Inflection point
A couple weeks ago while wandering around Target, I noticed that a person could buy a portable CD player ($9.99) for less than the cost of an actual CD ($14.99). Pretty interesting when you consider that the CD player was actually assembled and shipped across the Pacific, as opposed to being stamped out of a giant sheet of plastic. (Of course, this is just a consequence of a natural monopoly: any company can make a CD player if it wants, but only one company can make and distribute Johnny Cash’s album American IV: The Man Comes Around. [I’ll spare you the boring discussion about how price points are influenced by substitutions for CDs and music piracy.])
April 29th, 2004 at 8:58 am
Well, that’s fine in the big-bucks label case where the label gets most of the revenue, but for indies who sell just a few cases of CD’s, well, the price point is directly related to their mortgage payment.
April 29th, 2004 at 11:33 am
I guess my point is that labels have a natural monopoly on the “works for hire” which they choose to maintain the copyright on. Because of this they can raise their costs far above the marginal cost of production, as opposed to CD player manufacturers, who have to really keep the price point down because any company can make a CD player. Of course, record companies have larger expenses than cheap CD manufacturers (promotion, stupid lawsuits, payoffs to radio stations) so when it comes to shareholder profits, it eventually evens out. Competition between record labels, the threat of online piracy, and the large number of substitutions for CDs (I don’t listen to CDs in my car on the way to and from work really, I listen to the radio) work to keep prices down.
Hmm… looks like you got some boring discussion anyway.