September 21, 2003

CDs and DVDs

Michael Booth writes about the difference between the music and the movie industry:

DenverPost.com - ENTERTAINMENT Michael Booth: The best-selling "Chicago" movie soundtrack is available on CD starting at $13.86. The actual movie, with the soundtrack songs included, of course, plus additional goodies ranging from deleted musical numbers to the director's interview and a "making-of" feature, can be had for precisely $2.12 more. Therein lies the problem for a critically wounded music recording industry: The "Chicago" CD looks like a rip-off, and the DVD looks like a steal.

Nearly everything the record companies have done wrong in the age of downloading has been done right by the movie studios. America's love for movies is stronger than ever, while the nation listens to music with smoldering resentment. While movie companies escort happy customers to newly-installed recliner stadium seats, the music companies escort their biggest fans straight to the courthouse. There is only so much time for entertainment in a busy day, and people will spend their leisure where they meet the path of least resistance.

For every slight by the music world, there's a smarter parallel move by the cinema promoters: Not until 20 years after the introduction of the CD in the United States did a record label announce across-the-board price cuts that acknowledged consumer anger at paying $19 for one decent Justin Timberlake song. Universal will now drop prices on many CDs to below $10, a breaking point many buyers seem to accept. In contrast, the movie studios saw the threat from pay-per-view cable and satellite in 1997, when DVDs first arrived here, and slashed prices immediately. DVDs started between $19 and $24; today hundreds of great titles are available in the $10 range. With "Pirates of the Caribbean" still taking in great business in theaters, a two-disc DVD version will arrive before Christmas for $18.

People listen to the average CD many more times than they watch a DVD. Yet CDs are languishing in stores and DVDs are flying off the shelves. How to see this other than sheer music industry incompetence? Music companies stood by while one of their primary conduits to the public, radio stations, consolidated and grew numbingly homogenized. The variety of music stations offered to the public shrank drastically. Many listeners in their 30s and 40s gave up on trying new material. In the 1990s, the movie industry increased its product outlets across a wide range of styles. Multiplexes overbuilt to the point of bankruptcy, but the result for the consumer was convenient playing times and a near disappearance of daunting ticket lines.

Art houses expanded screens in many cities, providing venues for truly obscure intellectual adventures as well as extended runs for word-of-mouth hits not big enough for the 'plexes. Thus you can still see megahit "Bruce Almighty" for a buck or the acquired taste of "Winged Migration" three months after it opened....

Threatened over the past decade by various forms of piracy, the movie industry chose to go after profiteering international crime rings while letting the local cable companies take on illicit home descramblers with low-key enforcement action. The record labels, not satisfied with infuriating a younger generation with high prices and legal threats, is now enraging clueless middle-aged parents forced to pay $3,000 to $15,000 settlements over individual downloading lawsuits. Record companies pursued an act of Congress for the right to invade the privacy of Internet companies and customers in search of burners' personal information. For good measure, the labels forced a New York 12-year-old to pay a $2,000 fine, taking customer relations to a new level....

Posted by DeLong at September 21, 2003 02:54 PM | TrackBack

Comments

"The best-selling "Chicago" movie soundtrack is available on CD starting at $13.86. The actual movie, with the soundtrack songs included, of course... can be had for precisely $2.12 more."

How long until the music industry sues the movie industry over an outrage like this? The DVD is clearly unfairly undercutting the CD.

Posted by: SP on September 21, 2003 04:51 PM

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What's amazing is how successful the RIAA has been in morphing the recording industry form a group of greedy, price fixing, anti-trust violating, artist ripping off (Go read Stiffed!) cheating villanous scum into an aggrieved party.

Of course, this group of technophobes was against digital music; They were against every technlogical or sociological; advance that ever came down the pike: Radio (who will buy our records -- they'll get it for free over the airwaves), Cassettes (they're robbing us blind!) to MTV (What, we have to pay for a video now also?) ; Even the film industry was afraid of VCRs . . .

The industry is its own worst enemy; It always has been, even before they started suing 12 year old girls . . .

