Why are downloaded cd's so expensive? Is it a rip-off?

Kingsrule · Dec 29, 2013

I have a hard time justifying the cost of cd downloads, especially the hi rez stuff.
Compared to cd's there are:

No distributors
No rack jobbers
No jewel cases
No booklets
No transportation costs
No retailer mark-ups

Lets also say the administration costs vs the web delivery costs are basically the same ( I really think they are lower)

So working off a $15.95 retail cd:

Why we are still being charged for the above costs that do not exist in the download format and then some for different resolutions.
Backing the above non existent costs out, a redbook cd download should be $3 or $4 dollars, with additional resolutions being $1 to $3 dollars more. The profit percentages are still huge for upgraded formats but at least the gross dollar amount seems fair.

I hate the feeling of being grossly overcharged for anything, especially music downloads.........

Andre Marc · Dec 29, 2013

g997 said:
I have a hard time justifying the cost of cd downloads, especially the hi rez stuff.
Compared to cd's there are:

No distributors
No rack jobbers
No jewel cases
No booklets
No transportation costs
No retailer mark-ups

Lets also say the administration costs vs the web delivery costs are basically the same ( I think really think they are lower)

So working off a $15.95 retail cd:

Why we are still being charged for the above costs that do not exist in the download format and then some for different resolutions.
Backing the above non existent costs out, a redbook cd download should be $3 or $4 dollars, with additional resolutions being $1 to $3 dollars more. The profit percentages are still huge for upgraded formats but at least the gross dollar amount seems fair.

I hate the feeling of being grossly overcharged for anything, especially music downloads.........

Oh boy, you hit upon a major pet peeve of mine...you detail it beautifully above...
no shipping, manufacturing, or printing etc..just credit card processing and web costs.

BTW, you will find that LOTS of artists sell CD quality (44.1/16) downloads for 8 bucks or less on Bandcamp
and from their own web stores.

audioarcher · Dec 29, 2013

I feel the same way about movie rentals on cable/dish networks. They actually charge more than it costs to rental the physical disc. I refuse to pay those prices for something that costs them so little. We are already paying for the eq and installation, not to mention the distribution of the signal, on our monthly bill.

Johnny Vinyl · Dec 29, 2013

I'm in your corner on this. I've never understood the high cost of these. You could agree there is a cost of manufacturing and delivery, albeit in a totally different way, but a cost nonetheless. I fail to see that the maintaining of digital files for distribution/sale on a server somewhere are higher than the physical cost of manufacturing the discs, even without the points you raised. There is a discrepancy here that no one IMO has been able fully and satisfactorily explain.

I think allowances for various resolutions can be made, but $25 to $30 for a bunch of ones and zeros that I can't even enjoy reading the liner notes from doesn't hold much interest for me. You need to give me more for my money (such as guaranteeing I can get a replacement for one). The physical product has that guarantee as it's easy to burn another copy should a drive go down or whatever. Right now I have to spend money on the download and then spend more money to store a copy on another drive (or two) for safekeeping. My $25 has now become $25PLUS. As a consumer that strikes me as an illogical purchase.

I should say that I am a hardcore physical media buyer and given the prices of Hi-rez files I am likely to stay that way.

JackD201 · Dec 29, 2013

Half way around the world like I am, the downloads are cheaper.

Orb · Dec 29, 2013

Johnny Vinyl said:
I'm in your corner on this. I've never understood the high cost of these. You could agree there is a cost of manufacturing and delivery, albeit in a totally different way, but a cost nonetheless. I fail to see that the maintaining of digital files for distribution/sale on a server somewhere are higher than the physical cost of manufacturing the discs, even without the points you raised. There is a discrepancy here that no one IMO has been able fully and satisfactorily explain.

I think allowances for various resolutions can be made, but $25 to $30 for a bunch of ones and zeros that I can't even enjoy reading the liner notes from doesn't hold much interest for me. You need to give me more for my money (such as guaranteeing I can get a replacement for one). The physical product has that guarantee as it's easy to burn another copy should a drive go down or whatever. Right now I have to spend money on the download and then spend more money to store a copy on another drive (or two) for safekeeping. My $25 has now become $25PLUS. As a consumer that strikes me as an illogical purchase.

I should say that I am a hardcore physical media buyer and given the prices of Hi-rez files I am likely to stay that way.

And this also painfully applies to games for PC/Xbox/PS3-4/etc.
In fact they show a more worrying trend in that where you can get a physical disk all it does is direct you to a site to download the game that then must be activated, ensuring it becomes a nightmare to sell on the games; which the next generation of gaming consoles are subtly introducing ways-mechanisms for publishers to be even more stringent.

