Now The RIAA Wants You To Believe That You Should Be Paying Much, Much More For CDs
from the nice-try dept
By now, it's no secret that the folks running the RIAA have no clue about basic economics, but that's no excuse for some of their more ridiculous claims. The latest, as pointed out on Digg, is that the RIAA has an information page where they try to convince you that the cost of a CD should be much, much higher than it is, and therefore you're getting a great deal. Commentator Ben Woods gives a quick run down of why the RIAA is out of their minds. Basically, they're claiming that based on basic consumer price index information (i.e., inflation) the price of the CD should have risen over the past few decades, rather than stayed more or less the same. This is really weak economics, and highlights why the recording industry continues to shoot itself in the foot. It shows that they either don't understand (or would prefer to ignore) the differences between decreasing marginal returns (of rivalrous goods) and increasing marginal returns (of non-rivalrous goods). Anyone in the tech industry knows that overtime products get cheaper, not more expensive -- but the recording industry wants to pretend that music is non-rivalrous and therefore should increase in cost over time, rather than decrease -- even as the actual costs of production, distribution, discovery and promotion have all gotten cheaper over time? Sorry, but economics doesn't work that way -- and it's safe to say that the RIAA isn't fooling very many people. Even worse, the RIAA is saying all this while failing to recognize the competitive market they're facing -- where people have a lot more choices for their entertainment dollar, which should drive down the price of CDs, rather than the other way around. If the industry can't even understand these basic facts, is it any wonder they continue to destroy the core of their business?
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Irony Watch: CD pricing *after* 1996...
It's amusing that the period being evaluated ends in 1996. Almost five years ago now, my friend George Scriban posted an interesting analysis proposing that "price fixing since 1996 caused CD sales slowdown".
Said George:
The 1996 price fixing did halt the, ah, "mysterious" downward pressure on CD pricing, but it had some other effects as well. Gee, who could have predicted that?
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non-rivalrous?
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Riiiiiight...thats why they lock down the CD with DRM. Ironic?
*sigh* They are never going to learn.
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-- Disco Stu ("The Twisted World Of Marge Simpson" 4F08)
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the cost of a computer back in the late 70s was what? $8000? that was for something with like 64k of memory on a what? 3 MHz processor? how much would that cost today? that's like 1/100 of a computer today and since a computer costs 1000 on average, that's a $10 computer then.
but as the article points out, different technolgies/industries.
but there's always a way to plaly with "inflation" you can make it seem more expensive or cheaper. because a "computer" back then would cost 8k and 8k then is worth like 25k now or something, but the 8k was for the top of the line, and now top of the line would come in under 15k (i priced a ugm on alienware)
so yeah, you can make statistics fit your needs
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To hell with the RIAA
You get fresh music, the musicians get a fair return, and the RIAA and music companies get nothing.
It's a perfect world.
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re ftk
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Sheesh
I'd pay more for CDs if the money didn't go to the RIAA. All bands should sell their stuff directly.
Doesn't the RIAA read about themselves and think... "man, NO ONE likes us. Maybe we are doing something wrong"
Sometimes you just have to come to terms with the fact that the problem might be yourself.
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Re: Sheesh
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They dance around the real reason...
There are no more old albums to turn into CDs, which was pure profit (less the cost of the media/package) as the music was already 'owned' by them and they didn't even have to spring for new art assets.
But, then again, never assume malice for what simple stupidity can explain.
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Tech isn't the only cost
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The real reason...
I said almost...not all. But not enough to continue the windfall profits of reharvesting the (already bought and paid for) 60s, 70s, 80s, 90s, etc. and so on.
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wow...
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Tech isn't the only cost
From a consumer's perspective I can say that I expect CD's to be selling next to nothing since two new tech generations have arrived - the DVD and now the Blu-Ray.
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When she noted that the difference amounted to a 400% or 500% (or higher) margin of profit for the industry, the interviewee responded only with a slowly widening smile that eventually reached out to his ears (think of The Grinch as he realized how to stop Christmas down in Whoville).
