Question about buying cds

[Alex Fields]

Okay, so say the retail price on a CD is 15 dollars...often you will see it new on amazon for like 12 and on the artist's website for the retail price. Obviously when amazon or a local shop or whatever sells a cd they have to cut some profit. My question is, if you buy direct from the artist's website, does the money that would ordinarily go to the middle man go to the arist instead? In other words, does the artist get more of the money if you order directly from their message? If someone could explain the economics of this in whatever degree of detail I would be grateful.

[steve V. johnson]

Hi Alex,

"... if you buy direct from the artist's website, does the money that would ordinarily go to the middle man go to the arist instead? #In other words, does the artist get more of the money if you order directly...?"

Yes, that's true. #

These days there are a lot of ways to sell CDs, but artists' abilities to sell directly to the public are better than ever.

The bands below my signature haven't developed our own websites but use CDBaby's online store, and we're very
happy with it. #CDBaby also does "digital distribution," in which they provide our music to as many mp3 download
sites as possible (so we can be downloaded from iTunes and a whole lot of other sites, too!), and a lot of other places which sell CDs (Amazon, for example*) will list our music and then when someone orders
a CD, they order it from CDBaby at a wholesale price that we've specified.

Aside from the cost of the act of recording the music, the CDs themselves, with insert graphics and art and a jewel box, usually cost from $1.50 - 2.50 each in lots of a thousand. #Ordering fewer than a thousand increases the per/CD price
quite a bit, tho that's changing a little bit, downward. #The duplication and jewel case are cheap and the variation in cost
comes with the paper parts and graphics. #The more elaborate the booklet and tray card, the more the cost.

So the markup from, say $2.50 each to $15 each is good. #This allows us to break even soon and then send a lot of copies out to radio and reviewers. #Most indie artists like us #sell in onesies and twosies over a long time, so there's no great, single influx of profit. #Our best sales happen at performances, and we can donate them for stuff like public broadcasting donation premiums and such.

I guess it's not true for everyone, but we've noticed that when indie CDs are
discounted below the $13 - 15 range, it doesn't necessarily increase sales, especially when the discounted ones are offered beside a bunch of others, like in a shop or at a festival table. So we always keep the displayed price at a $15. We ask retailers to keep the retail price there when we sell to them wholesale, so they can make some money from them. And we can discount our direct sales any time we want from that. (Like at the end of a festival or for a charity event...)

So aside from sites like CDBaby (and there are a bunch of that sort) which serve artist well, I always try to buy directly from the artists if I can.

And please don't copy 'em and pass out copies. #Please?

I hope this is helpful in answering your questions,

stv

*Funny Amazon story... #To get on Amazon directly, a CD has to have its own Universal Product Code (UPC) and there's quite a bit of paperwork, or so I've been told by folks who have done it. # So we never tried to list there. #A while ago a friend emailed me to congratulate me on getting onto Amazon.
... Whaaaaat?!?...#
Seems that Amazon "lists" the CD just because they can buy it from CDBaby, and on Amazon, the Culchies CD can be yours for $28 and change + shipping! # #LOL!!!! #I don't expect that we'll sell any there... We haven't so far, and it's been listed for months. #Wotta hoot.

[August Watters]

So the markup from, say $2.50 each to $15 each is good. #This allows us to break even soon . . . #

Your previous paragraph did mention the additional cost of recording, so let's not overlook that in the final accounting. #My quartet CD (http://www.cdfreedom.com/artists/augustwatters/) cost close $8 to produce, including recording costs. At $15 per sale, breaking even will take awhile, especially if a percentage of that $15 goes to the distributor.

Thanks for mentioning: most artists appreciate if you DON'T copy and distribute the music. It doesn't help the artist afford to pay the bills, or make the next CD.


August W

[Bob Wiegers]

I know this is an age-old debate, and sorry it's somewhat off topic, but I bring it up as an honest question:

would you rather have someone:
A) borrow and rip your CD, listen to your music and become a fan although you receive no money for it
-or-
B) never hear your stuff and not buy your CD

as an aspiring/experimenting songwriter, I think I'd choose A.

[otterly2k]

Buying directly from artists does allow more of the $ to go to the artist... yes... so I make a point of buying cd's at gigs/shows when possible.

re: your question, bob - the answer probably depends on what portion of a person's livelihood is made as a musician. While I'd prefer people to buy the cd my vocal group made, I'm happy to have fans out there however they get it. But I don't rely on that income to pay my rent. Gigs sometimes pay very little and the artists counts on the sales income to make ends meet.