I think we see music going the same way, after all T&C of music purchased through Apple is rather restrictive and they set the trend (although thankfully there are great labels-sites with a less restrictive T&C for purchase downloads out there, but sadly not for all music genres and releases).

Cheers
Orb

MylesBAstor · Dec 29, 2013

Number one web site costs including maintenance, customer service, etc, offsets any savings. (They still have to do artwork.) And aren't they allowed to make a profit to pay their employees? Talk to Channel Classics, one of the largest online sites like I did at RMAF, and they'll give you the reasons why the costs aren't any cheaper.

If it was so cheap, why isn't everyone doing it?

jazdoc · Dec 29, 2013

Stupid question: How much does the artist get paid per download?

Johnny Vinyl · Dec 29, 2013

MylesBAstor said:
Number one web site costs including maintenance, customer service, etc, offsets any savings. (They still have to do artwork.) And aren't they allowed to make a profit to pay their employees? Talk to Channel Classics, one of the largest online sites like I did at RMAF, and they'll give you the reasons why the costs aren't any cheaper.

If it was so cheap, why isn't everyone doing it?

I don't buy that for a second. iTunes set the bar at $10+ for a crap MP3 copy and they saw an opportunity to set their bar much, much higher. Labour costs for site maintenance, customer service? It's minute as compared to hard copy manufacturing, returns processing and customer service.

Kingsrule · Dec 29, 2013

MylesBAstor said:
Number one web site costs including maintenance, customer service, etc, offsets any savings. (They still have to do artwork.) And aren't they allowed to make a profit to pay their employees? Talk to Channel Classics, one of the largest online sites like I did at RMAF, and they'll give you the reasons why the costs aren't any cheaper.

If it was so cheap, why isn't everyone doing it?

Huh?
You aren't thinking clear here at all. What employees? Do you not think the traditional model has many, many more employees thru the chain?

And everyone isn't doing it because anyone who wanted to do it for less couldn't get content now. The only way to get it changed is for all of us to stop buying at the ridiculous prices being charged...

Web sites are comparatively cheap.....

egidius · Dec 29, 2013

artists view

jazdoc said:
Stupid question: How much does the artist get paid per download?

The artist does most often not come into this equation:

Contracts are usually for a lump sum for a certain time including all possible ways of distribution. In good times (except if you are famous, but who actually is famous nowadays, that is, for more than three years?) The lump sum varies of course, but you will NEVER get rich from it.

That means you are out, except if the improbable case happens and your product sells after say ten years still steadily, then you will see some return from Itunes.
As for the other model, going via a go-between to iTunes, you pay around 60$ for your product to be placed, and all the players take their cut, usually around 30%

I have products along both conditions, and neither actually bring money worth mentioning; And most of my successful friends have the same attitude to those products: You cannot earn money. Why do we do it? Let's not go into clichées..

E

PS This is only an answer about the artist's cut. I myself would think 8$ should be in it. 3$ seems to forget, that the actual cost for a CD lies not in the CD/Jewel box, but in the actual recording/mastering, and of course rights, if we are into classical music and dont restrict ourselfs to dead people.

MylesBAstor · Dec 29, 2013

g997 said:
Huh?
You aren't thinking clear here at all. What employees? Do you not think the traditional model has many, many more employees thru the chain?

And everyone isn't doing it because anyone who wanted to do it for less couldn't get content now. The only way to get it changed is for all of us to stop buying at the ridiculous prices being charged...

Web sites are comparatively cheap.....

This all comes down in the end he said, she said. Anyone challenging on ANY of these cost topic threads has yet to produce any sort of real cost analysis (licensing, royalty, recording costs, setting up, operating, maintaining, paying for the site, customer service). But no solid facts, just casting in the wind. Certainly the OP has the access to research the subject.

I'm pretty sure that anyone could ask the people running the various sites the same questions that I did and get the answers.

lasercd · Dec 29, 2013

g997 said:
I have a hard time justifying the cost of cd downloads, especially the hi rez stuff.
Compared to cd's there are:

No distributors
No rack jobbers
No jewel cases
No booklets
No transportation costs
No retailer mark-ups

Lets also say the administration costs vs the web delivery costs are basically the same ( I think really think they are lower)

So working off a $15.95 retail cd:

Why we are still being charged for the above costs that do not exist in the download format and then some for different resolutions.
Backing the above non existent costs out, a redbook cd download should be $3 or $4 dollars, with additional resolutions being $1 to $3 dollars more. The profit percentages are still huge for upgraded formats but at least the gross dollar amount seems fair.

I hate the feeling of being grossly overcharged for anything, especially music downloads.........