Of course, the interviewee was dead on: if the consumer is/was willing to pay the price, then he certainly wasn't going to stop us.
RIAA's continuing problems is a 'market correction' I'm happy to witness.
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Alternative paths to success
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economics
There are plenty of options for those who want get music, legal and otherwise. It's up to the music industry to remain competative. It seems like they are trying to keep the industry from evolving to protect their way of business.
And if you follow the music industry, artists make very little off of CD sales (via recording companies), it's the recording companies that make their money from CD sales.
So like it has been said, go to a concert or buy directly from the artist to support the music.
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Not really cheaper over time....
And if the cost of the cd manufacturing is really such a factor in the cost of a CD i doubt you could sell just the information digitally and do so for arguably the same price.
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actual sales cost
recently I saw paperwork from a manufacturer, a company who makes the CD's themselves, and what Sony EMI in Canada was paying for them. it even had the abulm names listed.
the cost of a CD, from the manufacturer, in USD:
$0.50
so the music industry gets to pocket a lot of that $10+ per CD.
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"The RIAA Took My Music Away"
The RIAA took my music away
They took it away, Away from me
The RIAA took my music away
They took it away, Away from me
Now I don't know Where my music can be
They took it from me
They took it from me
I don't know Where my music can be
They took it from me
They took it from me
Ring me, ring me, ring me Up the President
And find out Where my music went
Ring me, ring me, ring me Up the FBI
And find out if My music's alive
Yeah, yeah, yeah
o o o o o o
o o o o o o
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If it's expensive, I stop buying it.
Duh.
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recording technology
Look at computers. The die size has changed several times in the last 10 years. That's a really dramatic change in how the CPU's are made. And yet, we see prices drop and more bang for the buck.
I don't ever want to hear about compensation for artists in the price of CD's. The big headliners get about 5 cents per CD, everyone else gets about 3 cents. And that is usually eaten up by what the artist owes label for studio time/producer/equipment.
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recording technology
Look at computers. The die size has changed several times in the last 10 years. That's a really dramatic change in how the CPU's are made. And yet, we see prices drop and more bang for the buck.
I don't ever want to hear about compensation for artists in the price of CD's. The big headliners get about 5 cents per CD, everyone else gets about 3 cents. And that is usually eaten up by what the artist owes label for studio time/producer/equipment.
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Aha!
Of course, the interviewee was dead on: if the consumer is/was willing to pay the price, then he certainly wasn't going to stop us.
The trick now is that cusumers are now smart enough to realize there are other ways of getting the musice therefore they are not willing to pay the price anymore. Add that to the fact that indie lables and artists have figured out that they can get the music to fans cheaper than what some RIAA contract (that pays next to nothing to the artist) can, and you have the reciepe for the RIAA crying about "lost revenues."
Lots of people whine about free market. They should be able to charge what they can get away with and all that. Well not that the labels can no longer get away with charging as much as they used to they have to pay the government to keep music listeners in line.
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Well... if you look at it this way...
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OLD
I'm no *AA sympathizer but that page is 3+ years old. This would be far more interesting if "Now" was actually now.
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CDs? What are those?
To me, CDs are just a waste of plastic/metal/whatever nowadays. SAVE THE EARTH! BUY MP3s!
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.
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Die in a fire RIAA.
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Cost of mixing...
Part of the reason is that computers have become fast enough to handle extremely complex mixes. Mixes that even 5 years ago required thousands upon thousands in dedicated hardware. Most studio mixes use a ton of tracks, even for a 4 piece rock band. look at what I use:
7 tracks for the drums
3 tracks for bass
4 tracks for rhythm guitar
2 tracks for lead guitar
2 tracks for lead vocals
2 tracks for chorus vocals
plus a track for stick counts and a track for white noise
that's 22 tracks, just for your standard rock band. Imagine a large band, or a DJ with all sorts of sound effect tracks. Mixing 20-30 tracks together takes some serious horsepower all by itself, but it doesn't stop there. consider that all those tracks require at least a little reverb, compression, and EQ.
