And now for something completely different: Hyperion Records, perhaps the most refreshing "player" in the classical music field, apparently got itself in hot water over a copyright suit that I could never have imagined had any legal merit at all. Some of my most prized classical CDs are Hyperion issues.
Their website clearly explains some of the factors that determine the retail price of a CD. Some highlights:
To give an idea of the chain of costs and prices which determine the figure at which a CD is retailed in Britain, let's look at the arithmetic applying to a record crossing the counter at GBP14.99.
Whatever the selling price, one factor is constant: the VAT, which accounts for nearly 15 per cent of the total price. On a record retailing at GBP14.99 the VAT is GBP2.23. The actual cost of the record to the purchaser is only GBP12.76.
The dealers have to make a living and their share of the retail price (GBP12.76, not GBP14.99) is around 33 per cent. In fact they make more from a record, proportionally speaking, than anybody else in the chain. They buy it for GBP7- or GBP8-something from a distributor (because it's impractical to have an account with hundreds of separate record companies) and the distributor also needs to be paid for providing the service. So another substantial percentage must be deducted. (It varies.) Because something like 70 per cent of a classical record company's product is exported (it is impossible to survive on UK sales alone) at not a great deal more than cost (because similar economics to the above apply overseas), a record company therefore actually ends up with something between GBP3 and GBP6 per record (sometimes even less) from which it has to recover the costs of recording, editing, providing notes and translations, typesetting, artwork, printing and manufacture of the disc, to say nothing of the cost of running the business - overheads like rent, rates, phone bills, salaries etc. And if it's a copyright record (any record with music by anyone alive after 1927 is generally copyright-loaded), around 66p per disc has to be paid to the copyright owner.
There's not a great deal left, so one has to sell quite a lot of records to keep going and - very important - have enough left over to invest in new recordings.[...]
There is no secret of the fact that CD manufacturing prices have fallen markedly since they were introduced. They are now comparatively cheap to press. Illogically, this has created a widespread belief that they are overpriced in the shops. "They only cost a dollar to make so why are they $18 in the shops?" is the monotonous cry we see on the Internet where one recent contributor to a classical music newsgroup wondered 'if the music industry isn't just pricing itself out of the market place'. (In fact the Internet seems to be alarmingly over-populated by would-be recording-economics pundits who say such things as 'I had always believed that a 'fair' list price for a so-called 'full price' CD should have been set at $10.00,' though how he arrived at this wonderfully simple formula was not divulged. In fact the same writer then trotted out the usual naïve bit about 'it costs just a little over a dollar [about 61p], including the jewel box and all artwork to make a CD.' Where on earth do they acquire this misinformation!) René Goiffon's analogy is that that is the same as saying that, being made of glass, all bottles should cost the same regardless of their contents, whether Chateau Lafite or Coca Cola.
Go read the whole thing.
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