rabbit@homxb.UUCP (P.REED) (09/24/85)
In "Dun's Business Month", Sept. '85, there is an article entitled, Here Come Computer Compact Disks. In this article the statement is made that Sony plans to market an audio player that converts to a disk drive at the flip of a switch. Does anyone know more about Sony's plans? Is there any connection between the direct digital output of the Sony CDP-XXXES series and CD-ROMs? .P The same magazine article states that; "The compact disks themselves are cheap to make and getting cheaper. Factories stamp them out like cookies from thin sheets of partially melted plastic at a cost of less than $1 each. About 15 million disks will be produced this year, according to Mark Anderson, assistant manager of development at 3M Corp. Matsushita, for one, which currently produces 200,000 audio CDs a month, plans to eventually shift to CD-ROMs next January at a new plant in Menomonie, Wisconsin, Anderson says." It appears that manufactures are using a pricing factor of 14, is this a standard value in the audio business?
ben@moncol.UUCP (Bennett Broder) (09/26/85)
>The same magazine article states that; >"The compact disks themselves are cheap to >make and getting cheaper. Factories stamp them out like cookies >from thin sheets of partially melted plastic at a cost of less than >$1 each. About 15 million disks will be produced this year, according >to Mark Anderson, assistant manager of development at 3M Corp. >Matsushita, for one, which currently produces 200,000 audio >CDs a month, plans to eventually shift to CD-ROMs next January at a >new plant in Menomonie, Wisconsin, Anderson says." >It appears that manufactures are using a pricing factor of 14, is this >a standard value in the audio business? I just bought Lotus 1-2-3 for $300. Let's see. There are 3 disks in the package- at wholesale prices, that's about $3. It appears Lotus Development is using a pricing factor of 100, is this a standard value is the software business? Ben Broder ..ihnp4!princeton!moncol!ben ..vax135!petsd!moncol!ben
rabbit@homxb.UUCP (P.REED) (09/26/85)
In a previous article the price of a CD was compared to the price of computer software, LOTUS 1-2-3. .P I was discussing the audio business not computer software. I want to understand why an EMI CD costs $14 while the same recording on an EMI LP costs $7. The same copy right fee should apply equally to the same recording, the same distribution system should not cost more for a CD versus an LP, and the same over-head charge (percentage) for management and support services should be applied equally to a LP and CD. What that leaves is the start-up cost for capital equipment for a CD factory and the difference in cost of manufacture (materials,labor, ...). As was stated in the article referenced, the cost of manufacture for a CD, which should have amortized into it the administration and service charges, is under $1. Thus the difference in cost of manufacture for a CD versus an LP cannot be more than $1. Right? Since a CD is about twice the cost of an LP at the retail level it should be concluded that the cost of manufacturing an LP is under $.50. My question was aimed at verifing that a CD should cost twice, $7, that of an LP. Certainly the cost of materials for an LP will be much less than the cost of CD materials and manufacturing equipment more expensive for a CD, but considering the large quantities involved I think that I as a non-audiophile am in fact caught in an audiophile pricing structure. As more of my putrid, sniveling type continue to invade the CD world the price of CDs will come down to a mass market level of $7 per CD. I hope!
