Thread: Philadelphia/Ondine drop SACD

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Post by seth December 23, 2008 (41 of 62)
Lochiel said:

The cheap production costs of Karajan and Legge's time are what have brought us to where we are - a saturated market in which the large supply of great recordings of everything in the repetoire (such as the recordings you mention) make the profitability of new recordings, even on a better format, very difficult.

That's why we shouldn't all be so eager for the cheaper re-issues, even those that are remastered. A little scarcity in the classical music market would likely do wonders for sales. Unfortunately, the large companies with the large back-catalogs need the revenue the reissuance of those catalogs produces to fund the new projects, because the new projects can't turn a profit nowadays. See the over-supply problem?

I wish DG would ban all future reissuance of Karajan for the next 10 years and pull the new "edition" out of circulation in 12 months. I wish they could successfully cut down the size of the available catalog. Want a new Beethoven cycle from DG? You'll have to buy Pletnev, whether you really like him or not, or you'll need to shell out a lot of coin on eBay for second-hand Karajan. That's the only way out of this problem.

And look at prices? We pay on Amazon Marketplace sometimes less than $15 for a good SACD or less than $12 for a RBCD. You probably couldn't buy 1/2 a ticket to a concert at a 2nd tier orchestra (in the cheapest seats) for those prices - a little more scarcity would likely allow producers to raise prices to where they need to be in order to make money or break even.

I'd love to hear Robert or Pentaman tell us what they would need to charge (as opposed to what they currently charge) on a per unit basis to break even on a CD and SACD of average sale volume for their label (and I don't know how many copies sold that would be, but just guessing I'd say its probably in the 250-500 units sold ballpark).

The problem with your analysis, is that cost to make recordings has dramatically risen since the 70s due to musicians' recording fees.

Even in the '60s, orchestral musicians were so low paid, that a majority of musicians in most orchestras had part time jobs. In Donald Rosenberg's "The Cleveland Orchestra Story," he writes that musicians were so desperate for money that some put in a few hours a week as bag boys at supermarkets! In the early part of the '60s, the average weekly pay for musicians in "The Big 5" orchestras was $167 a week or $1,133 adjusted for inflation. That doesn't sound so bad, except that until the end of the decade, musicians were only working 30 weeks a year. Nationwide, the average annual salary for a full time symphony player was $26,000 when adjusted for inflation.

Not only did record companies exploit this cheap labor, but Orchestras lined up as many recordings as possible to help supplement the income of musicians. Karajan cleverly used rehearsal time for recording sessions so that the Berlin players would earn double pay for that time. Orchestras depended on this supplemental income up until the '90s. One of the things that lead to the Philadelphia Orchestra's strike in the '90s, was that when they lost their recording contract with EMI -- suddenly everyone's salary dropped by $6k.

Post by seth December 23, 2008 (42 of 62)
Lochiel said:

I'd love to hear Robert or Pentaman tell us what they would need to charge (as opposed to what they currently charge) on a per unit basis to break even on a CD and SACD of average sale volume for their label (and I don't know how many copies sold that would be, but just guessing I'd say its probably in the 250-500 units sold ballpark).

IIRC, when Gardiner began releasing his recordings from his Bach Cantata project, he setup his label as a non-profit, and said that he needed to sell about 10k units in order for a release to break even and help pay for the next release.

I think you're break even point is way too low. Decca canceled the Cleveland Orchestra's Ring Cycle when "Die Walkure" failed to sell 600 units after a year. In the late '90s, such low sales number were common, and caused the major labels to end many of its record contracts.

Post by Lochiel December 23, 2008 (43 of 62)
seth said:

IIRC, when Gardiner began releasing his recordings from his Bach Cantata project, he setup his label as a non-profit, and said that he needed to sell about 10k units in order for a release to break even and help pay for the next release.

I think you're break even point is way too low. Decca canceled the Cleveland Orchestra's Ring Cycle when "Die Walkure" failed to sell 600 units after a year. In the late '90s, such low sales number were common, and caused the major labels to end many of its record contracts.

I think you're misunderstanding my question - I know that they're likely not breaking even on what a typical CD sells - my question is what they would need to charge in order to break even on that typical CD.

In other words, if they hypothetically sell only 250-500 CD's on a recording, what would each of those need to cost in order to break-even? (Now tell us what the average (per disc) sale numbers are for, say, all BIS CD's released in 2008. Set these "average per disc sale" numbers against "average production cost" numbers, and tell us what we likely should have been paying for each CD if we wanted BIS to break-even on their releases in 2008...)

Re: your earlier post - yes, I know fees were significantly less in the 60's and 70's. Low recording costs then, saturated market now.

