Hawkwind MP3's

[Paul Mather]

On Mon, Mar 31, 2003 at 02:28:26PM -0500, Doug Pearson wrote:
=> On Mon, 31 Mar 2003 17:25:57 +0100, M Holmes <fofp at HOLYROOD.ED.AC.UK> wrote:

=> >In the case of items such as CD's the buyers generally know the rough
=> >resale price of a CD which is modified by the band's popularity and
=> >sometimes by rarity of the release.
=> >
=> >The retailer can't charge any more for an item than the consumer is
=> >willing to pay and what the consumer is willing to pay will depend in
=> >part on what the consumer calculates that they can recover on resale of
=> >the item.
=> >
=> >That makes for a top price. Obviously effects like competition from
=> >other retailers might force that price lower for any particular
=> >retailer.
=> >
=> >Not that these are the only factors affecting pricing, but the resale
=> >value is a factor which affects price.
=>
=> This explains why some secondhand CD's cost more than others, but it
=> doesn't explain how, as you say, "if the band are on a percentage royalty
=> then a healthy secondhand market does add to their income".  I think THAT
=> is the statement that Jon is confused about - I certainly am!
=>
=> The statement doesn't make any sense to me, since bands don't get any
=> royalty percentages from secondhand sales.

I think the point Mike is making is that, indirectly, bands *do* get
royalty percentages from secondhand sales.  The rationale goes
something like this: if there is no secondhand/resale market for an
item, that item will be priced lower at its initial release.  (No
after-market value will tend to lower the "value" of the item, hence
the buyer will be unwilling to pay a high price, unlike an item which
does have a good after-market value, in which part of that initial
higher price can be recouped through subsequent resale.)

The initial sale price is the one from which the band derives its
royalty income.  So, if a good resale market allows the record company
to make the retail sticker price higher, the band will benefit from
this in higher royalty payments.

=>  If anything, it seems to me
=> that a healthy secondhand market would *detract* from a band's income,
=> since a band's fans have a finite amount of funds to spend on the band's
=> releases.

But fans are more likely to buy new releases (they're the "early
adopters":), being unwilling to wait until they filter down into
secondhand channels.  I presume record companies time their releases
carefully, so as not to have too much new product out at one time, and
also to time releases to occur at traditionally high spending times.

=> Also (as an aside), I seriously doubt that very many people buy new CD's
=> (unlike new cars) with any consideration as to what the resale value might
=> be (the notable exception being pre-fab "collectors' items", limited
=> editions, and the like).  If that were the case, nobody would buy top-40
=> releases, because those will all necessarily have lower resale values due
=> to excessive supply.

To be fair, Mike didn't say resale value was the only (or even the
main) factor affecting pricing.  I think there are lots.  A healthy
resale or collectors market indicates a fundamental strength of a band
to retain listeners over time, boosting their "value" with a record
label.  With Top 40 acts, I think hype/bandwagonning often drives the
"value" of their releases.  Ultimately, though, "value" (perceived or
real) translates into retail price, and a higher "value" placed on an
item by buyers will usually result in a higher relative price.

I don't buy albums with a view to selling them, so I can't comment on
how prevalent is that side of buying rationale.  But, my local record
shops have large secondhand sections with a high turnover, so
obviously there are some people that do.  You also have to factor in
nowadays that technology makes it easier to clone albums.  So, people
who previously might have made a cassette copy of an LP they sold can
now make a perfect clone of a CD onto CD-R.  Throw inexpensive
scanners into the mix and it's possible for < $1 for someone to retain
all the intellectual property on a retail CD release.  The surrender
of "value" in that case is much less than before, so I think the
inclination to resell, and hence it being an explicit factor in
purchase will probably rise, if anything.

Cheers,

Paul.

e-mail: paul at gromit.dlib.vt.edu

"Of course the *people* don't want war. [...] But, after all, it is the
 *leaders* of the country who determine the policy and it is always a
 simple matter to drag the people along whether it is a democracy, a
 fascist dictatorship, or a parliament, or a communist dictatorship. [...]
 Voice or no voice, the people can always be brought to the bidding of
 the leaders.  That is easy.  All you have to do is tell them they are
 being attacked, and denounce the pacifists for lack of patriotism and
 exposing the country to greater danger.  It works the same way in any
 country."

        --- Hermann Goering during the Nuremberg War Crimes Trials