Posted by: Barry Ritholtz on September 21, 2003 06:57 PM

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Perhaps we should just do away with copyrights for music. What will we lose? Rap “music.” I can only hope. Remember when someone sued to prevent children from singing “Rudolf the Red Nosed Reindeer.” They have gone beyond the pale, and it’s time to pull the plug on this obscene industry.

Posted by: A. zarkov on September 21, 2003 07:12 PM

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There is something very wrong when marketting genius and music market distributors take advantage of prepubescents, adolescents, and older minors.

Isn't it wonderful when our pre-adult citizenry realize they're being scammed and deploy their intellect to share "their" property? ... and, avoid the larcenous marketers!

I don't want to be a bad person or display envy. Copyrights are to be respected. But I think the law with regard to music of "short duration performance" is afforded an inappropriate length of time to reward the author. Something like 95 years beyond the writers demise for writing a 3 minute ditty (Ummlamlamlam, umlamlamlam, Get a Job!)is laughable. But seeing the wealth enjoyed by mere celebrity performers (Madonna, Streisand, P-Diddy, a host of Rappers, et al) leads me believe that somehow this is a rigged industry that enjoys undeserved legal protection. The fame and reward of live music performance is deserved. The injustice lurks within the unbalanced and unfair licensing statutes which "overeach" in lenghts of time and transferrence of rights to renumeration. This needs further examination. IMO

BTW: This country has no shortage of musical talent. Support live performance at the ticket booth.

Posted by: Don Majors on September 21, 2003 07:43 PM

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Wow - Zarkov doesn't like hip-hop. I guess we should all hate it as well . . .

I don't like harlequin romance novels - let's do away with copyrights for those. Textbooks are obscenely expensive for me and often hard for me to understand - let's get rid of their copyrights.

Posted by: ETC on September 21, 2003 08:52 PM

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This admiration for DVDs might evaporate if Michael Booth had any interest in the world outside the US and discovered all the joys of region codes. Or if Michael Booth had any interest in playing his DVDs through a chain of other electronic equipment and discovered the joys of macrovision. Or if Michael Booth were interested in running a non-commercial OS like GNU/Linux or BSD he would discover the joys of DVD data scrambling. Or if Michael Booth had a creative bone in his body and were the slightest interested in capturing frames or video segments from DVDs to sample and mix into his own movies, for humor value, ironic commentary or whatever.

But Michael Booth is a good American couch potato, uninterested in the world outside, and incapable of an independent thought, and so happily sings the praises of the cage Hollywood has built for him. What a tool.

Posted by: Maynard Handley on September 21, 2003 11:24 PM

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Taking Maynard's points in reverse order:

1) The movie industry is under no obligation to make it easy for you to capture frames or video segments.

2) Nor is it under any obligation to support unpopular OSs. I speak as a former Mac user, still mourning a forced conversion. The standard is what it is; deal.

3) Macrovision I'm not qualified to comment on, so he may well have a point here.

4) Region codes, dead right, they're a PITA -- a serious one for someone like me, an American with an American laptop who lives and works in Europe.

OTOH, patches and hacks for region code software are not /that/ hard to find.

So, while Maynard is right to express some dissatisfaction, the original point still holds. DVDs are cheap, and the movie industry is doing a far better job of dealing with the new technology than the music industry.

Posted by: Doug Muir on September 21, 2003 11:58 PM

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Maynard: Um, what has that got to do with anything? I didn't read the article as saying that everything is automatically okay with DVDs, just that in some important ways for the audience he's writing for, DVDs are working in ways that CDs could but don't because their makers are refusing to. This is not in any sense incompatible with the idea that the makers of DVDs could also get a few more clues.

Posted by: Bruce Baugh on September 22, 2003 02:20 AM

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Maynard: Um, what has that got to do with anything? I didn't read the article as saying that everything is automatically okay with DVDs, just that in some important ways for the audience he's writing for, DVDs are working in ways that CDs could but don't because their makers are refusing to. This is not in any sense incompatible with the idea that the makers of DVDs could also get a few more clues.

