sales are huge. Mainly because parents buy the safe things for their kids.<br />But the records that really sell are the ones that sell to a wide section of adults.<br />Enya, Dido, Santana, Whitney, Celine.<br />What I mean is multi-muliti platinum.<br />Why? Because todays adults grew up loving music, but don''t know what to buy. THey have the disposable incomes most teens don''t.

[hifichip76]

Ok- here''s my opinion, for what''s it''s worth. I studied entertainment/agency law pretty extensively, and I''ve found pretty consistently that in most record deals, the record label makes out the best, followed by the artist, then the retailers (especially because of volume). Guess who gets screwed? That''s right- the consumer.<br /> I think it comes down to one simple fact, regardless of how/why it is- CD''s are WAY too expensive! There are many dvd''s available which, as we all know because we''re the kind of people who are on this forum, have 5.1 soundtracks as well as video. Why should we pay $18 or more for a simple stereo pcm recording? I don''t know- but we do. I guess it''s because we love music. MP3''s sound pretty lousy on a revealing system, so we still have to buy music.<br /> To my memory, CD''s are the only format that have gotten more expensive as they''ve gotten older. There is no good reason for us to pay so much. We pay way too much, especially for jazz, classical, new age or any other non-top 40 music. There are some exceptions, but generally that''s how it is. I don''t even care what the reason is anymore. I try to go for 5.1 cd''s or dvd''s when I can, or borrow a cd and copy it (there trying to make that impossible now,too- but that''s a whole other posting). I''m going to try to get into SACD soon as I can afford it, so I at least get some new technology for my money.<br /> CD''s are OLD technology. There is NO reason for them to cost so much. End of story. If sales are down, I really don''t think it''s entirely due to Napster. I for one would buy more cd''s if they were cheaper. I''m sure I''m not the only one. I know the law in this area, and Napster was a poor decision that was the result of lots of money swaying the system. There has never been any law that makes it illegal to swap music. It''s not stealing, no matter what those "poor" musicians (most of the music being recorded nowadays isn''t worth paying hard-earned money for- most artists are lucky that people download their crappy albums) and record executives say. People will always buy music in large numbers. If the sales are down for the past year, it should teach the labels a lesson. They should stop blaming Napster and just admit that they''ve gotten too greedy and need to lower their prices. $18 for possibly 2 or 3 good tracks is not a good deal, especially when it''s recorded on 15 year old technology. CD''s are not "the latest thing" anymore. If the record labels and retailers want our money, they have to give us value like many dvd makers and electronics manufacturers have. When comparing the bang for the buck in every other home audio category- speakers, receivers, dvd players, vhs, cd players,etc.- the consumer gets more now than ever before. However, when we look at cd''s, something is wrong!<br /> angryfire.gif border=0

Chip,<br />If you take inflation into account, CDs have not gone up nearly as much as other entertainment.<p>DVDs are a good value because the studio has already made the money on the front end when the movie is released to theaters. That''s fairly simple to understand right? No risk there at all.<br />They know that they have a blockbuster or just a bust. They know how much money to put into marketing and advertising. And with a DVD, that''s all you have to do. For the movie, they had to put much more into promotion, production, distribution, etc. Anyway, I''m sure you can figure out the economics of why a DVD is cheap to put on the street.<p>A new album on the other hand does not have a guarantee. Every release is a risk, just like capitol investment companies throwing money at a dot-com. Yes, the record company makes the lions share when the album sells.<p>Do you know how many albums actually sell to make a profit? About one in ten. One big selling ablum that makes the label money will pay for ten other that flop. The costs involved in bringing a record to the consumer are huge.<br />If you''re open minded, I''ll list them for you on another post. But in the interest of space and time, I''ll throw this little fact out. It cost 1 million dollars just to bring out the first single to radio.<p>It cost $8.50 to see a movie (where I live) and thats for one viewing. For $15 I can listen to a CD as many times as I want forever.<br />That''s still the best entertainment value out there.<p>It costs $4 for a cup of coffee at Starbucks, $45 for a concert ticket, $5 for a bear at a ball game. Why does the cost of the CD piss you off so much, when it costs $40 a month for cable? And you still get commercials.<p>If the consumer knew the true economics of the recording industry, maybe they would start venting about the cost of their clothes instead.

