Hawkwind MP3's

[Andrew Garibaldi]

The bands do not make income out of second hand sales- think about it. In
the eyes of all thsoe who record such sales that lead to royalty
payments,any second had sale is for an item whose "normal" sale asa new
releases has been and gone - in the eyes of the industry, that item no
longer exists, therefore the group cannot receive any money directly or
indirectly from the sale of a second hand CD. The royalties are determined
precisely by the record company based on units shipped of that new release -
or back catalogue item - out of the company's offices - nothing else counts.
Which is of course precisely why so many bands from the seventies are doing
it themselves and trying to secure the rights to their back catalogue from
the record companies.
On that note, I read to day that the Allman Brothers lost their lawsuit with
Universal to try to get their albums from 1970-1979 back from Universal, the
ruling from the judge trying the case being that the band had left the claim
for too long and therefore had waived their rights to the product concerned.
It's a minefield out there people.
Andy G.
----- Original Message -----
From: "M Holmes" <fofp at HOLYROOD.ED.AC.UK>
To: <BOC-L at LISTSERV.SPC.EDU>
Sent: Tuesday, April 01, 2003 11:39 AM
Subject: Re: Hawkwind MP3's


> Doug Pearson writes:
>
> > >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!
>
> OK, suppose the very second you bought any CD that its secondhand value
> went to zero price. That is that there was no source through which you
> could obtain any money for resale of the item. The theory goes that the
> effect would be that the maximum price you would be willing to pay for
> the new item would drop to some extent. Basically people are willing to
> pay a certain amount of notional rent on an item plus whatever they
> estimate it's worth on resale. Therefore if an item has some resale
> value then the price they're willing to pay for new rises. To the extent
> that this raises the royalty of the band and to the extent that
> competition permits retailers to reach towards this price, the royalty
> to the band increases.
>
> Further than that, I guess you'll have to take it up with the theorists.
> It makes sense to me, but then I like to read about economics so my
> mileage might clearly vary.
>
> > The statement doesn't make any sense to me, since bands don't get any
> > royalty percentages from secondhand sales.
>
> Precisely so, but this doesn't mean that the secondhand market doesn't
> lead to income for the band.
>
> > 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.
>
> People only have a finite amount of funds to spend on anything. What
> retailers and advertisers try to do is change their preferences as to
> what they'll spend those funds on. Sure, someone might buy two
> secondhand CD's instead of a new one, and the band might have gained
> more from the new sale. However someone who might not pay full price
> might buy secondhand and thus raise the price of the new sale for the
> next guy. In fact if kollectors were sure they'd never sell and didn't
> want to leave a Hawkwind collection as a bequest, it'd be in their
> interest to wipe out the secondhand market and cut the new sale price.
>
> > Just as you describe "basic piracy", secondhand sales do not
> > help a band economically "unless it serves to bring new buyers into the
> > process"
>
> I disagree with this on the basis of the above argument.
>
> > 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
>
> They might not have this conciously foremost in their mind, but I
> contend that it's part of the background calculation.
>
> Suppose CD's were like nuclear waste and that if someone decided to get
> rid of one it would cost them a lot of money (I.e there's an even lower
> resale price than zero). Do you suppose that this wouldn't affect sales?
> On a less extreme scale we have domestic equipment such as fridges which
> cost cash to remove (and they're talking about it here for old
> computers). Wouldn't this affect fridge sales to at least the extent
> that a fridge for the bedroom might be skipped?
>
> > (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.
>
> Also more people interested in buying them later simply because they're
> more known. Most of the record companies love their back catalogues of
> ppular artists and certainly most record shops near me would give some
> cash for a David Bowie CD that they won't for an Ian Boddy one. Ian
> Boddy is much rarer but the dude figures that more people know Bowie and
> he's likely to have to give it room on the shelves for a lot less time.
>
> > I wish I could cite actual papers, but some of the
> > most interesting recent findings in economics have been studies showing
> > that consumers (including consumers of stocks & securities) do *not*
behave
> > in the "rational" manner that the current supposed laws of economics
were
> > presumed to dictate.
>
> I've no argument with that. Nobody however is suggesting that consumers
> are irrational either. When consumers behave other than theory predicts
> then that means to most economists that there are some interesting
> factors that the theory is missing. As you've also pointed out, it can't
> be a perfect information market either since nobody can know what
> someone will pay secondhand and how soon. The secondhand record shop
> dudes make income or not byt making their best guess and consumers
> conciously or unconcisouly do the same when estimating secondhand value.
>
> Even on rare items I make this calculation all the time. I just paid 64
> quid for the UFO Silver Machine single which was a promo. Do I believe
> that I could get 64 quid back if I resold? Possibly, but unlikely. I
> believe I paid a premium just to ensure winning the Ebay auction but not
> so much of a premium that the difference between what I paid and what
> I'd get is too high a notional rent for me to hold the item in a
> kollection.
>
> Of course technically, due to Ebay's bidding system, I only paid one
> Pound more than the next guy's bid, but I have to guarantee the next guy
> will bid next time.
>
> The trick about economics is that it's about people's *real* preferences
> rather than what they might claim to an opinion pollster or do in a vote
> that costs them nothing because they'll get it back again at the next
> election. When people have to pass over the magic chits in the knowledge
> that they'll never get them back to spend on the other option, there's
> no room to lie. What they buy reveals what they actually want and what
> precisely they're prepared to sacrifice as an option to get it. In that
> people lie routinely about damn nnear everything else, I think we should
> look at the poor economists' crystal balls as half full, and
> impressively so, rather than half empty.
>
> FoFP