Records are one of the few consumer goods which, in real terms, have steadily gone down in price over the years. In l906 one paid a guinea (GBP1.05, more than a week's wages for many) for a single-sided, 3-minute, 78rpm record of Melba singing 'Si, mi chiamano Mimi'. Forty years later in 1946, The Planets, on six 78s (playing time around 50 minutes) cost about GBP3; Beethoven's Ninth, on eight records, cost GBP4. The first LPs in l950, playing for 50 minutes or so, cost about GBP2 - almost a quarter of my own weekly pay packet for selling those very LPs! That was in the days when it cost 2.1/2d (lp) to post a letter, a bus ride along London's Oxford Street cost 4d (under 2p), and a pint of beer was 8d (about 3p). Had their prices increased pro rata, records would today cost between GBP50 and GBP100 each! So the present GBP12.99/GBP14.99 over-the-counter price of a CD - less than an average day's wage now - is the equivalent of only a few shillings not so long ago, and certainly within the memory of many record buyers.

And what do we get for our GBP14.99? Generally a lot more music, because CDs give up to 80 minutes of playing time - nearly half as much again as the average LP. This extra music affects the cost of a record at the origination stage. In the LP era it usually took two days to make a record. To record it, that is. Nowadays it's three, or even more, because of the extra music (which takes proportionally longer to rehearse and play) allied to such factors as the Musicians' Union regulation which limits the amount of music usable on a finished record to 20 minutes per 3-hour session. Because of the extra music, and the extra time taken to record it, a record company now has to pay considerably more for musicians, hire of venues and instruments, engineers, producers, editing and so.

A record company may also have to pay a large amount of money to publishers for the hire of the orchestral parts; it is calculated on duration and the usual demand is now the punitive sum of GBP55 a minute! For a 70-minute orchestral work this can add up to GBP4000 to the cost of a recording. (For a few hair-raising anecdotes on this topic please see the correspondence columns of the December 1996 issue of GRAMOPHONE magazine: 'Ripped up or ripped off'.)

There are additional costs relevant to the presentation of a recording - notes, texts, translations, pictures and so on - all widely variable. Clearly there is a considerable difference between the cost of a flimsy 4-page insert and a 32-page booklet on good quality paper containing scholarly notes and the texts of songs, operas and the like, in three or four languages. (A translation bill alone can reach several hundred pounds.)

Recording costs have therefore gone up a great deal in the CD age, and this is reflected in their price. If the CD playing-time limit was the same as that of an LP then it seems likely that they would cost appreciably less in the shops. As it is, the cost of a modern recording of a large choral/orchestral single CD can easily run up to GBP50,000, especially if soloists are involved. Clearly it is necessary to sell a large quantity to recoup such a sum.

Of course not all records are of orchestral repertoire, and it doesn't cost as much to record a solo pianist or guitarist. The fact is, though, that instrumental records sell appreciably fewer than orchestral ones, generally speaking. And if an instrumental recording does break even more quickly then it helps to even up the shortfall from the more expensive recordings. How many copies of a given record are in fact sold? The answer varies enormously, but it is not in the quantities which some people seem to think. (Otherwise there wouldn't be so many deletions and remaindered copies.) The average sales figure is just a few thousand copies (over several years - if it is permitted to remain in the catalogue that long!). Proportionally speaking, very few records reach 10,000. Some don't even reach 2,000. These are world sales figures, not just for the United Kingdom. What is more, at present the average sales per title are falling because of the enormous quantities of new issues.

Individual sales figures for the vast number of CDs on the market are not generally available. But as an example, the only recording ever made of Rutland Boughton's Third Symphony, issued by Hyperion, has sold 6036 copies throughout the world in about nine years. The recording costs alone totaled over GBP22,000, so the record has nowhere near covered its outlay, and probably never will. On the face of it that's commercial suicide. How is it justified? By sponsors, bless them. Many records would never be made without some form of financial input from outside parties for one reason or another. However, that is possibly irrelevant to the subject under discussion; it is mentioned merely to demonstrate that records of certain repertoire don't sell - at any price - in the astronomical quantities that people sometimes seem to imagine, and also to explain why obviously hard-to-sell repertoire does appear on disc.

