Music has never been less expensive to own, legally. We often hear that if music were cheaper, artists would sell more, but this is simply not true. Myth busted, read on.
Digital Music News – Worse Than Worst Ever? Tommy Boy Starts Number-Crunching Again…
“The first Beatles album in America came out in 1964 at $4.98 list,” Tommy Boy continued. “In today’s dollars that would be $35 for a 28 minute, monophonic 8-song album.”
In other words, using today’s pricing of $9.99 for an Itunes album would have only cost $1.35 in 1964… Even if you wanted to entertain a $20 CD (are there any $20 CDs these days?), the same would have only cost $2.70 in 1964. That’s nearly half of what it actually cost then.
So in the very worst case scenario, music is STILL 45% less expensive today than it was in 1964! And that’s calculated on a $20 CD! If you calculate the difference for an Itunes download, and full album today costs 86% LESS than it did in 1964…
Inflation Calculator: Bureau of Labor Statistics
Today’s $8.00 hr Min Wage equates into only $1.08 in 1964. But, the Federal minimum wage in 1964 was actually $1.25… so today’s minimum wage, adjusted for inflation actually has MORE buying power than it did in the 60s.
This is the weakest argument ever for the decline in music sales… the weakest… And, low ticket items (like 99 cent songs) or the most resilient in a bad economy. It’s durable goods like cars and washing machines that take the big hit.
Let’s look at 35 years of historical data 1973 – 2008 (Source IFPI). *
So it looks like the economy and consumer competition really isn’t that big of a factor after all, again, looking at 35 years of data… the late 90’s may have been the peak, but that’s only because of the onset of illegal exploitation of content without compensation that began at the turn of the century.
Let’s also remember that each decade saw it’s own added consumer competition.
The 70s saw the initial release of VCRs and Video Cassettes as well as video game consoles and cartridges.
The 80s saw home video boom as VHS matured, cable tv boomed, new types of youth sports took hold.
The 90s saw the introduction of DVDs, home computers became household items, people started paying for internet service, and cell phones began to be common place… each offering competition to music sales, but not free music itself.
Yet through each one of those decades (without rampant online piracy) sales grew steadily until p2p sharing and broadband reaches ubiquity at the turn of the century…and then, the sales plummet.
It’s also important to note that sales of recorded music (in all formats combined) started dropping with the onset of Napster and affordable broadband. Many assign the decline of recorded music sales to the introduction of ala carte song sales and Itunes. However, Itunes didn’t launch until the end of 2003 and this introduction of legal ala carte song sales did not accelerate the decline of paid sales (nor did it slow it).
The Trichordist 
I’m not sure you can draw conclusions on the question of whether music is too expensive or not from these charts. What you can say is that in a world of strongly enforced copyrights, the price of music would be determined by what people are willing to pay for it. In a world of weak copyright enforcement, music must be priced less so that it competes with stolen property. As well, if any piracy substitutes for real demand, then producing music generates less revenue from sales. Therefore, less music is produced/distributed/financed than it would be if property rights were properly enforced, and consumers get less music. This is basic supply and demand economics.
Of course there is also the moral issue – the “music costs too much” argument is used to justify piracy. But would these same folks say “a hot dog costs too much, so I’m just going to take it” or “a car costs too much, so I’m just going to take it – but if they dropped the price of cars, i might buy one?” Of course not. It’s just a way of (deliberately) confusing people because intellectual property is somewhat harder to understand.
And of course the other moral issue – in a free society, it it right to compel an artist to give up his artistic work to anyone who wants it? Why is that different from compelling a laborer to work and taking all the compensation? Didn’t we abolish that with the 13th Amendment (the one against slavery)?
That’s also called a compulsory license such as the license that Pandora enjoys. Compulsory licenses inherently benefit those who can afford to lobby for lower rates because the power of Congress compels us.
Interesting article.
You can also say that “convenience” isn’t a valid excuse for illegal downloading either, since we can legally purchase music online just as easily, but that was never a myth. (In the end, there really aren’t any valid excuses!)
But the perception of the price of music has changed. To the online music looter, $9.99/album is expensive compared to free, and buying whole artist catalogues can hardly be afforded. The way music is consumed and shared has indeed changed with p2p, where buying has become the exception. The reasons why people buy or download vary, but it’s often not just about the music. I do believe people will pay for what they truly value, but I’m not sure an online music looter can be reasoned with.
The “music is expensive” argument has been hogwash from the start as should be apparent from the fact that it has been getting progressively cheaper with each new sales model (as I had illustrated in “The Paradise That Should Have Been”, which was the basis for the (in)famous Information Is Beautiful infographic), but this did little to slow the sales decline (and we should remember that the current stabilisation of the US market may be an anomaly).
The competing products argument is equally misleading, since it can work both ways – consumers may be spending more on other forms of entertainment because they’re saving the money the would have spent on recordings by pirating them. What’s missing is data that would demonstrate people consuming less music than previously (in terms of time spent listening, for example), but to the best of my knowledge the situation is the exact opposite.
Finally, the idea that reducing the price of music would increase revenues (as opposed to unit sales) seems equally dubious to me, but I’d have to resort to diagrams to demonstrate my point. Perhaps I’ll do so over at TCM.
Krzysztof “Faza” Wiszniewski
TheCynicalMusician.com