Cost of a CD

1
A CD
Cost oF
2
Pricing Factors

• Creative Process Most important cost
  component of CD
• Creative Process The artists effort in
  developing that music.
• Process
  can take weeks, months or even years
• Artist Royalties on each recording.
• Royalties received vary according to their
  contract.
• Songwriter Royalties
• Additional Costs Incurred by Label
  Finding/signing new artists
• The RIAA does NOT research the specific costs
  that go into making a CD

3

Recording

• Studio Time
• Sound Engineer(s)
• ? Studio Musician(s)
• ? ? Producer(s)
• Must be recovered by Etc.
• cost of CD

Recording Fees
4
Marketing Promotion

• Most EXPENSIVE part of music business today
  includes
• Expensive Video Clips
• Public Relations
• Tour Support
• Marketing Campaigns
• Promotion to get the songs played on the radio
• New technology such as the Internet
• offer new ways for
• artists to reach fans, but it is
• expensive to use for promotion.

5
Marketing Promotion

• ? Art on CD Box
• Promotional Materials ?
• ? Developed Made
• ? Costly Concert Tour

Marketing Strategies are developed to promote
albums and include
Posters Store Displays Music Videos
6
vs.
Profit
Loss

• CDs are NOT equally profitable
• Majority of are never profitable
• (Sales ) lt (Expense (Prdctn Recing
  Promo distrbtn) )
• ?
• Ultimately lt 10 of CDs
  Profitable AND
• those that are Profitable CDs
  FINANCE and carry the rest.

Profit
7
Then Versus N w

• Despite these costs the price of recorded music
  to consumers has fallen dramatically since CDs
  were first introduced in 1983.
• Between 1983 and 1996, the average price of a CD
  fell by more than 40 AND Consumer Price Index
  rose nearly 60.
• Average retail price of a CD in 1996 would have
  been 33.86 instead of 12.75.
• While price of CDs have fallen, the amount of
  music provided on a typical CD has increased
  substantially.
• Higher quality in terms of fidelity,
  durability, ease of use, and range of choices
  including multi-media material, such as music
  videos, interviews and discographies.

8
Conclusion

• CD prices are low compared to other forms of
  entertainment.
• One of the few entertainment units to decrease in
  price, even though production, marketing and
  distribution costs have increased.
• CD prices are relatively low and home video
  rentals are still a bargain.
• Consumers, most of the time, are willing to pay
  the rising price of fun.
• CDs are truly an incredible value for the money.
• Links to Anti-IRAA sites
• http//en.wikipedia.org/wiki/RIAA
• http//www.boycott-riaa.com/