[Santiago]

There's higher profit for the artist per album buy selling direct, but there are much greater sums of money to be made through a distribution deal. While an artist at Amazon might not get the $2.50 per CD, he or she may sell a million units at a lower margin. All in all a strong distribution deal can work out for the artist, unless that artist is a really, really sharp business person. I think the issue for a new artist is to get the distributor's attention and priority. That's why a lot of indie musicians try to jumpstart their sales through college radio and other promotions. Once the brand (and band) is established, they have better leverage with the distributors. It gives them some standing in the market. And lets face it, major labels suck at development.

[Alex Fields]

Thanks for the answers, very helpful. FYI I wasn't asking as an artist trying to decide how to sell or something, I was just asking as a buyer who has noticed that a lot of times a CD will be about the same price on artist's website as on Amazon or a local store, and wondering if there was a point to taking time to use the website and maybe pay a few bucks more. I will gladly pay the extra few dollars if it goes straight to the artist, especially since most of the artists I have in mind probably don't sell huge volumes anyway.

[August Watters]

would you rather have someone:
A) borrow and rip your CD, listen to your music and become a fan although you receive no money for it
-or-
B) never hear your stuff and not buy your CD

as an aspiring/experimenting songwriter, I think I'd choose A.

As a professional musician I'd choose B. What does it mean to "become a fan"? Doesn't that imply some level of support? Someone who's not willing to spend a few bucks for the music probably isn't listening to it very carefully anyway.

I'm going to grumble off to my cave now.

[Nolan]

What does it mean to "become a fan"? Doesn't that imply some level of support?
I would think that would mean they would buy any of your others CDs since they liked the first one or maybe come to a show that they wouldn't have otherwise. #Of course if you only have one CD for sale... then it's not such a good deal.
It's funny this topic came up, I just spent $60 at the local music store on some bluegrass. #Three of the CDs I bought were new and the other two came from the USED section. #Does the artist get payed again when it's sold second hand at a shop?

One CD I didn't buy was the new Rocky Top Express since I know I'll be seeing them in concert soon and would rather buy it directly.

[Bob Wiegers]

As a professional musician I'd choose B. What does it mean to "become a fan"? Doesn't that imply some level of support?
I cant support you if I've never heard you. I'm a fan of lots of artists I havent supported financially, but I've definitely spread the word about them.

[August Watters]

I cant support you if I've never heard you.

I wasn't talking about fair use. I usually don't mind sharing a track with someone I think will appreciate it, especially if there's a chance they might buy the CD based on having heard it. I was talking about people who rip the whole CD with no intention of buying anything. You could argue that maybe they'll rip it for free, and pass it on to someone who eventually will buy something, but that idea doesn't do it for me.

Clearly this is an area where individual discretion is important. But there are lots of people out there who believe that music should be free, and aren't willing to address the issue of how music is going to be produced if no one is willing to pay for it. http://www.mandolincafe.net/iB_html/non-cgi/emoticons/mad.gif

Any time now someone is going to remind me we're supposed to be talking about mandolins. Which would be a nice change from what I usually hear around the house! # http://www.mandolincafe.net/iB_html/non-cgi/emoticons/mandosmiley.gif

[J.Albert]

About three years ago, I saved this info from (I think) a posting from the Usenet newsgroups. Didn't save the headers, so I can't recall exactly _where_ it came from, so take this info with a grain of salt:
=======================================
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
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead
=======================================

- John

[Alex Fields]

I don't see anything wrong with using burned tracks in cases where you would not be able to afford the album otherwise and are perfectly willing to replace the burned music with a full price CD when you have the money. I do that sometimes. I listen to a lot of music and have a limited budget, so if a friend has something I think I might be interested in, I will ask them to burn it for me. If I like it enough that I would be willing to pay for it were that the only way I could get it, I'll then buy the CD, and will do that for as many CDs as I'm able to afford at the time. I have no way of knowing whether I like the music enough to justify the expenditure until I've been able to listen to the music, and one track is rarely enough to make a solid impression of an album or artist as a whole. I certainly agree with the sentiment about people who want everything burned just because they don't want to pay, that's really annoying, I can't claim to have experienced that from the artist's point of view but at least in some sense I see it from the point of view of a musician who will probably be in that position eventually and accordingly am somewhat more sensitive to the ignorant attitude that says musicians make enough money that it doesn't matter or something. But I still think you shouldn't be so quick to judge everyone who burns music and stuff because a lot of people (or at least some people) do it in a reasonable way which doesn't cause any financial suffering to the artist.