Until recently, such a mix required a large variety of effects which cost hundreds or thousands each, plus at least a 24 track mixing board, or a 16 track and a couple 4 tracks. then hooking it together required about a thousand dollars in cable. Alternately, you could have a computer mixing environment. Until recently, that required a whole bank of computers, and still required lots of external equipment, plus custom software. Then, even if you can afford all that, where you gonna put it?
Because all that stuff will fill a whole room. Oh, and you needed $2000 mixing monitors as well. And guess what? all that crap gets HOT, so you need great air conditioning...but your trying to HEAR in this room, so the AC has to be dead quiet.
Oh, and I've completely left out the rest of the studio, the actual performance room. The acoustics control of a pro studio is critical to the mix quality, and it requires the work of an experienced engineer. An engineer whose work runs $300,000 to $500,000 for a small to medium studio. That rooms also needs quiet AC, humidity control, and probably modification to the actual building structure. Don't forget a wide selection of microphones, mic stands, and oh, more cable.
So that's almost a million dollars in setup, plus rent on a large space.
Now you need acoustics engineers, mixing engineers, receptionists, managers, and maintenance people to run the place. You've got to keep the studio full just to keep the bills paid. forget recouping your construction costs!
So now that we all understand that a studio costs about a million to build, and millions annually to operate, don't assume that the industry tactics only get applied to consumers. They're constantly applying pressure for lower studio costs as well. It's driving the studios out of business. They're doing the same thing to the artists, and it makes the artists not want to work with the labels.
Enter technology.
Last year, I moved into a place with an extra large walk in closet. I immediately hopped on the internet and researched studio setups. I acoustically treated the closest, bought a couple industry standard mics, and a top of the line dual-core computer with a gig of ram. I bought software off the internet for less than $300 total, and most of the once thousands in effects, have been replicated in code for about $50 a pop. Some are even freeware.
Now, I have spent less than $2000, and while I can't get quite the quality of a professional recording, it's more than good enough for demos of local bands. I could easily get a larger room, spend another grand, take a local college class, and produce pro quality mixes.
Since most bands need acoustically treated practice space anyway, the space rent, while expensive, is already necessary anyway. Everything else is well within price. A band will spend that much on studio time in a single year. So the studio has actually been made nearly obsolete. More and more musicians are simply learning to do it themselves, taking more control of the creative process, and cutting out ALL the middle men. Suddenly, computers have made such a tactic affordable. It was unrealistic even 5 years ago.
So now you have Studios needing to charge more, cause they aren't making enough recordings to stay afloat, you've got consumers getting pissed off at industry pricing and copyright tactics, and you've got artists slowly starting to walk away from the organized industry all together. Technology is conspiring to accelerate all these forces at the same time.
consumers now know they have the technology to have their music anytime, anywhere, and they are getting pissed that the industry is trying to withhold it. Artists now know that they, and their fans, are getting screwed at every turn, and they know they can record and promote themselves nearly as effectively now. And you have recording engineers realizing it's better to work freelance, going under contract directly for the artist, in the artists own studio. The artist pays less and the engineer keeps almost all of it.
Anybody still wondering why the labels are so worried about their bottom line? When you hear that an album sells a million copies, at $18 a pop (probably $14 after retail takes it's cut), and you know the studio time probably cost $100,000, advertising $500,000 and the artist only gets 1-2% of what's left, you gotta wonder where all that extra cash is going. Cause that's 14 million, minus about $900,000 in expenses, there's still 13.1 million dollars left. Where'd it go? Yep, into the pockets of agents and executives, and lately, it's safe to assume, lawyers.
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Re: To hell with the RIAA
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#32
and i think it costs a bit more to make a movie than a cd
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Quality of Music
More often than not the sound quality of a downloaded .mp3 is crap and they put restrictions on what and where you can play them from. So I don't download music.
If I like the music I go buy the CD..... I haven't bought any CD's lately because... well... quite frankly the content of the music is horrible.
Instead of a 12 page insert with pictures on a CD put advertisements on it. Let the advertisors pay for the cost of the CD and give the product to your customers for next to nothing. The music shouldn't be the main product. It should be the vehicle in which advertisements are delivered through. You can tell a lot about what a person will and will not buy if you know the type of music they listen to. To take it a step further give the record company / artist a cut of the profits made from ancillary sales made from those advertisements... good god... how hard is it really?
