When the CD was first introduced, plenty of record company execs hated it. One says, even now, “I thought [the engineers who designed it] could have done something to stop piracy.”
Looking back at the CD era, though, it’s clear that those little plastic discs were a goldmine. People loved the new format, many repurchased their collections on CD, and prices for recorded music went way up. How did the industry respond to this windfall? By screwing the artists.
Knopper describes how the labels wrote new contracts to cover the new format, contracts which featured larger “packaging reductions” and “free goods allowances.” In addition to the deductions, artist royalty rates were reduced. “After labels factored in these newfangled deductions,” Knopper says, “typical artists received roughly 81 cents per disc. Under the LP system, artists made a little more than 75 cents per disc. So labels sold CDs for almost $8 more than LPs at stores, but typical artists made just six cents more per record.”
Such practices fueled a CD boom that ran from 1984 through 2000, at which point the bottom began falling out of the industry. After two decades of expensive music–and little support for cheap singles–labels had grown fat on pumping out albums with a couple of hits.
This puts a different perspective on the cries of the record companies that illegal downloading is hurting culture because artists will not get paid for their efforts. Breaking the habit of an addiction to windfall profits is hard but why should have enyone have mercy on them?