[August Watters]

But I still think you shouldn't be so quick to judge everyone who burns music and stuff

Please re-read my previous post. That's not what I said.



because a lot of people (or at least some people) do it in a reasonable way

I agree -- the idea of fair use exists for a reason. It's fair. But when a friend says "I like that, could you burn me a copy?" I don't give them the whole CD.

[jmcgann]

Does the artist get payed again when it's sold second hand at a shop?

nnnnoooooo. We barely get paid at all on any CDs unless we actually make and sell them ourselves. I sold 5000 on Green Linnet and got negative balance statements until they just gave up and deleted the title (Upslide, which I bought back and licensed to Mel Bay, who is supposed to reissue it with transcription books. They've been sitting on the books since 2002 for some reason...)

BTW the shell game works this way: Let's say the label "gives" you $5k to record your project and pay your musicians (and even yourself, since you'll be in the studio many hours recording and mixing your project). They then account for it this way: You get a 10% royalty. THEY DEDUCT ALL EXPENSES FROM YOUR 10% meaning 90% of the wholesale proceeds go directly to the label, and to pay off your $5k you have to sell somewhere around 40,000 copies (That would mean a gross of $320,000 at wholesale=$8). To pay off the duplication/printing/mastering/advertising/shipping/overhead for the label costs you have to sell Springsteenonian amounts.

ONLY THEN will you begin to see your 10% royalty (about 80 cents per unit). That's right= and what do you think the expenses might be on that $320,000 wholesale to justify keeping it all?

Better put that Loar on payment plans...maybe a 250 year plan...

Remember, all the while, the 90% of the wholesale price that goes directly to the label. What they do with it beyond overhead is anyone's guess, but it does help to buy swimming pools (as one "roots indie" label magnate bragged) and nice cars and big houses for said label execs. Pretty nice profit margin! Who said recorded music doesn't make money???

It's just a question of who actually gets it.

But hey- at least you get to go on the road to promote "your" product at your own expense (tour support is a thing of the past, if it ever existed beyond The Who) and see all the different Bob Evans and Dennys of the USA! And when you buy back the CDs from the label AT WHOLESALE to sell on the road, you can make $7 per $15 sale to help cover YOUR touring overhead like gas, motels and meals (picks, strings, phone calls to lonely family/divorce lawyers) while earning the Big Bucks as a traveling performer to add to Junior's trust fund (please don't hurt yourself laughing!!!)

Oh yeah- don't forget the label doesn't count the units sold to YOU as actual sales so as not to be unfair - after all, why would it count if it's you that's buying them? You'll be making almost 50% profit yourself! Don't get greedy!!! If you sell 30 at a gig, you'll make $210 to split 5 ways with your bandmates! You could live like a king in some parts of the world on that (get your shots first, though!)Maybe sleep two and a half to a room instead of 5 at that Motel 6!

But I'm not bitter http://www.mandolincafe.net/iB_html/non-cgi/emoticons/mandosmiley.gif

Ah, let us rejoice! The music bidniz! http://www.mandolincafe.net/iB_html/non-cgi/emoticons/laugh.gif

[Shalebot]

As a professional musician I'd choose B. What does it mean to "become a fan"? Doesn't that imply some level of support? Someone who's not willing to spend a few bucks for the music probably isn't listening to it very carefully anyway.

I'm going to grumble off to my cave now.
I'm not sure how it is in the bluegrass world, but I know in the good ol' land of rock and roll, no one is makin' S--t off of CD sales (Nobody is selling CDs for 15 bucks outside of the very indiest of the indie markets. 8-10 is reasonable for a typical full-length production. If you're doing wallet or digipack style CDs with an insert- which is typical these days- you're looking at more like 3.00-3.50, for a thousand+).

An independent band selling such a product at that kind of price isn't doing too bad. But throw in label cuts, big-time production costs, and other nice little fees; it's not such a pretty picture anymore.

A fan who steals the music and then buys a ticket for a show (and maybe even some merch!) is more valuable than not having that fan at all.

What you're seeing, with both established acts such as Radiohead, and up-and-comings, is a willingness to take a financial beating on the album end of things, so that they can get people to listen to said music.