Posted by: Bruce Baugh on September 22, 2003 02:21 AM

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Maynard: Um, what has that got to do with anything? I didn't read the article as saying that everything is automatically okay with DVDs, just that in some important ways for the audience he's writing for, DVDs are working in ways that CDs could but don't because their makers are refusing to. This is not in any sense incompatible with the idea that the makers of DVDs could also get a few more clues.

Posted by: Bruce Baugh on September 22, 2003 02:23 AM

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I've become sufficiently pissed off at the RIAA that I've decided to sit out the next few years of buying music. I won't say I'll do it long term, but any music purchase I make over the next few years is going to have to be specifically because I _really_ like the artist in question. My days of exploratory buying are over for now (1500 CDs already sit in my collection, and that's enough cash lining the pockets of child-suing barraters).

Posted by: Ross Judson on September 22, 2003 07:56 AM

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I've become sufficiently pissed off at the RIAA that I've decided to sit out the next few years of buying music. I won't say I'll do it long term, but any music purchase I make over the next few years is going to have to be specifically because I _really_ like the artist in question. My days of exploratory buying are over for now (1500 CDs already sit in my collection, and that's enough cash lining the pockets of child-suing barraters).

Posted by: Ross Judson on September 22, 2003 08:01 AM

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ETC writes:
>
> Textbooks are obscenely expensive for me and often hard
> for me to understand - let's get rid of their copyrights.

Well, everybody sees how this doesn't follow. But I'm not sure everybody is aware of just how horrible a failure the current textbook market really is. One person (me) gets to dictate that one and only one textbook will be consumed by all the students in the class. This leads to the weird situation where almost all of the competition in the textbook market is directed at me, the person who writes the syllabus and gets a free desk copy of whatever is assigned. I have no incentive other than sheer empathy to assign a text that is less expensive or a better deal. Not surprisingly, the market is thus very uncompetitive. No substitution allowed, and total lock-in means very high prices from the publishers and the bookstore. As it turns out, there isn't really any way to make things more affordable for students even if you want to. This semester, I used the just previous (in the biz, "dead") edition of the textbook since the new edition wasn't markedly superior, and I reasoned the old one would probably be a deal since the bookstore had lots of copies that got sold back, and they'd want to dump them.

What an idiot I am. Of course, what actually happened is that the bookstore got a deal on new (and now nearly useless) copies of the text from their supplier, and sold mostly those to the students, so they were paying $90 new for a textbook I was supposing would be a $30 used item, and used copies were like $60. The only thing that mattered was that it was a required book, so they knew they had the students over a barrel. That really pissed me off, even though I could see exactly why they did what they did.


Posted by: Jonathan King on September 22, 2003 09:19 AM

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There's also the really, really, bad, awfulness of radio. I suppose you can't blame the recording industry for it, but the lack of diversity on radio is a major reason why a lot of people have lost track of the music scene. Even on -public- radio, diversity is dying out, which I have a hard time understanding.

Posted by: Matt on September 22, 2003 09:48 AM

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Matt writes:
> There's also the really, really, bad, awfulness of radio. I
> suppose you can't blame the recording industry for it,
> but the lack of diversity on radio is a major reason why a
> lot of people have lost track of the music scene.

It is interesting to see the extent to which radio has gone down the tubes, and what effect this has had on music. But what happened there is brutally understandable.

Mainstream radio exists to sell ads, and a moment's thought makes you realize that the markets you need to hit are the ones where people listen to a lot of radio. Already, this is probably not very encouraging. As it turns out, the place where people are most likely to listen to radio these days is in their cars. And the people in cars that advertisers most want to reach are women between the ages of 25 and something or other who make most of the household purchases and find themselves driving a heck of a lot more these days than before. There are a couple of other market segments to consider as well, but not very many. Since two or three of these segments dominate the market, all programming is designed not exactly to enthrall even these segments, but to make sure listeners don't change the station. Can you say "inoffensive and highly popular at the expense of everything else"? I thought you could.

The one other point that is worth mentioning is that another feature of the current market is that if you own a station and are out to choosing a "format" and an "audience", it's generally a much better deal to be even #3 in a huge segment than #1 in a smaller segment of the market, so you'll aim to sound like the #1 station in the #1 segment in your market, and that's the definition of homogeneous. You can get programming for a smaller segment, but it had pretty much *better* be way up scale for the exercise to work out. So the exception that proves the rule is public radio. Technically, there are no commercials, but there are prominently mentioned sponsors, and almost without exception they target market clusters that are upscale.

