How Low Can You Go: Will Fans Expect to Only Pay $1.99 for an Album in the Future?

Earlier this week, Digital Music News featured a report on illegal downloading, one in which “freeloaders” (as Chris Ruen calls them) said they’d pay for music if it was cheaper. Yet the price of music has decreased steadily for the past decade — but how low can it go?

Yesterday’s report by the British Entertainment Retail Association (ERA) concluded that, counting inflation, the price of a CD has gone down by 42.8% in the past decade.  In 2002, the average price of a CD was £10.71 ($15.98) — which would be £13.92 today, counting inflation — and today the average price is £7.96.

The price of a download album is also in a downward spiral – largely accelerated by Amazon.

It started a few years ago, when Amazon put Lady Gaga’s album Born This Way for sale at 99 cents.  It still had to pay her label full wholesale price for all the records sold, to a tune of the tidy sum of $3.3 million, but apparently thought it was worth it to take business away from other retailers.

Billboard decided that sales of albums priced at less than $3.49 wouldn’t count towards their chart position – but only in their first four weeks of release. So Amazon made a habit of selling several eagerly awaited new albums for $3.49.

But recently, on Feb 26th, the digital retailer decided to offer a slew of albums for just $1.99 (less than what a single used to cost), including Bruno Mars’ latest album, Unorthodox Jukebox, and Macklemore & Ryan Lewis’ The Heist. As both albums had been out for more than four weeks, they promptly climbed up the Billboard 200 chart – Unorthodox Jukebox went to No. 1 and The Heist moved from No. 16 to No. 4.

It’s unclear if Amazon still had to pay the respective artists’ label the full wholesale price.  What is clear is that the frequency of these, possibly loss-leading, sales drive down the overall price that fans are prepared to pay.  Which, in turn, drives down the wholesale price labels are able to charge.

One could argue that Amazon setting the average price of popular CDs much lower than almost every other retailer, years ago, has also played a role in the 42% price drop ERA is now reporting.

With digital sales, the profit margin per sale is already miniscule. Yet the cost of developing, recording, launching and promoting a new artist – never mind the failure rate (which historically has been nine in 10) of artists that don’t break even – remains the same.

If the expected price of an album becomes $1.99, who will make that investment?

Written while listening to the hypnotic, pulsating beat of Aliyah by Katie B feat. Jessie Ware – a 21st century Joleen set in a club, with Katie crying: “Aliyah, please, this is green envy.”

by  Helienne Lindvall

11 Responses

  1. ye

    People are content with shitty music, it doesn’t have to be new… The population has been so dumbed down and controlled they no longer even seek out good music. Shitty youtube videos make tons more cash than even the best recordings we know and love. The future is in stupid. Great time for comedians though.

    • mdti

      blah, the good music is always shit to someone else.

      great music is even shit to you if you’re not in the state of mind to listen to the said piece of music.

      The argument about “problem is because music is shit” is not valid. first, there is no such thing as Good or bad music : it simply does not exist as an objective quantifiable value. Even subjectively, it is wrong: There are things that fit some moments, some moods, some culture, some periods of one’s life, and the next moment, all that becomes “crap” for the one who idoled them once.

      and vice versa.

  2. Just Another Voice

    Yes, eventually, the price will fall through the floor. There is a always a floor. The floor eventually be – I want to download what I want to download, when I want to download it and I want someone else besides me to pay for it.

    I have a 35 yr old daughter. She was buying from one of those 39cent per dl “illegal” Russian sites – as were her friends. I “kindly” informed her of what she was doing. NOW she buys NO music – saying both Amazon and iTunes are crazy if they think she’ll pay a dollar a track for her collection. She thinks albums should be priced at $3 or less …

    … oh, and the kicker here is that that Russian site and those cheap dls were the way she found out about bands she and her friends go to see two or three times a month at the local music venues that book touring acts.

    … if she liked the band there she’d buy their merch….

    She claims her choices are now limited because of my insistence to do things the “right way.”

    Funny that .. huh?

    • Me, myself and I Friday

      No you are right – music does exist there… but unless you have put the time in to develop the ability to get that music outside so others can hear it, yours is a moot point.

      But I do not use garageband…I record at home using a ProTools recording setup with over $1500 invested in digital recording software and another $75,000 in musical instruments, amps and other related equipment. That does not include the money I have in my old analog reel to reel equipment… but that is beside the point. There may be many more recording studios in your area but relatively few here and those that are around are struggling because of the fact that the musicians (who had been fronted the money by record labels in the past) are not able to afford studio time but can afford a garageband set up and the aforementioned $30 mic. My cheapest mic cost 4X that and several others are 15-20 times that (and that was what I had paid over 20 years ago).

      As I said, I will continue to make music. I really don’t care if no one but family and friends hear my work. Other have more of their ego invested so I can only speak for myself.

