QUOTE(TSax @ Jan 27 2007, 05:03 PM)

QUOTE(imlovinit @ Jan 26 2007, 07:56 AM)

Here's an example from Rolling Stone Magazine and the Institute of Music Retail of the cost of a $15.99 CD and where the money goes.
$0.17 Musicians' unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists' royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead
The problem with that analysis is that some of those costs are fixed or semi-variable. To come up with a cost per CD Rolling Stones Magazine must have assumed a certain number of CDs to divide the fixed costs by. If the number of CDs is a good deal less, and I should think that a CD of ABRSM exam material will sell a lot fewer than the average CD Rolling Stones interests in then the fixed cost per CD will increase.
Good point.
Looking at this list we can separate out fixed and variable and also adjust for ABRSM assumptions. If ABRSM were to distribute music to students from their website rather than sell CDs for profit through ABRSM Publishing, we would get something like this:
$0 Musician's union (fixed per recording, but artists give recording as charitable gift)
$0,10 Packaging/Manufacturing (production, fixed, just rent a studio; manufacturing, variable, none needed if no CDs made)
$0,40 Publishing royalties (fixed, but probably actually lower since 2/3 of music is w/o royalty)
$0 Retail Profit (variable, but not needed if no middleman required to download from ABRSM site)
$0,50 Distribution (variable, assume they distribute online through someone else)
$0 Artists Royalties (variable, charity contribution)
$0 Label Profit (variable, not for profit charity)
$0 Marketing & Promotion (variable, not needed, included in normal ABRSM activities)
$0 Label Overhead (fixed, assume we don't need multi-million $ executives to run a music charity)
$0 Retail Overhead (fixed, no retail stores for online downloads)
So we come out at $1,00 per CD equivalent.
Even if beautiful Joanna MacGregor and the rest were paid a very handsome gig fee, the cost would still be under $2 per CD equivalent.
By making the music available per piece online, students could download only those songs they are interested in, instead of purchasing an entire CD.