One of my favorite subjects is the continuing woes of the recording industry. This story in Rolling Stone Magazine was bought to my attention. The gist of the story is that Wal-Mart wants to sell CDs at under $10, and the music business is not happy.
Anyhow, here are some choice soundbites from the story with my comments.
I don’t think there is a music supplier in America who really enjoys doing business with Wal-Mart
That’s because you can’t push around Wal-Mart – they’re too big to be intimidated.
At Wal-Mart, we’re a commodity and have to fight for shelf space like Colgate fights for shelf space.
And your point is..? To a Wal-Mart buyer, your selling just another product. Live with it.
What the Music business have failed to realize is that to most consumers music has become a commodity. The music business is not about “art”, it’s about the production, marketing and sale of entertainment products. This is ironic as the music business is responsible for most of the commoditizing.
Oh, and the cost breakdown at the bottom of the page (reproduced below for your convenience) raises some questions.
- $0.17 Musicians’ unions
- $0.80 Packaging/manufacturing
- $0.80 Retail profit
- $0.82 Publishing royalties
- $0.90 Distribution
- $1.60 Artists’ royalties
- $1.70 Label profit
- $2.40 Marketing/promotion (I was under the impression that the artists were billed for this)
- $2.91 Label overhead (what, exactly, is this?)
- $3.89 Retail overhead (Does it really cost nearly four bucks to sell a CD?)
I find the three largest pieces of this particular pie suspect. Note that retail and label each get two slices of the pie. Without them the price drops to a wonderfully reasonable $6.79.
My favorite quote from this article: The record industry needs to refine their business models, because the consumer is the ultimate arbitrator. And the consumer feels music isn’t properly priced. – Best Buy senior vice president Gary Arnold