BTW, I plan to buy Julia Fischer's Bach Violin Concertos CD upon its release. I recently saw an interview with her discussing this recording on YouTube.

Post by mdt December 24, 2008 (44 of 62)
bissie said:

So are all BIS recordings, after 35 years.
I find it a bit unfortunate that you are taking out your frustration at one of the very few companies that - against financial sence - follows its artistical conscience.

Robert

You are right,I appologize. I was actually writing to "the industry", not to you. Not really thinking I did it in response to your post, because you just happened to touch the point, that has been frustrating me so long with their behaviour.

I very much encourage you to keep continuing to follow your artistical conscience against financial sense.

(It would be nice as well if you could spread some of this attitude amongst your colleagues from the majors, they don't listen to us consumers. Maybe record people listen to other record people?)


kind regards and have a nice christmas

Max

Post by mdt December 24, 2008 (45 of 62)
Arthur said:

Sorry, Theresa, I think their logic is this:

We've got this hi-res mulitchannel recording AND a new format (Blue-Ray). Now there's only a limited market out there for this type of music, so we'll maximize our profits by releasing it only in lo-res, and then in a couple of years, we'll re-release it in Blu-Ray and those same customers will be forced to buy it again!!

Now if they produced a hi-res SACD hybrid today, no one would even consider the Blu-Ray disc coming later! One sale, instead of two--lower profits....

I may (and I stress MAY) check out some Blu-Ray discs down the line, but I'm definitely not supporting them in their current CD only phase! So at least from one consumer, they're not getting two purchases!

As for Ondine/Philadelphia: I don't NEED another Beethoven, Mahler, Shostakovich, Bruckner, Tchaikovsky Symphony recording ever again. But when I get the chance to hear a great orchestra in a hi-res recording, I nearly always give in to my curiosity and buy it. But when it's just another second tier lo-res format it's being released on, I have no trouble passing.

Mark my words, Ondine! I speak with my wallet. I've bought every Ondine SACD save one, but I haven't bought another Ondine disc in at least five (and probably ten) years!

I don't think Blue Ray should be a problem for SA-CD. In my view these are two different pairs of shoes.

Blue Ray brings the advances in video recording technology to the end user and SA-CD does the same for pure audio.

Both are the logical succesors for there predecessors DVD resp. CD. I believe these formats should exist in paralell just as CD and DVD are today. No one regards theme as ennemys.

Post by bissie December 24, 2008 (46 of 62)
Lochiel said:

I think you're misunderstanding my question - I know that they're likely not breaking even on what a typical CD sells - my question is what they would need to charge in order to break even on that typical CD.

In other words, if they hypothetically sell only 250-500 CD's on a recording, what would each of those need to cost in order to break-even? (Now tell us what the average (per disc) sale numbers are for, say, all BIS CD's released in 2008. Set these "average per disc sale" numbers against "average production cost" numbers, and tell us what we likely should have been paying for each CD if we wanted BIS to break-even on their releases in 2008...)

Hi there,

whereas I don't feel called upon to go on record in any Forum with my exact figures, I can give you a few pointers what it entails to run a record company.

If we were absolutely forced to break even immediately on every production we make, we would stop - immediately. Running a record company means taking the longterm-to-very-longterm view. It means investing in artistry, repertoire and sound of exceptional quality that will stand up to the test of time. This is why we never delete anything at BIS. We believe in what we do and do it with passion.

A typical recording costs, from idea to finished master tape, in the vicinity of 30'000 Dollars. This figure includes salaries for producers and engineers, travel, editing etc, but excludes artists' costs, copyright costs (did you know that a publisher may charge up to 6'000 dollars upfront just to let us record a modern piece?).

Please keep in mind that the label gets something like 35% of the final selling price and that the label, from that income, has to pay the physical production costs of SACD/jewel case and booklet, the artists' royalties and the copyright costs. Those costs typically come to about 50% of our selling price.

So now you can start crunching numbers (extremely simplified):

Selling price to customer: 18 Dollars.
Money to label: 6 Dollars
Half of that to artists, production, copyright: 3 Dollars

Remain to label: 3 Dollars

Costs to produce the master tape: 30'000 Dollars

Quantity needed to break even: 10'000

With a sales of 500 copies, the retail price would have to be about 360 Dollars. 250 copies - 720 Dollars.