[hifichip76]

Cosmic Kid,<p>Your point is well taken, but despite inflation can you think of any other recording medium that costs more now than it did when it was brand new (even adjusting for inflation)? As for movies, not every movie makes money at the box office. Battlefield Earth didn''t cost more on dvd than other movies (not that I bought it). The industry wanted people to but dvd''s, so they made the prices attractive. Everyone has a cd player and is invested in the format, so they have no inscentive to keep the prices in check.<p>And yes, many things are too expensive as you say, like cable, tickets, clothes, etc.- I must agree with you- but I confined my complaints to cd prices because that''s what this thread is about.<p>I am very well aware of the expenses involved in promoting and producing albums, having drafted and negotiated recording contracts. But the profit margin for the record labels is still wide in the long run, and they may have to cut it back a little if they want us to buy their cd''s. I really don''t have much sympathy for them. I''m sure they''ll continue to make plenty of money if more cd''s sell for $11.99. I love music, and I love to buy music, but everyone has a limited budget, and I could buy more if they were cheaper. I think we as music fans would all like to see this happen. Hopefully, lower sales will force the labels to bring the prices down.<p>< January 06, 2002: Message edited by: hifichip76 ></p>

[zed]

For those of you who question whether the record company is getting their fair share check out this article written by Steve Albini (engineer for The Pixies, Nirvana, Bush and others) WARNING long article, but informative. <a href="http://www.razlerrecords.com/thebiz.htm" target="_blank">http://www.razlerrecords.com/thebiz.htm</a>

I agree that many of us would buy more CDs if the price were lower. Myself included.<p>No, I cannot think of another pre-recorded medium that costs more now than when it was brand new.<br />But Chip, vinyl ALWAYS increased in price as the years went on and so did cassettes. Vinyl started at $4.98 in the ''60s and ended at $10.98 in the ''90s. Hey, come to think of it, how much does a new vinyl album sell for today? $12.98 MSLP. So there''s your answer.<br />But here''s another one. I can''t think of a pre-recorded media that up until the CD was indestructable. wink.gif border=0 <p>I do know this fact. The artists and management have to approve the lowering of the cost once the album is shipped.<br />Led Zepplin and ZZ Top are two groups that have always denied the request to have their catalog lowered in price.<br />Why? because they would have to sell so much more in volume to make up the difference in profit. And studies show that the albums sell at $11.00 just as well as $13.00.<p>When it comes to hit product, it''s even worse.<br />I think Madonna was the first $19.98 list CD shipped (not including soundtracks wich are historically higher priced). The public never flinched.<br />This year Universal shipped the first $20.98 list price CD. Some rapper. Once again, the numbers proved that the consumer didn''t care.<br />But I would guess that the sales of blank CDs rose tremendously.<p>All the record companies have a "Developing Aritst" price point of either $11.98 or $13.98.<br />This allows the baby bands to get a shot at the even lower retail prices. Sometimes this translates into bands getting a fighting chance to make it. But without radio, most never do.