knf@druxo.UUCP (FricklasK) (09/27/85)
>>Matsushita, for one, which currently produces 200,000 audio >>CDs a month, plans to eventually shift to CD-ROMs next January at a >>new plant in Menomonie, Wisconsin, Anderson says." >>It appears that manufactures are using a pricing factor of 14, is this >>a standard value in the audio business? >I just bought Lotus 1-2-3 for $300. Let's see. There are 3 disks in >the package- at wholesale prices, that's about $3. It appears Lotus >Development is using a pricing factor of 100, is this a standard value >is the software business? >Ben Broder This isn't really comparable. What we're talking about here is a difference in media, not program content. For Lotus, you're paying for the program, not I would expect the price to remain the same. However, a record that lists for $7.98 may have a CD price tag of $15.98 or even $17.98, although you're getting the exact same program content, and the record company is paying the exact same royalties! Since the disk might cost a dollar to produce, and the record only a few cents, they pass this difference on to the consumer. Where this is strange, of course, is that since a record costs, say, 35 cents to produce while the CD costs $1.00, why does this 65 cent difference turn into $8-10 at the record store. '`'`' Ken '`'`
crandell@ut-sally.UUCP (Jim Crandell) (09/27/85)
In article <830@homxb.UUCP> rabbit@homxb.UUCP (P.REED) writes: >In "Dun's Business Month", Sept. '85, there is an article entitled, >Here Come Computer Compact Disks. >The same magazine article states that; >"The compact disks themselves are cheap to >make and getting cheaper. Factories stamp them out like cookies >from thin sheets of partially melted plastic at a cost of less than >$1 each. >It appears that manufactures are using a pricing factor of 14, is this >a standard value in the audio business? Just now catching on, eh? -- Jim Crandell, C. S. Dept., The University of Texas at Austin {ihnp4,seismo,ctvax}!ut-sally!crandell
phil@unisoft.UUCP (phil ronzone) (09/28/85)
In article <512@moncol.UUCP> ben@moncol.UUCP (Bennett Broder) writes: > >I just bought Lotus 1-2-3 for $300. Let's see. There are 3 disks in >the package- at wholesale prices, that's about $3. It appears Lotus >Development is using a pricing factor of 100, is this a standard value >is the software business? > >Ben Broder >..ihnp4!princeton!moncol!ben >..vax135!petsd!moncol!ben I am not sure if this was done tongue in cheek or not. Does Mr. Broder actually believe that the only or major pricing factor in software is the cost of the media that it is distributed on? The ``cost'' of Lotus 1-2-3 is based on the cost of the people and plant needed to program, document, bean-count, etc. the product. Plus any failures that didn't make it our the door, plus advertising. Then there are dealer discounts (how do those dealers make their money, eh?) In concrete terms, I could duplicate Lotus 1-2-3 for about $1,500,000. Of course, 1-2-3 is already a winner, so now I'm risking 1.5 million on the chance of it being a winner. It is very costly to do software.
mpm@hpfcla.UUCP (09/28/85)
(Sorry about the preceding "blank" response, I screwed up while trying
to delete a previously-begun response. By the way, are "hpfcla" and
brethren still causing orphaned responses?)
SUBJECT: Cost of CDs
The following comes from an article in the August 1985 issue of
Digital Audio:
"Right now it costs the record companies about $2.50 for
each CD at the factory door, vs. about 60 cents for a
vinyl LP.
... CDs cost the record companies four times as much as
a regular LP, but they don't sell for four times as much."
-- p. 89
Please read the article on the cost of manufacturing CDs "with
current processes" before making (possibly) unfounded accusations
about how the record companies are bleeding us dry.
I would love to see CDs costing $7 or $8 a shot. And it may
happen in the next couple of years, but meantime there indeed is a
rough balance of supply and demand - the higher cost artificially
limits the "demand" (actually the number of CDs that consumers pur-
chase). Remember: demand is what you actually purchase, NOT what
you would LIKE to purchase.
Having read how current CD manufacturing processes work, I am
somewhat surprised that I can get most of what I want for $10-$12.
(It pays to shop around.)