But, of course, this is not the whole truth. We have other income and expenditures as well. Everywhere except in the USA, when a BIS record is aired by a radio company, we get a slice (so do the artists). Some (in BIS's case very few) recordings are sponsored. Internet-downloading is starting to yield results.
On the other hand, we have to pay salaries to office personnel and office costs, we have to pay for PR, we have (sitting in Sweden) to heat the office building, we have to pay our packer (when I don't pack myself), telephone, computers. These costs cannot really be apportioned to a specific production.

So, all in all, we manage to hang on, but, it has to be said, times are getting tougher. I am not at all sure that we could manage to start from scratch today. Our huge back catalogue and the fact that it is all readily available from stock, I believe, are the important factors that we are still a going concern.

And - with a rueful half-smile - that we don't release everything as SACD:s....

Best - Robert

Post by Peter December 24, 2008 (47 of 62)
bissie said:

Hi there,

Everywhere except in the USA, when a BIS record is aired by a radio company, we get a slice (so do the artists).

I AM surprised about this. What a strange take on copyright......

A very old friend broadcasts in Cape Town for Fine Music Radio and I understand most of the costs involved go to paying fees for playing the recordings, which is, I think, as it should be.

Post by bissie December 24, 2008 (48 of 62)
Peter said:

I AM surprised about this. What a strange take on copyright......

A very old friend broadcasts in Cape Town for Fine Music Radio and I understand most of the costs involved go to paying fees for playing the recordings, which is, I think, as it should be.

Sorry, but exactly WHAT are you surprised about? That the Americans pay nothing? Oh, but they never do. On the other hand, they do charge for copyrights for imports, even for CD:s where that copyright has already been paid elsewhere!! And for free copies, being given away.

Robert

Post by Peter December 24, 2008 (49 of 62)
bissie said:

Sorry, but exactly WHAT are you surprised about? That the Americans pay nothing? Oh, but they never do. On the other hand, they do charge for copyrights for imports, even for CD:s where that copyright has already been paid elsewhere!! And for free copies, being given away.

Robert

I do apologise, I was very unclear!

It's the paying nothing which surprises me, as the US charges fees as you say. I really don't understand the US thinking on this at all.....

Am I correct in saying the US charges per programme, so an SACD with a CD, stereo SACD and MC SACD programme pays three lots of fees? If so, does any other country do this?

Post by Cherubino December 24, 2008 (50 of 62)
bissie said:

Hi there,

whereas I don't feel called upon to go on record in any Forum with my exact figures, I can give you a few pointers what it entails to run a record company.

If we were absolutely forced to break even immediately on every production we make, we would stop - immediately. Running a record company means taking the longterm-to-very-longterm view. It means investing in artistry, repertoire and sound of exceptional quality that will stand up to the test of time. This is why we never delete anything at BIS. We believe in what we do and do it with passion.

A typical recording costs, from idea to finished master tape, in the vicinity of 30'000 Dollars. This figure includes salaries for producers and engineers, travel, editing etc, but excludes artists' costs, copyright costs (did you know that a publisher may charge up to 6'000 dollars upfront just to let us record a modern piece?).

Please keep in mind that the label gets something like 35% of the final selling price and that the label, from that income, has to pay the physical production costs of SACD/jewel case and booklet, the artists' royalties and the copyright costs. Those costs typically come to about 50% of our selling price.

So now you can start crunching numbers (extremely simplified):

Selling price to customer: 18 Dollars.
Money to label: 6 Dollars
Half of that to artists, production, copyright: 3 Dollars

Remain to label: 3 Dollars

Costs to produce the master tape: 30'000 Dollars

Quantity needed to break even: 10'000

With a sales of 500 copies, the retail price would have to be about 360 Dollars. 250 copies - 720 Dollars.

But, of course, this is not the whole truth. We have other income and expenditures as well. Everywhere except in the USA, when a BIS record is aired by a radio company, we get a slice (so do the artists). Some (in BIS's case very few) recordings are sponsored. Internet-downloading is starting to yield results.
On the other hand, we have to pay salaries to office personnel and office costs, we have to pay for PR, we have (sitting in Sweden) to heat the office building, we have to pay our packer (when I don't pack myself), telephone, computers. These costs cannot really be apportioned to a specific production.

So, all in all, we manage to hang on, but, it has to be said, times are getting tougher. I am not at all sure that we could manage to start from scratch today. Our huge back catalogue and the fact that it is all readily available from stock, I believe, are the important factors that we are still a going concern.

And - with a rueful half-smile - that we don't release everything as SACD:s....

Best - Robert

Fezziwig: ďItís not just for money alone that one spends a lifetime building up a business... Itís to preserve a way of life that one knew and loved. No, I canít see my way to selling out.... Iíll have to be loyal to the old ways and die out with them if needs must.Ē

Keep fighting the good fight.

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