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cd's with ads
and what's next? the cd's 11 traks take up 43 minutes? give the other 37 for audio ads? or make the first 37 minutes the ads Which you can't skip through? or have each track have ads that you have to listen to before the song starts.
great. our music gets even better...
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Heh
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Ads not so bad
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Re: Sheesh
Probably. But in my workplace experience, that leads to the question "How long do these inevitable, accidental, brighter new employees last before the employer recognises their error and fires them?"
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Weird Al
http://www.dontdownloadthissong.com/
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The Costs
Their record industry could easily be saved but the infrastructure greed will be too hard to undo. If CD's sold for $5.00 or $6.00 each it might not be worth someone's time rip them. Someone on the fence about his honesty would certainly spring $5.00. It's still a 500% margin. The could make up lost revenue in volume. Walmart would go that way if the industry would let them.
The movie industry seems to have found a happy medium between first run tickets, CD sales and rentals. The greedy amongst that industry might disagree. But they need to be vigilent because if they teeter the price tipping point, broadband will suck the life out of them. As it is they are nipping at their heels.
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Re: Tech isn't the only cost
It's quite normal. The scary thing about the RIAA is that you have this nagging doubt that they'll run to government and demand a state backed price fixing to restore the old value!
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Ha!
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Re: Re: Sheesh
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Supply and Demand
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marketing
If they don't do it, however, they get lost in the shuffle and don't sell as many discs.
It really hasn't been about music in quite awhile. I look forward to the day the whole system collapses under its own gluttonous weight.
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Re: Irony Watch: CD pricing *after* 1996...
its 2007
2007
-1996
---------
11
Which only serves to more underscore your point, this frivilous nonsensical study is nothing but smoke and mirros and hardly a good one at that.
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Re: Tech isn't the only cost
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Re: Not really cheaper over time....
Also this argument wouldn't hold up to the price of most cds especially after the sale period ends (usually the first week or two) There is no need for a sale on goods like this except to bolster sale numbers for charts, if you can afford to decrease the price to make the number of sales look good then you must still be making a profit.
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Re: recording technology
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Re: OLD
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A Willingness To Pay Requires More Effort From You
I spent in my mind more on shipping than the worth of the music itself. And it never seemed to end. No matter how good the club sale was, I was always spending tons on each piece for shipping. It seemed that "The Industry" was making side money on my craving for what I thought were life enriching songs back then. Now it is just an expense, not pertinent to life, and it just makes me angry and sad both.
This really turned me off and today, I rarely listen to music. National Public Radio is my fare including some interesting music shows from time to time. I do NOT own an Ipod or any kind of MP3 device or player except for my movie DVD player with which I might rarely listen to a friend's CD when she says I must.
The whole buying experience and disproportionate add-on costs have jaded me against music in general. Except for the Cincinnati Blues Society (God Bless their staff and participating artists). Suffice to say if it isn't played within the context of a rented movie, then I may not have heard the song!
I know others who feel much the same. You've taken advantage when we were young and now you make such a fuss about it in our adult life. You folks have darkened the doors of artists whom I'm sure deserve to be heard, one way or another. Which ever way someone gets to hear music, increasingly it will be one which is: -very affordable, and -delightful.
When something is -delightful and -very affordable I'm more willing to part with my very hard earned money. But alas these are two things which seem to be glaringly absent in much of the music industry today!
While everything around us seems to be improving and evolving, why can't you? I believe it is because you have the wrong focus on business. Spend some time taking quality courses and you'll quickly realize exactly what I mean.
It could be caused by greed like so many think, or it could be your expenses could be streamlined a lot! This is were understanding all things quality comes in.
The CONSUMER needs to be delighted! Do that and things will change and you'll be very happy too! The road to change can be easy or hard. Up front it will cost you dearly but pay out most handsomely for your commitment to the consumer. In every part of your business there is latent potential that is not producing desired and needed results.