Posted by: Jonathan King on September 22, 2003 10:17 AM

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I've seen economic arguments for radio's badness-- but you have to explain a few things. Why does it continue to get worse? After all, niche marketing isn't a new idea, and it works fine for shoes and movies. Why not radio? -Some- people really like Lucinda Williams, for example, & she's not all -that- far out.

Why didn't it happen 20 years ago? Have the laws of economics changed? Have tastes changed? I'd say, if anything, that tastes have gotten more diverse rather than less. How does radio get away with ignoring that?

Posted by: Matt on September 22, 2003 10:38 AM

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Regarding radio (as with tv) the prized demographic is male. Hence the ribald stuff during drivetime. Women consume more media and hence are more easy to reach. Less music more talk...stuff that will keep you waiting till after the commercial break.
The daytime is devoted to 'at-work' radio...so you tend to get predictable playlists. Stuff that is okay to play at work...at the doctors office, at the car wash and so on. Drivetime is more spreadout in the evening and so the audience is not as prized as the morning drivetime audience. Fewer big names but still lots of talk. Prime time is TV land and the rest of the day audiences are relatively unpredictable.
Accompanying this is the high cost of human programming. To create and maintain an eclectic library of music, to pay a knowledgeable dj (who is likely to attract more than just his/her dorm-mates from college) costs money. Whereas the formats allow for a standardized playlist, does not require you to pay big bucks for a dj (who can easily be replaced if he/she demands big bucks because the playlists are standardized).
Perhaps if satellite radio catches on, we may start seeing more diverse music again...they shouldn't be as concerned if you switch around stations. However, the diversity in radio does not meen that you get all kinds of music on one channel...but all kinds of stations carrying all kinds of music.
We don't decry ESPN and say all they carry is sports...what a waste! We know where to go on TV if we need music, if we need news and so on. So why subject radio to that criticism.
Having said that there are key differences. TV is more 'event' driven: Friends is on at 8:00 pm thursday, 60 minutes at 7:00 on sunday and so on and you don't want to miss it because you won't see the program again except on reruns and that is unpredictable (On-demand may change that yet...but we're a long ways from it). Radio is not like that...it is actually driven by events in people's lifes...driving to work, weekend barbeque...cross country road trip and so on. So the programmers (not having loyal audiences) take fewere chances and start offering more formula formats.
That's just one view of why radio is 'bland' while TV is relatively vibrant.
BTW, it was happening 20 years ago. I think with regulatory changes and ownership changes it has accelerated...but the phenomenon started a long time back.

Posted by: Sam Jackson on September 22, 2003 02:31 PM

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If CDs are competing for shelf space with DVDs and computer games they will have to provide a similar level of revenue to the store per foot of shelf space. There are far fewer DVD titles and they have a lot of concentrated hype so stocking must be relatively easy. Since manufacturing and distribution are cheaper and easier than VHS and players are built into laptops and can be had for less than a VCR the DVD really is an awesome product.

For music companies to match that they must overcome a diffuse product range, a relative lack of hype and a smaller perceived value. To compete they must provide products capable of providing revenues to compete with DVDs which mean individual products that will sell in high volumes and at high prices which in turn means NSync.

Much has been made of how little a recording artist gets out of a CD but to a lesser extent the same can be said of the music company which gives most of the revenue to retailers and distributors while bearing most of the hypeing costs.

I think this explains the music industry's refusal to embrace the gains that even moderate price elasticity would give if allowed to reflect falling costs of production and manufacture -- you wouldn't know from the price of a CD that what my laptop can do with music would have taken kit worth millions just fifteen years ago or that the cost of making and distributing a CD is less than a third that of vinyl even before including massively increased flexibility.

IMHO music companies are fighting a losing battle for access to a particular distribution channel against DVDs and video games. They will keep fighting for it until lack of success and better alternatives make another channel more attractive. The Universal price cut may mark the end of the beginning in this battle. Maybe it won't be hugely successful in protecting the channel but it narrows the gap with file sharing and make stuff like iTunes look even more attractive to the industry.

