Hawkwind MP3's

[Doug Pearson]

On Mon, 31 Mar 2003 17:25:57 +0100, M Holmes <fofp at HOLYROOD.ED.AC.UK> wrote:

>Jon Jarrett writes:
>
>> On Mon, 11 Nov 2002, M Holmes wrote:
>
>> > Michael Blackman writes:
>
>> > > True.  It sucks balls.  But where else can anyone get Warrior on
>> > > the edge of time or ASAM and several others.  Hawkwind certainly
>> > > wouldn't get any royalties from ebay sales.
>
>> > In the strict sense that's true.  However on deeper analysis it's
>> > clear that as with cars, part of the sale value of CD's takes
>> > account of the resale value.  Therefore if the band are on a
>> > percentage royalty then a healthy secondhand market does add to
>> > their income.  Basic piracy obviously doesn't unless it serves to
>> > bring new buyers into the process.
>
>> Mike, is this actually true at all?
>
>What's truth? It is standard economics though.
>
>> It seems to me that if it were to
>> be then someone would have to be surveying all second-hand outlets to
>> have an idea of which artists were selling and which weren't, and I
>> find it very unlikely that sort of information's available to
>> high-street retailers, or even that they'd let it affect their prices
>> if it were.
>
>Nope. It's the buyers who know that stuff they buy has some resale value
>and have some rough idea of what that value might be. in the case of
>cars, there's actually a book of resale values of various models
>modified by age and condition. This plays a key part in the financing of
>new cars where "trade in" is used.

Yes, there are "blue books" for secondhand CD's (and LP's/45's), just as
there are for cars, rare books, guns, collectibles, and just about anything
else with a secondhand market.  And at least with CD's/LP's, the blue books
are notoriously inaccurate, both overpricing common items, and underpricing
rarities known only to obsessive collectors.  Stores that rely solely on
those aren't generally the most profitable ones in town ...

>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.  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.  Just as you describe "basic piracy", secondhand sales do not
help a band economically "unless it serves to bring new buyers into the
process" (which, of course, both sometimes do, at least in my personal
experience).

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.  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.

    -Doug
     jasret at mindspring.com