The U.S. is falling behind in this understanding. This applies to all business from the Mom & Pops to national corporations. Do this and then be welcomed into our world and we'll pay you for it!
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Re: To hell with the RIAA
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Uhm
What I did to split the difference is join Sony Connect, so I can download the songs I want at a buck each. Usually I get two songs from a CD and that's it. For that price I can justify paying for it legally.
Since Sony Connect puts limits on what you can do with downloads, I have special software that lets you rip the songs out to regular .MP3, if I want. Or I can just burn a CD from within Sony Connect and then rip out to high quality MP3 using WMP11.
Ultimately I wouldn't even pay $5 for a CD. Not with the quality of CDs today. The musical passion just is not there like it was (begin old man voice) back in my day.
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Recording costs don't matter
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Perhaps
Therefore the RIAA should stop paying crappy "entertainers" and flooding the market with bad music at the same time would reduce the offer (available cds) and make it a less competitive market. That would drive the prices down.
But I guess there is money to be made and if there is room for all this crappy music, the price of cds is exactly where it should be. Stop controlling the price of cds and you will get the real price of cd. If competition drives the price down, then good. Your return should be the higher even if the margin is lower because you will sell more cds.
Another great shot in the foot. A "bullseye" this time.
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Re: Not really cheaper over time....
As for why they sell the music digitally at the same price, it has nothing to do AT ALL with production costs for the music CD. Prices are roughly equivalent so that no competition takes place. If the digital or physical sides of the music industry decided to lower prices, the other side would have to match or beat that price. Pretty soon we end up with a price war, in which both sides lose out on billions of dollars in profit. Ergo, neither side lowers the price, because it's against their best interest to do so.
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Market economics
What they've apparently failed to realize or remember is that, for every dollar you raise the price point of something, you lose a certain percentage of willing customers who now can't afford to buy your product. By the same token, cut that price, and your prospective audience increases. It seems clear from their pricing that they (however misguidedly) intended to reduce their number of customers, yet complain because they've lost customers.
I won't buy any apples for $10 each, but at 50¢ each, I'll happily buy a bag of 20 for $10, and so would a LOT of other people.
Add to all of the above all the publicity RIAA has gotten for suing single mothers and people without computers, and you begin to build a population that will conscientiously refuse to be your customer, even for *needed* articles of value at a reasonable price. I can't imagine how a vendor could better cut his own throat than what RIAA actually does.
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buy used
This is my method, and every CD I buy costs exactly what I believe it's worth: about $3.
As a bonus, I support a local business while not supporting the RIAA or the colluding musicians.
I only pay full price for local bands, or bands that sell online without major label interference.
On a side note, when I managed a record store, major labels bent over backwards to give me and my employees free CDs. Thousands of them every year -- more than we even had storage space for. Guess CDs aren't that expensive after all. We made a small fortune selling these promo CDs to the used music stores.
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download, download, download!!!!
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riaa
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Time for a new business model
No, the RIAA does not fight for the rights of artists. They fight for their own wallets. With current technology, I think artists should abandon the current model and start distributing their work themselves. That is the only way to break the power of these recording sharks. A simple example: an artist gets may be 5-10% of the price of a CD. Producing a CD is 1 dollar. Add another dollar for leaflet and box, another for transport, another dollar for the sales and we're at 5 dollar. Where do you think the other 28 dollar goes??
Digital songs are even cheaper, say 20 - 30 cents a piece. There are dutch artists (Hans Dulfer) that have begun to distribute their work like that. Unprotected, on a memory stick. I hope more will follow.
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RIAA sucks
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You have no respect for music artists
Second: much less known artists that sells at most a few thousand copies (and are supposed to live on that misery) should be allowed to price CDs much higher. Even $50. Tell me why otherwise you are willing to pay different amounts of money for books? Why are books different than CDs? ou are saying basically that CDs are like bananas. Just sell them by the pound then. Who cares about the time, effort and money put into it by the artists and musicians.
No thanks to the people like you that are willing to pay very high prices for books, magazines, DVDs, but pretend that music is free as some kind of natural law.
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