I wrote earlier that the government were going to open talks with the music industry with the objective of bringing the prices for original CDs down. It was believed that a reduction in prices will make original CDs more attractive to the consumer, thus assisting in the war against creative media piracy by removing the demand for pirated products.
Would you buy an original CD by a well-known local artist for RM10?
Would you buy an original, autographed CD by a well-known local artist for RM15?
I still believe now as i did when i first wrote about the topic, that this is a fool's errand. The music industry and copyright owners have no reason to agree, and the authorities don't really have any means to force them to. If the authorities control the prices of such products to a level where the average consumer will buy it, you'll see either one or both of two things happening:
# The record labels will refuse to sell such low prices. This will see them either terminate operations here, or take the issue to the courts (where there will most likely win - how can you rightfully control the prices of a luxury item that music CDs are?).
# It will become next to impossible for new talent to break into the market. Record labels will not risk investing for untested talent when their potential margins from sales have been seriously eroded.
It was revealed in The Sun (too bad they don't have a website, making linking to them impossible) today that the cost of manufacturing and producing a single CD ranges from RM0.30 onwards, perhaps with a ceiling of RM3-4. That sounds just about right (how else can the pirates sell their products at RM5-10?). But associated costs such as marketing, distribution, royalties, salaries of the employees at the music labels such as Universal and EMI, push the total cost of the product to the low or mid RM20s. Again, this sounds just about right taking into consideration a profit margin of 30-40% when the CDs are eventually sold for RM35-40 in the open market.
An analysis of this chain of production (or supply chain) clearly indicates the bulk of the costs (thus a bulk of the reason why we have to pay such high prices for CDs) lies with the record labels. Actually making the CD exist is relatively cheap, but the management of the marketing, sales and distribution of the supply chain is expensive.
The answer seems obvious. Why not, just get rid of them? Cut out the record labels, and you'll be able to sell CDs at sub-RM20 prices, even after factoring in the profit margins of the retail outlets such as Tower Records, Victoria Music Records, and Ah Chong Music. That will probably be the sweet spot for consumers; that's when we will start buying original music and even begin to prefer it over pirated versions. A CD in the US costs US$14.99 at the local K-Mart. With "purchasing power parity":http://pacific.commerce.ubc.ca/xr/PPP.html factored in, that's dirt cheap and at a price where the American public is fairly comfortable with. I believe RM$14.99 (for an album by a local artist) is a price that the Malaysian public will be comfortable with. Prices for overseas artists (who will be expected to be paid their royalties in US dollars, perhaps slightly higher to take into account currency conversion rates.
But will it happen? Will the record labels allow themselves to be cut out of matters? The normal arguments will follow: they are a necessary component in the process of producing and marketing music. Without them, local artists will have to fend for themselves, and most will not be able to afford the associated costs to produce music. The record labels are there to pick up the tab for the recording studio sessions (to record a reasonable length album, such costs can go up to RM50,000), to pick up the tab for manufacturing, distribution and marketing. They have the know-how, the know-who and the muscle that artists require. How can the average local artist make a living without them?
Two problems with this argument.
# It assumes that recording labels are investing heavily in new talent. No, they aren't. Take a look at the crop of emerging local artists: nearly all are Malay, young women with beautiful bodies and faces. Vocal ability is almost a secondary concern. Those who can sing like and sound like "Siti Nurhaliza":http://www.channelsiti.com/0main.htm are encouraged to apply. A quick visit to No Black Tie (Jln Mesui, KL) will show you that local talent is in abundance, and some of them are very, very good. Yet nearly none will have a shot with the record labels. It doesn't matter if you can play the guitar like Jimi Hendrix, if you're overweight and unfitting of the Malaysian "target market" (i.e. the Malay audience), you won't be signed on.
# It assumes that the sale of CDs/tapes/videos is the only, or even the main, source of potential income for a recording artist. Really, it doesn't have to be. Siti Nurhaliza makes tens of thousands of ringgit for a single private live performance (of which, i've been informed she does regularly over a period of every month). While most artists won't be able to command her fees for live appearances or performances, i believe some decent money can still be made for artists who are willing to bust their b****s by travelling the country, doing roadshows, performing in bars, pubs, clubs or private functions. A couple thousand at this wedding, another couple thousand at that dinner - it all adds up. As an added bonus, artists can also arrange to sell their albums at such functions. To arrange such gigs, you don't need the backing of a record label. You just need a good manager. But really, the idea is for the artist to really work for his money - cut out the middle man (i.e. the record labels), cut costs, and go down on the ground, do the marketing themselves, build the rapport with fans without some fancy multi-million dollar marketing campaign, but with a simple handshake. Just the way the bands of the 1950s-70s did it in the US and UK.