Sorry to be insulting but you have no idea what you are talking about.

First of all there are two distributors involved: Apple takes a 30% cut right off the top. Next you have the digital distributor/aggregator who takes (on average) 20%. The label pays its artists a full royalty whether its physical or digital product sold. This includes publishing. Marketing and promotional costs are the same to the label, regardless of the method of delivery to the consumer. As physical sales diminish and digital sales increase, the distinction between the formats blur relative to costs. As a label, I (and the artist) makes marginally more on a digital sale than a physical one.

Kingsrule · Dec 29, 2013

lasercd said:
Sorry to be insulting but you have no idea what you are talking about.

First of all there are two distributors involved: Apple takes a 30% cut right off the top. Next you have the digital distributor/aggregator who takes (on average) 20%. The label pays its artists a full royalty whether its physical or digital product sold. This includes publishing. Marketing and promotional costs are the same to the label, regardless of the method of delivery to the consumer. As physical sales diminish and digital sales increase, the distinction between the formats blur relative to costs. As a label, I (and the artist) makes marginally more on a digital sale than a physical one.

In my example there are 2 distributors plus the retailer, plus the booklet, plus the jewel case, plus transportation costs, plus returns.
Why don't you tell us about those costs?

It appears that you are hiding those or you don't know what you're talking about......

lasercd · Dec 29, 2013

Its difficult to have a meaningful dialogue with someone who thinks downloads should retail for $4.

You win.

FrantzM · Dec 29, 2013

lasercd said:
Its difficult to have a meaningful dialogue with someone who thinks downloads should retail for $4.

You win.

Not sure he said that.

I , also tend to think that a download should cost me less than a physical disc. You seem to feel this shouldn't be the case. You have not however presented your argument in a clear fashion. Care to elaborate/educate?

microstrip · Dec 29, 2013

g997 said:
(...) I hate the feeling of being grossly overcharged for anything, especially music downloads.........

As we do not have all data and we are not economists, IMHO the only possible way of knowing if we are being overcharged is comparing someone prices with the prices of the competition, and hope that the open market rules of competition had lead to a minimum price. Surely there is the possibility or cartelization and dumping, so we can never be sure of the truth.

IMHO, the seller will analyze the economical power of the different buyer classes (downloads and physical media) and will charge accordingly - but this is just a feeling, I am not prepared to support it.

lasercd · Dec 29, 2013

Frantz:

My apologies. I'm on my iPad and getting ready to settle in for the Dallas/Eagles game so I've kept it brief. Please reread my good friend's post. He suggested that digital downloads should retail for $3-4 because some of the costs attributable to physical product do not apply to digital. Unfortunately he didn't think it through all the way. He mentioned there are no distributors, well in fact there is one, the digital aggregator. With physical product there is 1 or 2. In the case of digital there is a retailer, an 800 pound gorilla called Apple. Of course you have Amazon as well. Other smaller download sites are out there as well.

From the perspective of the label we make a little bit more on a digital sale vs, physical. Essentially we save a $1 on the cost of physical product plus about 25 cents per disc in shipping to our distro.

Marketing and promotion costs are identical. Royalties have to be paid in full to the artist regardless of format. A digital album retails for less than a physical one, so a lot of the costs mentioned by the OP have been factored out.

If you want to present the argument that Apple is charging a too much well I'm not going to put up much resistance but they call the shots. You can negotiate a better rate from your digital distributor but you are not talking about meaningful numbers.

At the end of the day if artists and labels don't make enough this all goes **poof**. At $4 a download its not a business.

microstrip · Dec 29, 2013

Since we are debating costs of downloads, just a naive question - are you supposed to keep a proof of buying the download for all your life, and probably pass it to your heirs?

Andre Marc · Dec 29, 2013

lasercd said:
Its difficult to have a meaningful dialogue with someone who thinks downloads should retail for $4.

You win.

No they should not be 4 bucks.

They SHOULD have however, be 20% or 25% cheaper than physical product. I am talking about
CD quality downloads. There generally IS no physical equivalent of a hi rez PCM release.

Let's look at this example for the how ridiculous the market it is..the lossy download of Norah Jones and Billie Joe Armstrong's Foreverly is
12 bucks on iTunes, when I checked last week, I bought the CD for 9 bucks. The 96/24 download is 18 (around 15.50 with coupon) on HDTracks.

For an industry that claims they want to wean folks off CDs, they are doing a helluva lousy job.

Then they go and release deluxe editions of classic albums like Tommy with lavish books, Blu Ray content, etc.

Why are downloaded cd's so expensive? Is it a rip-off?

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