Zed,<br />Just read that article and was very much entertained. It was pretty much right on.<br />When a new young group wants to be stars, they will do anything. Sad but true.<p>But I had to take pause when the author stopped at only listing the GROSS revenues.<br />What''s that about?<br />I wonder why he didn''t list NET revenues?<br />Don''t you?<p>I know that lawyers and management charge.<br />But...they DID work didn''t they? You get paid when you work...right?<p>The label?<br />Let''s see...<br />If they shipped 250K, it would have to be with a major. So right off the bat, there''s a 2% distribution cost you have to pay your distributor. It''s more if you''re an independent label. Indies rarely ship in those figures. They might hit 50,000 on the high end.<p>Cost to launch the first single: $1 million.<br />That does include paying Independent promotors. To get to the 250,000 mark you have to have an audience of at least 35 million. That would be about half the rock stations in the country spinning the record about 2 times a day.<br />That takes a lot of promotion dollars and it takes a professional staff with juice.<br />Now after the first single starts to take off at Rock radio, then you have the challenge of crossing it over to Top 40/Mainstream radio.<br />Now you''re really talking some money.<p>Also, to get that audience you need a video. Many stations won''t play a record if you don''t have some video play to support what their audience is listening to.<br />The cost of the Video? $50,000 at the lowest end,<br />like the Video for the Strokes, to $100,000.<br />When you''re a star, you can spend the $500K you really want to.<p>It''s a baby band, right? So TV is still out for now unless they really start to click. But if the label did use it''s muscle to get them on TV, the costs of flights, hotels, etc. is taken up by the label.<p>Now let''s talk about getting it placed at retail.<br />At 250,000 the record had to be placed in prominent positioning at the stores. Or else you would never have hit that 250,000 number in the first place.<br />Cost to position the record at national chains,<br />$600,000.<br />Now, that also includes the Sunday circulars where the CD gets a cut the size of a postage stamp. If you want bigger ads, bigger space, just add more money.<p>Once the album ships, the band is going to want to see posters and displays in the stores.<br />One poster cost $1.00 one 1x1 flat cost $.75.<br />If the band has a buzz, maybe some specialty item was made as a promotional item. That could cost another $3.00 to $20.00 per piece.<br />But for sake of argument, lets just say the P.O.P. budget for this group is $50,000.<br />But don''t forget that if you want a window display in a high traffic area you''re going to have to pay between $100 and $1,000 depending on if the window is in Cleveland or Manhattan.<p>Let''s talk about the tour.<br />Tour support from the label was not discussed in this article. I wonder why. Yes, it''s recoupable, but it surely goes against the GROSS.<br />What if it''s never recouped? The band''s manager doesn''t loose money, the label does.<p>Then there''s the bit the author wrote about the fancy drums, guitars and amps. Every band I know that signed with a major and had a good buzz, could call any instrument manufacturer and get an endorsement deal. Cost of instruments: $0<p>Tour advertising. Once the group is on tour, do you think the record company just waves them off and says "Good luck"?<br />No, There are radio promotions, radio visits and radio concerts. Do you really think the radio stations do these things because they love the music?<br />That cracks me up! All the costs for these promotional activities are taken up by the label.<p>Tickets. In order to create the buzz, the labels buy hundreds of tickets during a tour so that they can bring influential people from radio, press and retail to the events. Cost of ticket budget: $50,000.<p>Finally, the record business is one of the only businesses that still operates on consignment.<br />So, even if this record shipped 250,000 the question is how many came back? Because every piece that isn''t sold in the store can be returned to the record company for credit.<br />If half of what they shipped comes back, the authors entire fuzzy math has to be recalculated.<p>OK, this is getting long. Sorry.<br />But there is one more expense and that''s the salaries at the label. Yes, I know there is no sympathy for those people who stoke the star making machinery, but without them, this group will never see a gold record or themselves on SNL or Letterman.<br />When the band stiffs, it''s the labels fault.<br />When it goes double platinum, radio broke them.<p>Promotion, publicity, sales, tour personel, travel personel, Product manager and even A&R execs. All make stars. That''s the job they get paid to do.<br />BUT if this little baby band doesn''t make it, the label looses that investment.<br />So, on to the next baby band. Maybe that one will click.<p>< January 06, 2002: Message edited by: Cosmic Kid ></p>

[h2lentino]

Cosmic Kid, your statement below is exactly my point, and I qoute:<br />"True. Pre-teen sales are huge. Mainly because parents buy the safe things for their kids.<br />But the records that really sell are the ones that sell to a wide section of adults.<br />Enya, Dido, Santana, Whitney, Celine.<br />What I mean is multi-muliti platinum.<br />Why? Because todays adults grew up loving music, but don''t know what to buy. THey have the disposable incomes most teens don''t".<p>We are subsidizing the pre-teen, hip-hop, and others gengre. We have the ''disposable income'' and ''share'' that income to our teens.<p>And how would you explain the "Beatles 1" CD success among younger generation? With it''s 27 songs, it''s acctually a double-album priced as a single! <p>I guess there is a good chance we might see lower prices this time. Consider this scenario happening soon: We, who have disposable income go for SACD or DVD-audio or plain DVD for that matter. The pre-teens continue doing what they do today - content with MP3 downloads, find a way to copy CDs from friends and other sources.

Radio is another aspect of this whole thing that hasn''t been discussed much here. Salon did a very good <a href="http://www.salon.com/ent/feature/2001/03/14/payola/index.html" target="_blank">article</a> on why radio sucks, and will continue to suck into the future. <p>I''m a big supporter of independent and local music, and this article was very depressing to read, but at the same time, it all makes sense, in a sick kind of way.