      But good on you to insist that your daughter do the right thing and contrary to her belief, there are still plenty of places to discover new music – soundcloud, reverbnation, noisetrade – and several do not require payment but do allow for fans to pay what they want. I do believe that will be the business model in the future that will allow musicians to be compensated for their work.

      But, the central part that has not been addressed is the fact that the listeners today are being dumbed down due to a severe lack of quality in current new music offerings – quality in both the actual recording and quality of the music being created. Not all, but most.

      The fans now must do what had been done by the record label A&R departments and separate the chaff from the wheat. Who loses? The fan and the musicians. You can look to the sites I’ve mentioned above to see what music has touched other musicians and save yourself a lot of time in finding new, quality music that will be worth much more than $2 for the entire album.

      • Sandin

        It is sad to see the old way of being a musician fall to the wayside to the young, who never knew why we feel this way. It wasnt perfect, but it did work

        for many older bands out there. Now all the golden yr bands are touring, because their music was sold the first and second time, but the new generations just “dl what they want , for free, and no one questions any more.

        hence 50 dollar t shirts at shows, to recoup what they are desperatly trying to keep, any money they deserve. They wrote the shit anyway, that has always been where the real money is.

        I like what you have to say< I just feel bad that we are slowly eating ourselves, our childrens education, and it's just never going to go back. Napster, Amazon, corporate feeble minded dimwits, they are the ones causing this new problem. How do artists survive , if they music is not worth anything anymore.......??

  3. GGG

    Unfortunately, they have to go lower. There is just too much choice out there in a fleeting culture that thrives on finding the next best thing, and if bands want their shit to sell instead of being illegally DLed, they have to understand that most people don’t have $100 a week to spend on new music. As someone who works in artist management, trust me, it sucks that I can’t take my chunk from the sales of $18.95 CDs. But you also can’t just ignore how the culture has changed.

    And if you’re still spending an absurd amount of money on recording costs, you aren’t doing enough research. (Unless you live in the middle of nowhere. I guess then your choice of production quality may be limited).

  4. Visitor

    Yet more people are making music than ever in history, more is published and shared. The new musicians are just doing it in their bedrooms with GarageBand and $30 Amazon(tm) bought mics and not at the recording studio. Welcome to the new music industry.

    • mdti

      you don’t describe a new industry, but a new world.

      The movement seems to be in the de-industrialization for the most part. Show business will never die, it will nurture itself from the “new world” you describe. All big stars have been crappy home studist with 30USD budget mics and no immediate understanding of midi in and out, all musicians were dumb beginners at some point…

  5. Me, myself and I

    The problem is, as was mentioned in another forum for musicians, the fans that have grown up listening to dl’s of garageband quality recordings have poor ears. Sorry if that offends some, but is truth. It may be not well received but it is still the truth.

    From a musician’s standpoint, it will always be the ones who don’t create the music who profit at our expense. It doesn’t matter if it’s a site that has a .ru in the address or a site that has the dot com domain name of amazon.

    The ones who suffer are the music creators and ultimately, the people who are inspired, moved, lifted up and are able to find peace in their souls from our music.

    One can argue that there will always be musicians willing to play for free (see the number of venues that insist an artist bring in a crowd to even hope to have a guarantee of the door for proof) and I will respond that in those cases, one gets what they pay for. You, the audience, lose by encouraging that from the clubs that only want to hear the cash register ring as drinks are being sold and could care less if the band on stage can even play (that is if they haven’t already switched to a DJ or have only a jukebox)

    You see I can also argue that there are many musicians who look at their families, their ability to put food on the table and a roof over their heads and ultimately decide to get a job at a factory (if they are lucky enough to have one nearby that has not moved offshore) or go to work in a field where they sit in a cubicle to get a paycheck (so long as the reports are filed and the timecard is punched).

    I would only ask this simple question… what is your music worth to you?

    Not to me, for I have the ability gained through several decades of practice to be able to create all the music I want by myself with no assistance. And I can write new music any time I want to sit down and work at my craft. But how much is it worth to you, the consumer of the music?

    How much would you pay for your download if the end result of your reluctance to part with your money cost you the opportunity to ever enjoy the sound of a single beat of the drum, the wail of guitar or a tickling of the black and white keys on the keyboard? Or a soulful voice crying because “someone done done them wrong”?

    Or will those many musicians, who are able to create music so fine that it is almost otherworldly in its beauty and intensity simply decide to only make music for themselves? What kind of music will be left? Take a moment and listen… really, take a good close listen to YouTube or iTunes or even amazon (or any of the other dl sites) and tell me if that has not already happened…

  6. Just Another Voice

    none of this has anything to do with HOW music is reproduced. Music exists within the nature/the soul of man. That’s inescapable. So music will not go away because consumers won’t pay for it. And the notion that artists are sitting at home recording using garageband exists only in the minds of those who are not actively engaged. I’ve never seen so many recording studios in an area as I do now in some cities.