[dasspunk]

Having had a record deal in the past, I can speak to the original topic a bit. Often times, the CDs you see at shows and online are bought by the artist from the record company for maybe $4-6. Any profit on the selling of said CDs is theirs to keep. So yeah, they get more cash when you buy direct.

Other topics... Personally, when I get around to recording another CD, it will almost certainly be $10 shipped anywhere on this planet (Earth that is). If it costs me $11 to ship it to Antarctica, So be it. I have a special hatred for $15+ CDs. I think they are over priced... regardless of circumstances (YMMV). Case in point: at a recent show, my buddy Bobby, having not sold any $15 CDs at shows in some time, decided to sell CDs 2 for $15. He sold over $100 worth that day.

My Brother uses the boxes of his unsold CDs as speaker stands... So I say, when you get around to making your own "speaker stands", sell 'em for whatever you want http://www.mandolincafe.net/iB_html/non-cgi/emoticons/smile.gif Just be prepared to have your speakers propped up for some time... or on the floor!

[Alex Fields]

Please re-read my previous post. That's not what I said.

My bad.


I agree -- the idea of fair use exists for a reason. It's fair. But when a friend says "I like that, could you burn me a copy?" I don't give them the whole CD.

I think my point was that even the whole CD is okay if you want it to find out whether you like the group enough to buy their album and not just because you'd rather get the music free. It's true that probably most people won't make that distinction very well I guess.


What you're seeing, with both established acts such as Radiohead, and up-and-comings, is a willingness to take a financial beating on the album end of things, so that they can get people to listen to said music. Isn't Radiohead averaging more per download for their new album than they made before from CD sales? Last I heard the average people had paid for the album was at least three or four dollars...I can't remember how high exactly, but since it's a download and there's no record company, their only cost is bandwidth for the website. I figure they're making more than they would selling it as a CD with a record deal. But even if that's true it's only true for Radiohead, probably not effective for Joe Shmoe lol.

[August Watters]

If you're doing wallet #or digipack style CDs with an insert- which is typical these days- you're looking at more like 3.00-3.50, for a thousand+).

I'd say the range can be broader than that, depending on what services you are purchasing. #CD manufacturing easily range from $1.50 -$3 each, by the thousand, depending on how it's done (replication? duplication? graphics? booklet size? packaging?). Recording costs might vary from nothing for a self-recorded album (if you already have the equipment), to a few thousand bucks if you're going the professional studio route. There can be other hidden costs (studio musicians, licensing, editing).

So an artist might make a profit on an $8 CD if costs were kept down, but a professionally-recorded and produced CD can cost that much to make. It all depends on what type of project it is, and what resources go into making it.

On the subject of burning copies of CDs to give to friends. DON'T DO IT!!! DON'T DO IT, EVER!!! Theft is theft and no amount of Robin Hood arguments will change that one little bit.

If you have a CD you think a friend would like then LOAN THE CD TO YOUR FRIEND!!! If he/she likes it tell him/her to buy a copy, directly from the musician if possible.

I can't afford a Ferrari. I would like to have one but I can't afford it. Does that mean it is OK for me to go steal one? NO, it isn't different. Theft is theft.

[Klaus Wutscher]

My Brother uses the boxes of his unsold CDs as speaker stands...
Great idea! I could do that too! http://www.mandolincafe.net/iB_html/non-cgi/emoticons/tounge.gif

I don´t know about you guys, but boxes of unsold CDs are the most depressing household items I could think of- that´s why I store them at work http://www.mandolincafe.net/iB_html/non-cgi/emoticons/tounge.gif

[jim simpson]

bluegrass joke:
"..a million seller - I've got a million in my celler"

[DMC]

The whole burning of CDs is a complex issue, no doubt about it. I'm not going to condemn or judge someone who once burned a CD. However I will tell you why I won't burn CDs.

1)Creating, recording and distributing music (even via download) costs money! We HAVE to pay for it or it will simply cease to exist. I honestly derive a certain amount of satisfaction from buying a DGQ or Bela Fleck or Mike Marshall CD or whatever because it makes me feel like I'm contributing in some small way to the possibility of these guys making this music that I love.

2)If we want to own a copy of an album to listen to at our leisure then we are obliged to pay for it. Why? Because it's intellectual property i.e. property as real and genuine as any other. If we simply burn someone elses copy that's theft IMO. If you accept that an album protected by copyright is intellectual property then it is very hard to avoid the conclusion that burning CDs is essentially theft. It seems to me that society in general differentiates between this type of property and more tangible forms of property. They shouldn't IMO.

