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Actually, as Liebowitz found, the price of CDs has actually remained stable over the years, adjusting for inflation. In fact, thanks to discount stores such as Wal-Mart and Target, the real cost of CDs, in some cases, has decreased over time.
What's more, while the cost of manufacturing a Kid Rock CD might only be pennies, the price tag pays for much more. Which is why it's vital that the biggest-selling artists not see their product given out for free via Kazaa.
"Younger fans, at whom pop music is aimed, tend to be comfortable with computers, which is why downloading hurts the best-selling hits more than any other kinds of music," Hilary Rosen, the former head of the RIAA, told The New Yorker recently. "As a result, records that might have sold 8 million copies now sell 5 [million]. Unfortunately, these blockbuster sales pay for the development of new artists -- Kid Rock pays for all the others."
How to reconvert those Kid Rock fans back into paying customers is the question that will determine the fate of the recording industry. Certainly, it's not like the labels haven't come out with their own sites where they sell music online. Take pressplay.com, an online music service run by Sony and Universal, two of the Big Five music labels. The site seems simple -- at a cost of $9.95 a month, for example, you can stream or download as many songs as you want. But cancel your membership, and you lose your downloads. Of course, you could opt for a "portable download" package -- a clever euphemism for what the whole point of downloading music is: burning to a CD. Pressplay advertises "portable downloads," but only in packs of five, 10 or 20. So actually buying music, as opposed to renting it, is a whole other expense.
Ironically, surveys have shown that most downloaders actually would be willing to pay for their downloads if there was an option that was as easy and as comprehensive as, say, Kazaa. Apple realized this last spring, when it introduced iTunes to Mac owners. Find a song you like, and download it for 99 cents. Or, buy a whole album for $10. No strings. No subscription hassle. The song is yours to keep or burn or do with what you want. Even though Mac's percentage of the personal computer marketplace is in the single digits, iTunes so far has sold more than 5 million songs.
On July 22, the founder of Buy.com launched buymusic.com, intended as an iTunes for PCs. It claims to offer 300,000 songs, and individual downloads are available for between 79 cents and $1.19. However, each song has its own rules regarding how many times you can burn it to CD, or transfer it to portable mp3 players. It is, quite frankly, annoying.
Left out in the cold are traditional music retailers, who, for the most part, can't offer singles to customers. "If a customer comes in, they have to buy the whole thing," says Eric Levin, owner of Criminal Records in Little Five Points. Levin has overheard the following remark more than once in his store: "Don't buy it here; I'll just download it for you." Three years ago, that made him cringe. But he's more philosophical about it now, figuring that if the big labels suffer, independents will step in. Plus, Criminal Records is more than records -- it's DVDs, comics, magazines and toys.
"What the big labels have been doing for the last five years is a mistake," he says. "I don't see peer-to-peer file-sharing as the worst thing that can happen. I see it as great radio. When it works correctly, it's a great sales tool."
BigChampagne's CEO, Eric Garland, would tend to agree. After three years of tracking downloads, he says appearances can be deceiving.
For instance, one of the songs getting the most airplay currently is Beyonce Knowles' "Crazy in Love." And yet, Garland says, while it's a relatively popular download, "you won't see it on our top 10 chart anytime soon." Garland's possible reasons for such discrepancies illustrate the conundrum facing industry watchers.
First, Billboard's Hot 100 ranks singles based on airplay and album sales. And, as Garland notes, how often a song is played on the radio doesn't necessarily reflect its popularity among listeners, as anyone who can't escape Uncle Kracker's remake of "Drift Away" will tell you.
BigChampagne's rankings, however, track raw consumer demand -- what listeners choose, as Garland says, when faced with an all-you-can-eat buffet. What's important to remember is that downloading is primarily a song-driven phenomenon. Most people, he argues, don't download entire albums from an artist, but rather the song they've heard that they want to own. This subverts the traditional model, in which a listener hears a song on the radio, or sees a video, or reads a positive review and goes out and buys a CD with a dozen songs.
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