[h2lentino]

coolzeus, take the ''not'' out. Good point. In a way, we are paying (subsidizing) these "MARKETING" suckers.<p>Anybody interested to know who owns/control the media can also check this site:<p><a href="http://www.thenation.com/special/bigten.html" target="_blank">http://www.thenation.com/special/bigten.html</a>

I had a couple questions, CosmicKid-<br />1) Where did you get the $11.47 figure that stores have to pay for discs? <br />I''m coming at this from a smaller music industry side, like independant labels, and many of them do their own distribution, so they have lower straight-to-store costs, around $7 per disc. The store can then mark it up however much they desire. Some go from the label to a separate distribution company, and then from the distribution co to the store, so there''s a mark up in there for the distro co. As far as I know, it''s not quite so standard industry-wide at least as far as independent labels go. I don''t know much about the majors though...<br />But I would doubt that a store like Best Buy that marks some new cds at $6.99 would allow themselves to take a hit like that on something they paid $11.47 per unit on. I don''t know for sure tho.<br />BTW- anyone check out those Simon & Garfunkel remasters? Wondering how they sound. A local independant store sells them for $8.99.<p>2) I agree about the ''1 Britney pays for 9 flops'' comment. That''s definitely true; what bothers me is that some labels even look for acts they don''t mind taking a bath on. They need a certain amount of records they can sink a little money in, but not push, even if it''s just to take a tax write off, as they have contractual obligations to fulfill themselves. Any thoughts on that?<p><br />More in the artist/record label vein:<p>What interests me about this is that it''s all relative. What an artist makes per disc manufactured/sold is directly dependant upon their record contract. Being in a small band on an independant label, I''ve known many bands that were signed to relatively large labels in a small music scene (death metal to be exact), and some of them ended up owing the label money, even though the band was considered successful (successful being about 30,000 units sold). <br />Even though their record company may have sold the record to distributors at $6 each, may have given the band only 5% of the total revenue made on the sale of the discs, amounting to a measly 30 cents per disc. Multiply that by 30,000 and the band got $9000- of which the advances, recording costs, layout design costs, cd and layout production costs, magazine advertisement costs, tour support, etc. may be 100% recoupable by the record company. $9000 doesn''t cover much in today''s world (our current album costs for recording/mix/master alone is reaching $15,000), and if all those costs are recoupable, the band can easily end up owing money to the label.<br />The only solace artists can take in having been through that wringer is that maybe they have put their name out there enough to be able to garner a better deal the next time around with higher royalty rates and less recoupable costs- or better yet maybe even put the disc out themselves.<p>I still remember from an interview with Les Claypool that the Frizzle Fry disc is the album Primus made the most money on, because they put it out themselves and owned all the rights to it. Once they got big, everyone bought that record too, and they got all the profit.<br />In other words:<br />$6 * 30,000 &gt; $.30 * 30,000<p>I know, this has nothing to do with the original topic- guess I got bored at work. It is Friday, after all... wink.gif border=0

eric,<br /> 1) The retail cost on a $17.98 list or an $18.98 list CD is around $11.40, depending on the distribution company and the discount.<br />Don''t forget that Best Buy and other retailers are subsidised by charging high positoining costs for product. It takes a lot of money for you to find a disc on an end cap sale priced.<br />The $6.99 prices your looking at are for Developing Artists. THose, the labels put out at a lower list price. From $11.98 to $13.98. Again depending on the distributor, the discount and the cost of positioning.<p>2) I don''t think that a lable purposely signs and act to fail. Even the tax write off is not a good strategy. However, there are those types of artists who just can fit the normal formulas for promotion and marketing. Money is thrown at them for tours, etc. and the label just waits for something to happen. If it does, great. If not, it''s time to move on.<p>Your next two paragraphs are right on.<br />Yes, it all depends on the contract signed.<br />Yes, the label spends all the money and takes all the risks.<br />Yes & No, the aritst doesn''t really "owe" the label money. That is the label isn''t going to send the sheriff over to reposes their cars or guitars. But if the band has signed a contract for multiple albums then they just try to make it up. Knowing of course that the next album will also mount additional costs to be recouped.<p>I have never met an artist who didn''t want to be a star. They will sign anything in order to fulfill their dreams.<br />There was just an article in the Wall Street Journal about an artist on MCA. MCA lost 2.2 million on her. Could not get anything going.<br />No ones fault. But that''s the kind of costs it takes to break a new act today.<p>Lot''s of rappers started out selling CDs out of their car trunks. But you can''t become a star that way. <br />Artists should always have a lawyer just representing them. NOt the management and the artist, just the artist. Then the artist still has to make a decision, because if they don''t like the deal, the next stary-eyed wannabe is waiting in line.<p>Is it fair? Doesn''t matter. Soon people won''t pay for music at all and no one will make money.<p>Best of luck to you.

