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The Price of CD’s.

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Introduction

The Price of CD's Many people believe that CD's are overpriced, but to look at the breakdown in the costs that are involved in producing a CD, the end price at which the CD will be sold to consumers can sometimes be justified. So what are the prices that are involved in producing a CD? Well the record company has to cover all costs not just those involved in the direct manufacturing. These include, the artist advance, the recording costs, the cost of the artists' promotional video's, the marketing of the artist and the CD (including press and PR), tour support and remixes. Although some of these costs are recoupable from the artist, in order for the record company to break-even and make profit, the CD's have to incorporate all of these costs. ...read more.

Middle

Twenty-eight states in the US filed suits against the five biggest record companies and two music retailing giants, accusing them of conspiring to fix CD prices. (Cisneros, O. 2000) When issues such as this are raised, it leaves the consumers to wonder whether the CD's are sold at a certain price to include all of the record company's and the retailers costs, or is it that the costs are not as expensive as they make out and they are in fact marking up their prices by a hefty sum to exploit the consumers in order for the companies involved to make excess profit. Piracy is a growing concern for the music industry. Record companies have witnessed a vast drop in their profits due to the downloading of music from the Internet, peer-to-peer file swapping and organised piracy (piracy on a mass produced scale). ...read more.

Conclusion

to rely on for profit. It can be said that the record companies are not selling their CD's at high enough prices in order to make substantial profit, and in many circumstances, any profit at all. Nielsen Media Research shows that CD sales fell by 13%, in the US, from 2001 to 2002. CD sales worldwide have fallen by 14% in the last two years. Share prices in the record companies are also falling. EMI saw their share price halved from �4 in September 2001 to �2 in September 2002. (The EMI Group, 2002) In an effort to get consumers back into the record stores, the music industry is trying an array of new sales strategies. Some new releases can be found for just under $10, while new or "developing artists" can be found for between $6.99 and $13.99. This is in addition to sales, rebates and other methods to lure the consumer back. ...read more.

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