This is all just my opinion remember http://www.mandolincafe.net/iB_html/non-cgi/emoticons/biggrin.gif

Wanting to check out an artist before you splash out your hard earned money on a full album is not just reasonable but it's the smart thing to do. Just recently I decided I wanted hear some more Cannonball Adderly after listening to Kind of Blue for months. I asked the jazz fans on here for suggestions. I searched for the suggested albums online and various different websites had samples from every track of every album. There was no need for me to burn an album or even a track to determine whether it was worth the money. Checking out the sound of an artist before spending money may not always be possible in this particular way but most of the time I think it is.

[steve V. johnson]

People just -will- steal/copy material from CDs and pass around mp3s, whether they bought them or not. The 'Hobbes' Choice' of whether you'd rather have the attention from theft or the obscurity from integrity is a false issue, and it seems really dark and nasty to present that choice, which is no choice at all, to an artist, much less to a friend. Folks will do that stuff, and when they do it doesn't result in any great measure of positive advertising for the artist.

I didn't put in anything about recording costs because I don't think that they're quantifiable any longer. Music is recorded virtually every way possible, from live-to-cellphone to months in a $5000/day recording studio and everything in between.
And, by the way, I think that it's fantastic that folks can do all that.

For artists who are truly ambitious and want to work to reach the widest possible audience, a distribution deal is the thing.
Those "record labels" that still exist have realized financing the creation of recordings is a large expense that is passing from their roles, and that there are loads of recordings that artists make on their own and finance however they can, that are like
ripe fruit, ready to be picked. They're also realizing that what they were good at was distribution and promotion, and that they can best concentrate their energies and resources on those activities. For the artist, negotiating a distribution deal is
a way to get the distribution to capitalize on what they've done already and to guide the distribution to work well with their
future plans, and to only pay for the services they can use from the label, and not the great long laundry lists of things that
labels like to bill the artists for. But this requires that the artist who's signing one of these has a pretty robust business structure in place already, and one that's ready for growth into new markets.

I've had some dealings with major labels, and I'm just fine "under the radar" these days. But I wish any and all success to those who'd like to be that big.

As to retail prices, it's sort of inevitable that iTunes' establishment of the $1/song download price would extend to 'album' and CD prices. In my part of the world, and those I visit, the retail standard is still $15. I don't really care how artists price their products, but I have noticed that discounting a CD against other products in the same display doesn't really work, and usually ends up with lower sales and frustration. So if the CDs of six artists, equally well-known at, say a festival table, are ten bucks, it's my experience that the seventh artist pricing at $8 is unlikely to boost their sales, and just loses money, and perhaps sales. Just because I'd like everything to work well for everyone, and for everyone to sell their work as much as they want, I hope that that isn't universally true.

Many, if not most, of the factors we are considering here are changing, and to artists' advantage, overall. It's getting easier to find a decent manufacturing price on fewer than a thousand CDs, distribution is decentralizing and mp3 download-only distribution is on the rise with virtually no hardware costs and mp3 codecs are getting better, so the music sounds better. There are new business models for "labels" and distributors, of course recording gear is getting better and cheaper all the time. Etc. and so on... ;-)

Thanks,

stv

[Greenmando]

,,If you have a CD you think a friend would like then LOAN THE CD TO YOUR FRIEND!!! If he/she likes it tell him/her to buy a copy, directly from the musician if possible.

I have found that not one CD ever loaned has ever came home. Not one!
My wife and I only use copies of CD's in the truck to protect the originals. No one would break into a car for burned discs. If someone is interested we loan them the copy from the truck.

We may be unusual, but we enjoy the originals and will pass on buying Cd's without the cover art, we want to know who worked on it.

"I have found that not one CD ever loaned has ever came home. Not one!"

Well, at least your "friends" are stealing legal CDs.

[OlderThanWillie]

My hangup when looking to buy a CD is when I note that for $16 + tax there are only 6 music tracks. A Ricky Skaggs CD I own has a track that is only about 30 seconds long. Having seen too many of those 6-track CDs I now only buy those that have 10 or more tracks. http://www.mandolincafe.net/iB_html/non-cgi/emoticons/mad.gif

[Ivan Kelsall]

In most cases the ONLY option is to buy through a record store.I buy ALL my Bluegrass cd's thro.County Sales. Not only are cd's 1/2 the UK price,but i know that the 'extra' UK cost is just filling the coffers of the wholesaler,NONE of it goes anywhere near the musicians,
Saska