[bcs]

i think it''s more likely that the record industry will be forced to lower prices to keep sales up, rather than sticking obstinately to their ridiculous $20 price tag. after all, you can get mp3''s at near cd quality. the new experimental artists, or the ones who just have a track record of poor sales, are the ones who will get nudged out of the equation. after all, something has got to give and it isn''t going to the be recording industry or the successful musicians or the music-swapping community (a new one will just keep cropping up as old ones close)--it''ll be the small bands who get their funding from the incredibly successful ones.<p>as soon as the sacd vs dvd audio war is settled, i think sales will start to rise again, especially when everyone hears how much better the two formats are (just as in the vcr vs dvd and tv vs hdtv). i think many people are waiting to see how that battle plays itself out before making any expensive purchases. i know i am.

[Masherbrum]

Cosmic you are incorrect with the "selling cd''s out of trunks". N.W.A. did just that and every PUNK, THUG (whatever) RAP, has had the honor of working with one of the richest producers in the MUSIC INDUSTRY! Dr. Dre. The above is fact. <p>To quote Denis Leary - "Thank you for calling, Thanks for calling!"<p>Masher

Masher,<br />You are absolutely correct.<br />I guess what I should have said is...<br />You can sell all the albums you want out of your trunk and make money. But you can''t become a star until a big company or producer picks you up and spends all his money making you a star.

B.C.S.,<br />I think you''re right on too.<br />Because the Big record companies are controlled by huge corporations who only care about quarterly profits, only more bad things are going to happen. New cool music that doesn''t have a radio format you can go to, will get fewer breaks. But maybe those are the ones that will have a better chance on the internet anyway.<p>I think the industry will implode and more new entrepreneurs will crop up who will care about the music again and will only have to answer to themselves, their employees and the artists.<p>As far as DVD-A or SACD goes, I think (and it''s just my opinion) that those formats will not be accepted by the general public. I think that the next format may just be the hard drive.

[h2lentino]

I thought people in this thread might be interested in this recent article (2/26/02) about artists lobbying against the major labels....<p><a href="http://www.winamp.com/news.jhtml?articleid=9175" target="_blank">http://www.winamp.com/news.jhtml?articleid=9175</a>

[h2lentino]

....and how about this?<p>February 18, 2002<br />Record Labels'' Answer to Napster Still Has Artists Feeling Bypassed<br />By NEIL STRAUSS<p>In their bitter battles against Napster and other free music downloading services, record company executives have wielded one moral argument that has placed their position beyond self-interest: the fans take the music without proper permission and don''t pay the artists a dime.<br /> <br />Last December, the major record labels responded with two Internet services of their own where fans pay monthly fees to download songs. Under this arrangement, however, the performers still don''t get a dime: for each song downloaded, they stand to get only a fraction of a cent, according to the calculations of disgruntled managers and lawyers.<br /> <br /> And, artists and their managers say, the labels, like Napster, aren''t putting the music online with proper permission either.<br /> "I''m not an opponent of artists'' music being included in these services," said Gary Stiffelman, who represents Eminem, Aerosmith and TLC. "I''m just an opponent of their revenue not being shared."<br /> <br />Because the sites are new, no payments have been made yet, but the payment plan has so infuriated scores of best-selling pop acts,including No Doubt, the Dixie Chicks and Dr. Dre, that their lawyers have demanded their clients'' music be removed from the sites, with some even sending cease-and-desist orders. Only in some cases have the major record companies complied.<p>Read the complete article here:<p><a href="http://www.recordingartistscoalition.com/napster.html" target="_blank">http://www.recordingartistscoalition.com/napster.html</a>

h2lentino<p>I read that, or a similar article about a week ago. I also saw one major''s response which was sounding kind of lame.<p>But there''s also the problem with the artist coalition trying to break the 1987 statute in California that excludes the record industry from the 7 year contract law.<p>I can understand both sides of that argument as well. Except the only artists that seem to care about reversing the statute already have established careers. Generally, once an artist makes it big his/her contract stipulates a revision of terms. That is of course if the artist was wise enough to indclude it in the original contract.<p>Then there are big stars like Billy Joel, Leanne Rymes or Toni Braxton who just lost their money to shady managers or even family. The history books are full of them.