The cost of a CD should be exponentially higher, according to the RIAA

The Recording Industry Association of America hasn't been making too many friends these days. I guess I should say that the organization does have many friends inside the music industry, because that's who makes up the the RIAA.

I'm not here to argue whether it's right or wrong to download free music where it's available, or whether it's OK to listen to your friend's "Beach Boys Greatest Hits Album." I'm just here to point out what the RIAA wants you to believe about the cost of music and CDs.

If you visit the Key Stats/Facts page on the RIAA website, you'll notice a justification for pricing CDs. The biggest argument appears to be the fact that the Consumer Price Index rose nearly 60 percent between 1983 and 1996, even though the price of a CD actually went down. While this might be a true statement, this is virtually worthless in determining how much a CD should cost.

Let's examine this statement, directly from the website:If CD prices had risen at the same rate as consumer prices over this period, the average retail price of a CD in 1996 would have been $33.86 instead of $12.75.

I know that the CPI has risen, but these numbers don't seem to translate properly. So I visited the Bureau of Labor Statistics Data site, which contains a CPI Inflation Calculator. Unfortunately, I needed the initial value (of a CD in 1983), instead of the theoretical value in 1996. Since I didn't have that, I just guessed until I came up with $33.86 in 1996. I finally found that value: $21.50.

This means that the RIAA is claiming that the average cost of a CD in 1983 was $21.50. How many CDs have you purchased for more than $20?

True, the CD was new technology at the time, and it's quite possible that the price, in some places, was more than $20. Where the RIAA deviates from basic technology knowledge, however, is that more often than not, the cost of producing something like a CD almost always goes down over time.

What better example of electronics getting cheaper than taking a look at the history of the calculator. From the website listed above, Texas Instruments came out with a calculator in 1972 (TI-2500) that cost $119.95 (actually, the suggested retail price was $149.99). If we take a look at the CPI inflation calculator, using the calculator cost and a 13-year span, from 1972 to 1985 (the same time length the RIAA used), we see that the calculator should have cost about $308.77 in 1985.

Maybe this isn't fair, considering the time periods are different. So I'll try $119.95 in 1983, and the value in 1996 is $188.96.

How much do you think a calculator that could do only basic math functions (add, subtract, divide, multiply) was worth in 1996? By 1981, Texas Instruments had already developed a model that included more functionality for $19.99. Granted, the technology involving calculators and CDs are vastly different. My point is that when you are in the technology world, most of your products, with the same level of functionality, do not get more expensive.

The CPI is useful for looking at the prices of raw material, grocery items, etc. Sorry RIAA, but buying a CD isn't like buying a bushel of Korn.

Comments