-- Mike McCarthy
(ihnp4 | hplabs)!hpfcla!hpfcms!mpm
Now if only the record companies would release MORE of the good old
stuff!rb@ccivax.UUCP (rex ballard) (10/03/85)
> >The same magazine article states that; > >"The compact disks themselves are cheap to > >make and getting cheaper. Factories stamp them out like cookies > >from thin sheets of partially melted plastic at a cost of less than > >$1 each. About 15 million disks will be produced this year > >It appears that manufactures are using a pricing factor of 14, is this > >a standard value in the audio business? > > I just bought Lotus 1-2-3 for $300. Let's see. There are 3 disks in > the package- at wholesale prices, that's about $3. It appears Lotus > Development is using a pricing factor of 100, is this a standard value > in the software business? > > Ben Broder > ..ihnp4!princeton!moncol!ben > ..vax135!petsd!moncol!ben Cost of production is only part of the price, records (LP's and 45's) cost even less to produce ($.25/copy). If you look at the "Bargain Rack" at a Woolworths or Kmart, you can find records for $1.00 each. The larger cost is that of "getting it on the dealer's shelves". To get good positioning on those shelves requires that you are "perceived" to be a "Top-40" by the dealer. I remember an Elton John record that was "Number 2 on the charts" THREE DAYS BEFORE IT WAS RELEASED!! If you want your product carried by dealers and your product is for an established product, you will have to spend enough on advertising to BOTH POTENTIAL DEALERS AND CUSTOMERS to "create" a demand for your product. On newer computers, less is required, but heavy marketing is still required. This expense has to be recovered over the life-span of the product. Suppose you sell a product to a customer. He will use that software for as long as 5 years, and expect "free" or "low cost" upgrades, phone support, and immediate attention if he has trouble. The 100 * cost of production value is largely a product of "IBM mainframe oriented" marketing. When IBM, or any mini/mainframe software is "leased" to a customer, the customer expects enhancements, upgrades, and bug fixes immediately. This is understandable if you consider that "down time losses" for a machine connected to 200 users can run well over $200 per MINUTE. If your information operator can't look up your phone number on our computers, we hear about it immediately. Unfortunately, most publishers don't realize that "personal computer" software is a completely different market. Many low cost and share-ware programs as well as public domain stuff is used just because it's cheap. You could probably publish your own version of "grep" and sell it for $5/copy and make a lot of money (not millions, but some) if the same product is not in public domain. Even if it were, if you gave the dealer a half dozen copies to sell on consignment, you could sell a few per month just because it's on the dealers "shelf". Actually, your dealer would probably have to put it in the "bargain box" because "shelf space" is not cheap. The dealer will expect at least 50% so be realistic about your pricing. Ask your dealer if he has a "share-ware" box. Many just put a box of diskettes next to the computer, you buy the "blank disk" at normal price, he just forgets to erase it. Frequently this is a "perk" given to customers who buy their machine from them. There are other outlets such as users groups, Compuserve, and dozens of bulletin boards where you can get "Shareware" or "Public Domain" programs for free. If you like a product, send the "publisher" a check (Many request anywhere for $5 to $100) and you will get "goodies" including things like Upgrades, Printed documentation, even source code. Some shareware companies run the same source code through two different compilers, the slow one (frequently smaller) goes "on the boards", while the fast one "gets mailed". Some of the commercial bulletin boards actually "sell" software on-line. It's possible that with CD-ROM going into the market, you will be able to buy disks containing "This months share-ware" produced by one of the bulletin boards. By making large collections, volume can be high enough to provide "a little cash for the little guys". Just split the revenue out as "royalties". Magizines often provide "token payments" of $25 to $100 to free-lance writers for articles, a BBS could do the same with software. For that matter, support questions and answers could be "published" right along with the software. How many megabytes would a months worth of Net.news take. Would you be willing to pay say, $50 a year for a subscription to it? How about if net.sources came out in binary, runnable form (no need to run binhex or uudecode, just run). Suppose you got $1/page for articles, would you post more, or less than you do now? Suppose you knew that you could sell 1 million copies, sound interesting? As long as we're at it, add a simple data base that could be read by all of the computers (ascii text?), and were able to look at specific subjects. This would eliminate some of the need to "browse" through 500 megabytes of articles wouldn't it? Back when Video-Cassettes were $100/movie, some bright lad thought up the idea of the "Video Club". I remember when it was illegal to rent those movies out, but eventually, the Film Industry got wise and started asking for a "cut" of the rentals. The result is that Video is a thriving business. Now you can buy the movie for $30 or "rent" it for $5 (or whatever). Many movies are "sold" simply because the renter keeps it too long. This was an imaginitive solution to the distribution/profit problem. The computer industry (home and business) needs to find an imaginative solution to this problem. When they do, you will see 1-2-3 look-alikes or whatever, for $10-$50 each, and you will buy 3 or 4 of them because each has "special features" you like. You will pay "full retail" for frequent upgrades, because they have "new features" and problems are fixed. Until then, you can pay $300 for 1-2-3, or "search for a PD clone" on some obscure bulletin board in someones "spare bedroom".
