From: jim bell <jimbell@pacifier.com>
Date: Thu, 25 Jul 1996 14:46:39 +0800
To: Duncan Frissell <frissell@panix.com>
Subject: Re: Digital Watermarks (long, getting off-topic)
Message-ID: <199607250418.VAA06574@mail.pacifier.com>
MIME-Version: 1.0
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At 08:23 PM 7/24/96 -0400, Duncan Frissell wrote:
>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.

I'm afraid that quantitatively, this is utter nonsense.  

A relevant data point is the fact that for about $1000, anybody can have 
1000 copies of a custom CDROM manufactured.  That, by music industry 
standards, is an EXCEEDINGLY low production run.  The difference in cost 
between such a CD, and one made in quantities of 100K to 1 million can't 
possibly exceed 90 cents or so.  While the early days of CD's were marked by 
lack of capacity, it is obvious that if the pressing plants are now 
accepting orders for pressing runs of 1K or less, there is plenty of 
capacity left in the industry.  The extra manufacturing cost for those extra 
titles certainly can't be found in the cost of production.

So how about record stores?  Are you suggesting that the fact that there are 
"too many titles" are somehow increasing costs so much that $8 vinyl turned 
into $13.95 CD's?  But how can this be?  CD's are physically smaller than 
vinyl records.  Cheaper to transport and store, and cheaper to display.  And 
they are certainly not more expensive to advertise!

No, the number of titles available has essentially NOTHING to do with the 
price.  I'm truly astonished that you would think this to be true.


>>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.


Then why is it more expensive to market a cassette audio tape, over a videocassette?!?
Jim Bell
jimbell@pacifier.com