Music Industry Myth: The $20 CD
How many times have I read that a CD costs $20? Way, way, way too many.
Let's take a look at data offered by NPD Music, a provider of sales and marketing data on the music industry. The average price for a CD in 2003's fourth quarter was $13.47, which was 2% less than the same period in 2002 and 4% less than 2001. According to 2003 SoundScan data, 51.6% of all albums purchased in 2003 were new releases. (The others were catalog titles, which have a lower list price.) In 2002, new releases accounted for 50.0% of all purchases. Since catalog titles are cheaper than new releases, and because new release sales accounted for a greater percentage of 2003 sales than 2002 sales, that 2% drop in average CD price may actually understate the recent price drop of new release CDs.
The fact is that nearly every CD (excluding multiple CD sets) costs $18.98 or less, and the vast majority of CDs cost far less. Many new rock bands have a "developing artist price" that is $11.98 or $12.98, which is offered to gain sales and exposure for the new band. (I bought BRMC's latest CD a few days after its release, at a Virgin Megastore, for $9.99 plus tax.) Universal Music Group, which represents roughly 30% of the new CD market, charges, at most, $13.98 for a new CD. (Which was recently raised after consumers didn't respond well to the price cuts. Goes to show that music is not as price-driven a product as most would think.)
(By the way, I'm not going to include sales tax in this discussion for two reasons. Not every state has sales tax, and tax rates vary.)
NPD uses OutKast's Speakerboxx/The Love Below as an example of the pricing of new release CDs. This is a two-CD title with a suggested list price of $21.98. The average record store sold it for $17.46 in the fourth quarter. The same album was sold for an average of $15.19 at electronics specialty stores. Neither of those prices is within $2.50 of the magic $20 barrier--or within 12.5% of $20. And again, keep in mind that's for a two-CD set.
Even the biggest title of 2004, Usher's Confessions, can be found for less than $20. At Amazon.com, Confessions can be purchased for $13.49,. Yes, shipping will raise that price, but unless you live in Bhutan the total bill isn't going to be $20.
Coolfer checked the RIAA's numbers. Average suggested list price of CDs shipped are as follows: $15.05 in 2003, $14.99 in 2002, $14.69 in 2001, $14.02 in 2000, $13.75 in 1999 and $13.47 in 1998. (Dollar value of net full length CDs shipped divided by net full length CD units shipped.) It's interesting to compare NPD's data to the average suggested list price according to the RIAA's statistics. Because consumers are usually able to purchase a CD below the suggested list price, the average price actually paid is less than the average suggested list price. In 2003, consumers paid an average of $13.47 (that's the fourth quarter price, but close enough) for a CD with an average suggested list price of $15.05.
Whether or not a person is paying $20, there is a popular sentiment that music is overpriced (which is a different ballgame...I'm talking only about facts, not opinion). When talking of overpriced music, both journalists and consumers (but especially journalists and their editors) should differentiate between the new Janet Jackson CD (suggested list price: $18.98) and the new album by Franz Ferdinand (suggested list price: $13.98). They should separate major labels from indies like Dischord, who insists upon low lists prices at retail and actually offers all full length titles for $10 each at its website. They need to keep in mind the many Miles Davis CDs--remastered and repackaged--that have a suggested list price of $11.98. (Even better, Sony offers three Miles Davis CDs--In A Silent Way, Sketches of Spain and Kind of Blue--as a three-CD package for only $29.98.)
The $20 CD? Yeah, it exists...in the world of imports and box sets. But for the most part it's a myth.
Music Groups

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