To give an idea of the chain of costs and prices which determine the figure at which a CD is retailed in Britain, let's look at the arithmetic applying to a record crossing the counter at GBP14.99.

Whatever the selling price, one factor is constant: the VAT, which accounts for nearly 15 per cent of the total price. On a record retailing at GBP14.99 the VAT is GBP2.23. The actual cost of the record to the purchaser is only GBP12.76.

The dealers have to make a living and their share of the retail price (GBP12.76, not GBP14.99) is around 33 per cent. In fact they make more from a record, proportionally speaking, than anybody else in the chain. They buy it for GBP7- or GBP8-something from a distributor (because it's impractical to have an account with hundreds of separate record companies) and the distributor also needs to be paid for providing the service. So another substantial percentage must be deducted. (It varies.) Because something like 70 per cent of a classical record company's product is exported (it is impossible to survive on UK sales alone) at not a great deal more than cost (because similar economics to the above apply overseas), a record company therefore actually ends up with something between GBP3 and GBP6 per record (sometimes even less) from which it has to recover the costs of recording, editing, providing notes and translations, typesetting, artwork, printing and manufacture of the disc, to say nothing of the cost of running the business - overheads like rent, rates, phone bills, salaries etc. And if it's a copyright record (any record with music by anyone alive after 1927 is generally copyright-loaded), around 66p per disc has to be paid to the copyright owner.

There's not a great deal left, so one has to sell quite a lot of records to keep going and - very important - have enough left over to invest in new recordings.

So what about all these 'budget' and 'super-budget' records that you can buy these days? How is it that some labels can sell their CDs for GBP4 99, or even less? The following facts refer to new recordings, not to records available cheaply because they've already recouped their costs at a higher price, sometimes over several decades. Nor does it apply to 'pirates' (illegally recorded at no cost), of which there are many in the shops. They do it mainly by cutting out all or some of the above factors. For a start, such labels usually (there are exceptions) limit themselves to 'standard' repertoire - so the music hire factor is eliminated since orchestral parts are widely available. Also, copyright works are generally eschewed, therefore no copyright is levied on sales.

Perhaps the biggest saving is in orchestral bills. Many 'budget' recordings were made at a time not so long ago when it was possible to record for comparatively trifling sums in Eastern-bloc countries where GBP20,000 could buy an entire orchestra for a month! What's more, their output was virtually unlimited because the musicians were not under any union strictures confining them to either specific working periods or the amount of music allowed on to the final disc. And they needed western currency. It was theoretically possible to make an entire orchestral record in one 3-hour session for less than GBP250! Although these exploitative conditions now seem to have come to an end, the recordings made under them are still being sold at very cheap prices. There are orchestras in the western world, too, who are prepared to record for minimal rates for various reasons, or are subsidized by their home cities or countries. Needless to say they are not listed among the world's most elite ensembles. Meanwhile, ironically, the 'majors' are canceling their contracts with such orchestras as the Boston Symphony, the New York Phil and the Cleveland Orchestra because they're not making enough money from them (see below for the subject of the 'majors'' US dealer prices).

Budget labels also compromise on quality in order to keep costs down. Some savings are in presentation. How many 'budget' records come with 36-page (or more) booklets with the texts, translations, pictures and so on which people expect to get with a full-price disc? Try and issue a record of Monteverdi vocal music or something similar without translations and see how short the shrift you get from the critics, to say nothing of the buyers . . . if they buy it. The latest disc in Hyperion's Schubert Song series has a 112-page booklet (cost around GBP1.11) with the texts and translations of all the songs. Not everybody is prepared to forego that 'luxury' (some would say necessity) for a lower price?

Other economies are possible in the marketing of cheap CDs. Because the repertoire is relatively popular and certain to sell a lot more than symphonies by Alwyn, Boughton, Frankel, Holmboe, Langgaard, Pettersson, Rubbra, Schnittke, Simpson (which are all in copyright, be it noted) and similar esoteric repertoire, and available cheaply because it has been made cheaply, its sales potential is of interest to the 'multiples' - the high-street chains whose principal raison d'être is to sell newsprint and pharmaceuticals - who are only interested in large turnover and not in serving the needs of the discriminating and knowledgeable record collector. (Try and buy Boughton's Third Symphony in there!). They are also attractive to the non-specialist chains and supermarkets which have the power to bulk-buy direct from the label at appropriately low prices without the distributor's percentage. Some of the discs are in fact created by the shops or CD factories themselves from leased or cheaply-bought tapes (frequently pseudonymous), with obvious price advantages.

