RECORDING INDUSTRY SLASHED CD LABELS, RAISED PRICES DURING PERIOD IN DISPUTE http://www.soundandvisionmag.com/article.asp?section_id=2&article_id=453
JAMES K. WILLCOX - While few dispute the [RIAA] numbers, some, such as George Ziemann, are challenging the RIAA's inferences from them. Ziemann, an Arizona-based musician and owner of Macwizards, a music production company, was propelled into the debate when he wasn't able to sell his band's CDs via online auctions on sites such as eBay, Amazon, and Yahoo because they were burned on recordable CD-Rs. . . As a result of that experience, Ziemann researched the RIAA's figures and came to very different conclusions, released in a much-circulated article, "The RIAA's Statistics Don't Add Up," posted on his Web site (azoz.com). He makes two key assertions: 1) that the labels raised CD prices during a down economy, and 2) that they slashed the number of new releases by almost 25% during the past three years. He says that these factors, and not downloading, are responsible for sluggish CD sales. To arrive at the first conclusion, Ziemann took the RIAA's numbers for the retail value of CDs sold and divided it by the units shipped to determine an average CD price. He found that prices have steadily increased, from an average of $12.05 in 1990 to $14.23 in 2001. Although the numbers for 2002 weren't available when Ziemann did his analysis, using the same formula we determined that the average CD price reached $14.99 in 2002. But when you exclude the promotionally priced CDs sold through record clubs or non-music stores like Starbucks and the Gap, the average price rose from $14.31 in 1998 to $17.09 in 2002. . . In Ziemann's assessment, the combination of fewer releases and higher prices - not free downloads - caused sales to slump. His argument is bolstered by Josh Bernoff, an analyst at Forrester Research, who pointed out in a report issued last August that this isn't the first time booming CD sales have plunged. For instance, during the recession in 1991 - long before anyone even knew what a download was - CD sales growth fell from 15% to 4%. When you consider that the annual rise in the country's gross domestic product slowed by 36% from 1999 to 2002 and that the S&P 500 dropped an equally depressing 28.78% during the same period, the recent 9% decline in sales doesn't seem so dramatic - particularly for a format that's been around for 20 years.