mr@hou2h.UUCP (M.RINDSBERG) (10/04/85)
> This isn't really comparable. What we're talking about here is a difference > in media, not program content. For Lotus, you're paying for the program, not > > I would expect the price to remain the same. However, a record that lists for > $7.98 may have a CD price tag of $15.98 or even $17.98, although you're getting > the exact same program content, and the record company is paying the exact same > royalties! Since the disk might cost a dollar to produce, and the record only > a few cents, they pass this difference on to the consumer. Where this is > strange, of course, is that since a record costs, say, 35 cents to produce > while the CD costs $1.00, why does this 65 cent difference turn into $8-10 > at the record store. The reason for the difference is that the manufactures are trying to recoup their initial R&D investment at this point in time. When the market for CD's grows to the proportions of other media then the price will decrease correspondingly. Mark
matt@warwick.UUCP (Matt Harrison) (10/07/85)
One of the key points in this discussion is the production capacity of the manufacturing plants. To illustrate: in Europe, Thorn-Emi were not that certain that CD would take off when it was launched and held back on the start up of their disc manufacturing plant. Now that CD is a success - sales wise at least- there is a significant shortage of production capacity, which causes, at least indirectly, a rise in the price of the finished product as discs have to be restricted to short production runs, with delays in getting them produced. Additionally this gives the owners of the current plants a degree of monopoly in the area. In the near future this should improve as the slumbering giants get their act sorted out and increase the production capacity. I think a similar problem may be a partial cause of the prices in America, but then again, maybe not. Another factor has to be the relative cost of the players. The cheapest CD players are rather more expensive than the average record deck and this leads to an assumed acceptance by the consumer of higher software prices. Matt Harrison. ------------------------------------------------------------------------------ "The future is never as far away as you think, it's just a lot more expensive than you expect." ------------------------------------------------------------------------------
dww@stl.UUCP (David Wright) (10/07/85)
In article <1067@hou2h.UUCP> mr@hou2h.UUCP (M.RINDSBERG) writes: >The reason for the difference is that the manufactures are trying to >recoup their initial R&D investment at this point in time. Not quite, it's the manufacturing setup cost which is biggest. There's a 1/10/100 rule here - ratio of Research/Product development/manufacturing cost. So quite likely for a novel but potentially high sales volume product like CD disks costs are going to be say $1M initial research, $10M development to point of practical (manufacturable) prototypes, $100M to build a high volume factory - all this for each company concerned. Say a company wants to get it's investment back in the first million copies sold: they'd have to make $111 "profit" on each disk, which would lead to a selling price (if materials cost $1) of say 3x $112. Fortunately the manufacturers of CD disks expect a multi-million market so the startup cost loading is much less than this per disk. But there's no way round paying for the startup costs in a Capitalist society. In a Communist one, of course, such trivia as CD disks don't get developed at all. And in a Mixed/cooperative/or similar society, they only get developed "free" (i.e. at taxpayer's expense) if the government thinks people really need them, otherwise it's left to the Capitalists, as above. TANSTAAFL ("Tain't No Such Thing As A Free Lunch").
henry@utzoo.UUCP (Henry Spencer) (10/08/85)
> How about if net.sources came out in binary, runnable form (no need to > run binhex or uudecode, just run). On *WHICH* *MACHINE*?!? It is a feature, not a bug, that most of the contents of net.sources comes in source form rather than binary. Some of us think that the violation of this rule by net.sources.mac is a deplorable botch, albeit perhaps a bit hard to avoid due to the lack of standardization in Mac development software. You would probably need a full CD-ROM just to store the binaries for all the machines that one might be interested in running a given program on. And you'd never get that many C compilers together in one place to build them all. -- Henry Spencer @ U of Toronto Zoology {allegra,ihnp4,linus,decvax}!utzoo!henry