The foregoing facts apply in Britain. Over-the-counter prices in the rest of the world vary considerably, usually because of freight charges, import duties and various taxes. Currently they are appreciably higher, for instance, in Iceland, Switzerland and some South American and Scandinavian countries (though differing and fluctuating exchange rates confuse the picture somewhat). Most of the rest of the world pays much the same as Britain. The most notable exception is the USA. The lower price of CDs in America is sometimes given as 'proof' that they are overpriced elsewhere. One reason for the difference is their low tax. But even American buyers complain, with no justification, that some CDs are too expensive, particularly the imported European independent labels - Hyperion, Harmonia Mundi, Chandos etc - which sell in the shops for $16-$18, a couple of dollars more than labels emanating from the 'majors' (PolyGram, EMI [Angel], WEA, Sony etc) which sell for $12-$15 because the dealer price of those labels is unrealistically low for anybody else.

In Britain, PolyGram's dealer price is currently GBP8 69; in the US the dealer price for the same CD is under $10 (about GBP6). Why the difference? Nobody seems to know! According to René Goiffon of Harmonia Mundi USA, the classical market there (less than three per cent of total record sales) is of little interest to the 'majors' who appear to have no interest in the fact that they are probably losing money on their new classical issues. Most of their revenue comes from the pop business and the recycling of classical titles of which they have an enormous amount. So they are more or less elbowing all other labels aside on dealers' shelves by supplying CDs at a price which cannot be matched by other labels committed to quality recordings of adventurous repertoire.

Goiffon thinks the situation in the United States is very serious: "If we do not get the message across that at $20, a CD containing over an hour of music in high quality sound, by the world's greatest musicians, that you can play over and over again, is actually the cheapest form of entertainment (look at the price of books, movies, or restaurants), we run the risk of seeing the independent classical labels simply disappear".

Unfortunately, CDs are now widely perceived as being intrinsically cheap because there are so many giveaways on the front of magazines and so on; sometimes even two on one magazine. (This is possible because the repertoire is given free of charge by the various record labels in the belief that it will help sales of the parent discs: though usually it doesn't.) Another misleading factor is the 'loss-leading' price at which record clubs advertise some things. In recent weeks one club in Britain has offered the Solti 'Ring' as a 'come on' for less than GBP20, to the rage of the retail trade. This makes better sense when one is informed that the club in question is in fact owned by PolyGram (who also own the recording and press it themselves) and that the offer was conditional upon joining it.

There is no secret of the fact that CD manufacturing prices have fallen markedly since they were introduced. They are now comparatively cheap to press. Illogically, this has created a widespread belief that they are overpriced in the shops. "They only cost a dollar to make so why are they $18 in the shops?" is the monotonous cry we see on the Internet where one recent contributor to a classical music newsgroup wondered 'if the music industry isn't just pricing itself out of the market place'. (In fact the Internet seems to be alarmingly over-populated by would-be recording-economics pundits who say such things as 'I had always believed that a 'fair' list price for a so-called 'full price' CD should have been set at $10.00,' though how he arrived at this wonderfully simple formula was not divulged. In fact the same writer then trotted out the usual naïve bit about 'it costs just a little over a dollar [about 61p], including the jewel box and all artwork to make a CD.' Where on earth do they acquire this misinformation!) René Goiffon's analogy is that that is the same as saying that, being made of glass, all bottles should cost the same regardless of their contents, whether Chateau Lafite or Coca Cola.

Let us hope that the current mistrust of CD prices and suspicion about the motives of record companies is not contagious. If collectors start to avoid premium-price records and buy only cheap ones then they will be the ones to suffer in the long run because the day will surely come when the only new recordings they'll be able to buy, apart perhaps from a few sponsored productions, will be less than top-rank orchestras playing mainstream repertoire such as the Peer Gynt Suites and the New World Symphony, pirate recordings, and 'vanity' records paid for by the artists themselves (usually unknown for fairly obvious reasons). Then they'll complain about the shoddy presentation and lack of choice.

Ted Perry
Managing Director
HYPERION RECORDS, LONDON
May 1998