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Music Cartel Launches Another 'Joint Venture'by George Ziemann -- September 22, 2008 Confident the Senate is going to turn the Dept. O' Justice into RIAA employees, the cartel is teaming up for a series of joint ventures. Competing with each other is so tedious, you know. The first part of this story emerged little more than a week ago, when UMG, WMG and Sony, teamed up with MySpace to create MySpace Music. EMI was supposedly considering signing up, too. A couple of days later, independents started complaining that they couldn't upload their catalogs. My initial impression was that this was going to be a situation wherein they can control the retail price and claim 100% of the market. Even if they allow independent labels to sign up, the indies will be customers, not competition. Today's announcement is that SanDisk Corp, BestBuy, Walmart, and all four major record labels have entered into a joint venture to introduce a new format called "slotMusic," which has no discernable advantage over the CD format other than the fact that owning the format allows them to profit from 100% of the market for slotMusic. Again, everyone else will be customers, not competition. They've already declared that the price of slotMusic albums will be "in the ballpark" as current CD prices, so right off the bat, there's no consumer pricing benefit to be had in these troubled times, even as the record labels eliminate the most expensive costs of distributing the physical product.
I think it's safe to say that the cost of printing liner notes and cover art (and let's not forget screen-printing on the CD) are, by far, the most expensive part of the physical process of manufacturing CDs. On a small scale, depending on how colorful you make it, the cost of ink and paper to print the inserts are about 80% of the materials cost. While it would scale down for the big boys, they're going insist on the glossy paper and multiple pages, which boosts it right back up. They're going to give you digital files. Duplication costs are virtually eliminated. If you want to print them out, you have to pay for the ink and paper. If you buy your ink in HP cartridges, ink is currently about $5,000 per gallon, so don't get too carried away. A counter-argument to this criticism may be that, freed from the printing expense, the album art could once again expand to what it was in the days of vinyl LPs. And get this... There's an extra bonus. "High quality" now means 320k mp3s. They've got more space than a CD, which no one fills up, and they're going to downgrade the audio standard instead of offering the mp3s in addition to the higher quality CD tracks. Anyway, I've drifted far from the point, which is that the four major labels seem to have abandoned all pretenses of competition. UMG, WMG, Sony and EMI are now openly working together on multiple fronts to open up retail avenues which they own, giving them the ability to completely control access to the market and set the retail pricing. Just like the old days. |
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