Newsgroups: bit.listserv.allmusic
Date:         Thu, 16 Apr 1992 10:43:49 EDT
From:         "Michael H. Bloom" <MHB@MITVMA.BITNET>
Subject:      Give them an inch...

James Hedberg <hedberg@INFERENCE.COM> discourses  Re:  CD COSTS (fwd)
> Forwarded message:
> > From: "Richard H. Fisher" <ERRHF%TTACS.BITNET@AUVM.AMERICAN.EDU>
> > Subject:      Re:  CD COSTS
> >
> > In other words, the record companies are probably screwing people over
> > pretty badly.
>
> I think we need to remember our U.S. economics!  Our prices are based
> on what the market will bear, not what things cost or are worth.

Well, yes and no. That's the pure demand side of the equation. On the other
hand, nobody's going to keep selling a product for less than his costs of
producing that item-- that's why you don't hear a lot of 20th century music
for full orchestras; it's way too expensive just to rehearse and record it,
as Frank Zappa found out. That's the pure supply side. Somewhere they balance
out at an equilibrium point, often called the market clearing price. That's
why you can end up paying an extortionate $68 (or whatever it was) for _It's
a Beautiful Day_, because supply was artificially restricted and it was the
only game in town.

Now one of the things that affects demand is substitutability, which is just
what it sounds like, the degree to which consumers who might want a product
could be satisfied with another, similar product instead. This can mean a
couple of different things in this case-- if Michael Jackson records were
significantly more expensive than Terence Trent d'Arby (sp?), for example,
then you might decide to go for the less popular artist and dance a little
slower (but cheaper). This actually has some bearing on keeping the music I
like as obscure as it is: most people's "costs" of obtaining it-- the trouble
of finding out that it exists, figuring out that it's worth listening to, and
ultimately locating a source for it-- are too high for their expected return
in listening pleasure, so they don't bother to check it out even though they
might find it really interesting, they just consume the readily available
music product instead. Michael Jackson has big economies of scale on his side.

The other application of the theory shows up in the technology war that LP's
recently lost. If LP's are still readily available, then CD manufacturers are
competing with them and have to offer better value for the increased price--
maybe bonus tracks, maybe the convenience of not having to go turn over the
record, maybe they can get you to care about the better sound quality or the
(alleged) durability-- but as long as you had the old reliable alternative,
CD's had to keep the price down and the value up. Now that your only choice
other than CD's is the notoriously wretched pre-recorded cassette, the majors
are free to increase the price of the CD medium, as is beginning to happen
with that bloated piece of swill _Classic Queen_.

"Jim Kirkman (LP)" <LESPAUL@UNC.BITNET> gets cheesy:
>           ... Unfortunately my reservoir of knowledge can't come
>   up with the original authors, somebody like Hoagy Carmichael or
>   somebody(s) from that era.

I think you're right, Hoagy Carmichael wrote it. I've got it on that Willie
Nelson album of standards, _Stardust_, which I think is all tunes by Hoagy.
I also believe Hoagy's catalog is one of the sets of publishing rights Paul
McCartney now owns.
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