From: Duncan Frissell <frissell@panix.com>
Date: Thu, 25 Jul 1996 11:16:58 +0800
To: jim bell <jimbell@pacifier.com>
Subject: Re: Digital Watermarks (long, getting off-topic)
Message-ID: <2.2.32.19960725002302.008aeae0@panix.com>
MIME-Version: 1.0
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At 10:26 AM 7/24/96 -0800, jim bell wrote:

>Isn't it odd that when music is sold, CD's are MORE expensive than cassette 
>tapes, even though you _know_ that the manufacturing cost of CD's is less?

CDs sell for more because buyers decided that they wanted a wider range of
titles with shallower sales (hence higher unit costs) rather than a narrower
range of titles with lower sales prices.  The number of CD titles available
is far greater (in general distribution) than the number of vinyl titles
that were available during vinyl's peak year.  This greater availability of
short run pressings raises average unit sales costs justifying the higher
prices.  Had the market decided (when physical production costs fell) that
it was satisfied with a Top-40 CD stock, average CD prices would have fallen
to vinyl levels.

>Another oddity:  The price for a blank, standard-quality videocassette is 
>about the same as that of a blank, standard-quality audio cassette tape, 
>despite the fact that the volume of tape included in the former is probably 
>about a factor of 10 higher.

Materials cost is a minor part of total cost.

In both cases, the cost of production is a small part of the cost of goods
sold.  Almost all of that cost is the cost of marketing (as with all
mass-market products in a modern capitalist economy.

DCF

"The only adequate description of the Universe is the Universe itself.  The
only fair price of an item is the market price.  Neither the Universe nor
the Market can be adequately duplicated in the head of a Congresscritter."