Perhaps.

Posted by: Jack on September 22, 2003 03:17 PM

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zarkov, rap would be the big winner. They could get the beat from any song they want which is at the moment not possible

Posted by: ano on September 22, 2003 03:59 PM

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zarkov, rap would be the big winner. They could get the beat from any song they want which is at the moment not possible

Posted by: ano on September 22, 2003 04:01 PM

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Matt writes:
> I've seen economic arguments for radio's badness-- but
> you have to explain a few things. Why does it continue to
> get worse? After all, niche marketing isn't a new idea, and it
> works fine for shoes and movies. Why not radio? -Some-
> people really like Lucinda Williams, for example, & she's not
> all -that- far out.

Well, there was that song two or three singles ago with strong, uh, drug injection imagery, but yes, you do have a point...

Niche marketing can work, but you do it when the niche is the most profitable thing (left?) for you to do. So Lucinda Williams gets lots of airplay on so-called adult contemporary stations, but there might be only one of those in your market. And if there is only one, they'll pull in that whole segment without working very hard, hence not digging that hard for new or interesting stuff. (Or even old and interesting stuff; in many cases, these stations don't own ANY CDs any more, so you can ask for songs performed by artists they play all the time, and you will get no joy.)

> Why didn't it happen 20 years ago? Have the laws of
> economics changed? Have tastes changed? I'd say, if
> anything, that tastes have gotten more diverse rather than
> less. How does radio get away with ignoring that?

I think there have been some pretty strong changes in listener patterns since 20 years ago. These days, every mid-level car or above rolls off the line with a CD player, so it's very possible that this fact alone has dampened the possibilities for more creative radio. People will play what they like if they can, and how can a radio station fit your preferences better than your own personal CD collection? As far as the diversity of tastes go, this is a two-edged sword. On the one hand, there is a much wider spectrum of music coming out (I think), but on the other hand, this has probably splintered the market pretty severely, and made some of these niches less profitable than even the fourth most popular "corporate country" station in a market. And some of these niches just won't be combined.

I agree that the problem is frustrating, and I wish I could see a way out of the mess, but I think it is Just True that most radio stations are making a better business choice by playing "Soak up the Sun" and other impossible-to-offend stuff than (say) Funky Périphérique or local bands or anything else.

Posted by: Jonathan King on September 23, 2003 07:40 AM

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I would argue that the music industry is missing the point. The point is whether they will master digital technology or not. The mp3 and P2P are simply too organic expressions of digital technology to fight. Independent labels have been much nimbler in embracing the technology and have been thriving while the majors have been floundering.

SHAMELESS PROMOTION:
I've written a fairly long piece which has been well recieved that I'm fairly proud of at http://marcbrazeau.blogspot.com/2003_07_13_marcbrazeau_archive.html#105846667904708269

It covers suggestions for the majors, opinions of indy icons, management secrets of the grateful dead, bootlegs and mash ups: the current UK amateur dj craze, stax and motown and a few other suprises.

Posted by: Marc Brazeau on September 23, 2003 11:07 PM

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I would argue that the music industry is missing the point. The point is whether they will master digital technology or not. The mp3 and P2P are simply too organic expressions of digital technology to fight. Independent labels have been much nimbler in embracing the technology and have been thriving while the majors have been floundering.

SHAMELESS PROMOTION:
I've written a fairly long piece which has been well recieved that I'm fairly proud of at http://marcbrazeau.blogspot.com/2003_07_13_marcbrazeau_archive.html#105846667904708269

It covers suggestions for the majors, opinions of indy icons, management secrets of the grateful dead, bootlegs and mash ups: the current UK amateur dj craze, stax and motown and a few other suprises.

Posted by: Marc Brazeau on September 23, 2003 11:07 PM

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In his errors a man is true to type. Observe the errors and you will know the man.

Posted by: Poler Emily on December 10, 2003 05:04 AM

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The fear of death is the beginning of slavery.

Posted by: Watanabe Tsune on December 10, 2003 11:35 AM

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