heystoopid used our news submit to tell us "Now, we know why the artist and musician royalty payments are in rapid and continuing decline, the article in the magazine "Rollingstone" on 12th October 2004, goes on to detail the breakdown of a retail price of a US$15.99 CD. I thought the people of this website may want to view this article."
Wal-Mart typically carries just a fraction of the titles you would find in say, a Tower Record store. But, they sell many of those CD's at $9.72 as a loss leader to get some of their weekly 138 million customers to buy something else, preferably at a profit. According to this article at Rolling Stone, Wal-Mart is buying these albums from the labels for 12 bucks and they are getting tired of losing money. They claim that their sales model is to sell something as cheaply as they can. They are accusing the music industry of charging all they can, all the market will bear for their products. Two very different business models. Wal-Mart doesn't think that they can co-exist much longer.
| In the past decade, Wal-Mart has quietly emerged as the nation"s biggest record store. Wal-Mart now sells an estimated one out of every five major-label albums. It has so much power, industry insiders say, that what it chooses to stock can basically determine what becomes a hit. "If you don"t have a Wal-Mart account, you probably won"t have a major pop artist," says one label executive. Price War: Does a CD have to cost $15.99? Major labels insist that the low prices mass retailers such as Wal-Mart and Best Buy demand are impossible for them to achieve. But Best Buy senior vice president Gary Arnold counters, "The record industry needs to refine their business models, because the consumer is the ultimate arbitrator. And the consumer feels music isn't properly priced." Labels point to roster cuts and layoffs as evidence that they can't sell CDs cheaper. This breakdown of the cost of a typical major-label release by the independent market-research firm Almighty Institute of Music Retail shows where the money goes for a new album with a list price of $15.99. $0.17 Musicians' unions |
Can Wal-Mart, BestBuy and Target help to bring down out thess costs? Together, they account for nearly half of all CDs sold. This could be very interesting indeed! But, this quote is too small a sample, you must read the whole story over at the Rolling Stone. Then, please come back and give us your thoughts.
Source: Rolling Stone Magazine
