Re: CD Prices and Inflation

[jim bell <jimbell@pacifier.com>]

At 05:06 AM 7/26/96 -0700, Timothy C. May wrote:

>So, what do we have now? Salaries are 2-4x higher, gold is at $375 an
>ounce, a new 3-br house averages about $100K (and is 2x that in many
>places), hamburger is at $2-3/pound, "Scietific American" sells for $3.95
>or $4.95, and paperback books go for $4.95.
>
>Roughly, then, everything on this list is 3-4 times more expensive than it
>was in the late 60s. So, those LPs I was buying for $4-5  should now cost
>$12-20, correcting for inflation/price rises.
>
>And yet I am able to find many CDs I want for $8.67 (Tower Records: "3 for
>$25" sales). And they never wear out. And they usually have 60 minutes or
>more music on them--at least the CDs I buy do--, compared to the paltry
>35-40 minutes on most LPs of the past.

>So, while I "wish" CD prices were even lower, I'm paying a lot less in
>"real dollars" for more music today than I was paying 15 years ago or 30
>years ago.

I think you're trying to hide a 5-year effect by immersing it in 30 years of 
change.  Yes, we've had inflation, but the large spurt of post-Vietnam 
inflation was basically over by about 1983, when the CD was introduced.   At 
that time, the explanations for the higher expense of CDs included the fact 
(then true) that they were costlier to manufacture due to the lower volume 
and lesser competition, as well as a lower production capacity. (all of 
these effects were essentially eliminated within 5 years or so.)   At the 
time, I recall that most vinyl was around $7 or so, and CD's typically sold 
for $15.  By 1988, therefore, CD prices should have dropped to the same as 
vinyl, plus whatever inflation had occurred in the 1983-1988 time frame.  
(20% total?)  $9.  Maybe.

You'll respond, as you did, that SOME CD's are available for $9.00  Yes.  A 
few.  (But  it's now 1996, and 1988 was 8 years ago, and back then $15 
pricing rule was not frequently broken.)  When they're on sale. But the vast 
majority are stuck, as if by glue, to the $12-$15 price range.

I think most people understand, implicitly, that "there's something going 
on."  We don't pretend to be able to quantify it, exactly, but it's there.

Here's a proposal that I think would fix the problem.  What if the copyright 
laws were amended to allow _anyone_ (individual or a company) to copy and 
sell any CD, paying the artist a royalty 20% greater than he'd get from the 
contracted record company, _and_ paying the originating record company, say, 
50 cents royalty per CD.  The company doing the "legal bootlegs" would still 
have to pay for its own production, distribution, and any other costs.  This 
wouldn't be practical if the pricing by the main record company is 
reasonable; it becomes quite profitable for them if they are in competition 
with $15 discs. 



Jim Bell
jimbell@pacifier.com