I don't know if you saw my other post with the breakdown, but the retailer's markup was beside the point. One study showed it at 25%, but that number was to establish the record label's wholesale price for the purposes of breaking out the distribution costs. Using MSRP as a base isn't a bad way to approach the problem recognizing that many retailers will discount further.
jeffrey kay <jkay@engenia.com>
cto, engenia software inc.
--- Original Message ---
From: chuck@topsail.org,
Subject: Re: Comments please
On Friday, March 9, 2001, at 05:13 PM, Tony Finch wrote:
> Jeffrey Kay <jkay@ENGENIA.COM> wrote:
> >
> >Of course, you pay for those things. But there's a substantial amount of
> >money that retailers make from the CD's they sell. I don't know what the
> >delta is between the wholesale and retail prices, but it's got to be in the
> >25% to 50% range.
>
> No way! Less than 10%.
>
Tony's right. Musicblvd.com typically made $1-1.50 per CD on the normal
price of $10-12. So "sales" were loss leaders. That's a pretty cutthroat
margin.
Figure an average artist (NOTE: this is the typical condition for
first big hit) royalty is 8-16% unless they're way big or own the label,
That leaves the labels with the huge piece of the pie. No wonder they're so rabid about Gnapster et al. Hits them right in the belly.
And Eminem ain't all that rich yet.
Chuck
Chuck Murcko
Topsail Group
http://www.topsail.org/
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