lauren@RAND-UNIX.ARPA (10/01/85)
This is starting to get into the realm of INFO-AUDIO, but I think I can answer the question. First note again that the typical cost for a CD is actually about $1.60, not less than a dollar. Of course, this is not where the main price difference between CD's and vinyl appears. First of all, in major metro areas, the more typical cost for CD's is not $14 but is rather in the range of $10.95 to $12.95. $11.95 is a very common price around L.A., for example. When looking at pricing, it must be realized that worldwide CD manufacturing capacity is very, very low, at least when compared with vinyl. About 90% of CD's are manufactured outside the U.S. (there is only one CD plant currently operational in this country), so most discs are by definition imported. Lead times for audio CD production can be very long, since there is massive competition for pressing time. This leads to a form of scarcity in a market where CD player sales are growing very rapidly. Many record stores are unable to keep enough CURRENT releases on the shelves at any given time, due to the long lead times for production and distribution of popular CD's. These factors all combine to bump the price up well beyond that for vinyl, which is generally produced "locally" and in GREAT quantity with very little lead time for production or distribution. I believe we'll see that CD pricing will continue to fall as production capacity (especially domestic capacity) increases. --Lauren--
rb@ccivax.UUCP (rex ballard) (10/04/85)
> This is starting to get into the realm of INFO-AUDIO, but I think I > can answer the question. First note again that the typical cost for > a CD is actually about $1.60, not less than a dollar. Of course, this > is not where the main price difference between CD's and vinyl appears. > First of all, in major metro areas, the more typical cost for CD's is > not $14 but is rather in the range of $10.95 to $12.95. > $11.95 is a very common price around L.A., for example. That isn't that much different from cassettes is it? > Many record stores are unable to keep enough CURRENT releases > on the shelves at any given time, due to the long lead times for production > and distribution of popular CD's. > --Lauren-- This last portion is the most important. Any distributor, retailer, or other middle-man takes a Gamble when he carries a new media. Remember 4-channel LP's, stores were frequently stuck with inventory. Shelf space costs anywhere from $5-$25/sq ft/week when all costs are taken into consideration. A square foot of CD's sitting on the shelf for a month because they are not the CURRENT TOP-20 can be very expensive! The higher price encourages the dealer to take the inital risk. Prices will come down as CD gets more popular.