meta-roj

brought to my attention somehow… a story in the guardian.

“How dare you treat an American officer with disrespect?” he shouted back, indignantly. “Believe me, we have treated you with much more respect than other people. You should go to places like Iran, you’d see a big difference.” The irony is that it is only “countries like Iran” (for example, Cuba, North Korea, Saudi Arabia, Zimbabwe) that have a visa requirement for journalists. It is unheard of in open societies, and, in spite of now being enforced in the US, is still so obscure that most journalists are not familiar with it.

on behalf of my bewildered country, elena lappin, i’m sorry.

for you journalists, i guess this is the fine print. not sure where blogs fit into the journalist spectrum. i can’t very well get a “letter from my employer” as i’m unemployed.

i guess that communications thing got a little out of hand for the dear leader…

[reported on cnn, no decent links yet]

barry asks the question….

Hypothetical question: If you were sitting on a VC committee in 1980, at the dawn of the CD, would you have voted for investing in a new chain of music retailer?

he’s got his own answer, of course (no), but these answers are all clouded by the perspective of hindsight….

so one thing i would like to throw into this discussion is that when the cd was born (which i guess is something that we really should talk about more, considering all the death-of-the-cd stuff around here…), it was the great hope of the music business – switching everyone up to a new, and more expensive format.

there’s some data out there. unfortunately, the easiest data to play with comes from our good friends over in japan – specifically the recording industry association of japan. so, excuse me for a moment while i jump into a wholly different market to extrapolate some data from two handy tables the riaj has provided – transition of audio recordings – unit basis and transition of audio recordings – value basis.

barry’s question, of course is only really relevant around the birth of the cd – so that’s the early- to mid-1980’s (us unit sales of cd’s exceeded unit sales of vinyl in 1988, if my foggy old memory serves me right).

so, to pick a random pre-cd point in the short evolution of the life of the recording industry, let’s look at 1980, then somewhere around that inflection point, 1988, and then 8 years later, 1996.

Transition of Audio Recordings – Unit Basis:

Transition of Audio Recordings – Value Basis:

glue these together and you can get a unit-value chart:

the first thing to notice is that the cd formats are always the best unit-value in a given year… and that’s important.

now, you do have to look at this a little cross-eyed for the next step in the story, but it goes something like this (units are yen, but it’s the relative measures that i’m looking at, i’m also going to ignore the singles-formats for now, but i wanted to include them for possible use later):

in 1980, the unit-value of an album on vinyl was 1.505. unit-value of an album on cassette was 1.582, so the average unit-value of an album was 1.55-ish.

the promise of the introduction of the cd was two-fold – first, you get a better unit-value (for all kinds of reasons – indestructable! no pops! no scratches! no hisses! digital! new! wow!), and second, all the fans of all the bands will eventually buy another copy of the old stuff that’s still in production in the new format. and you can see a little of that reflected in the 1988 unit-value chart:

by 1980, the unit-value of an album on vinyl rose to 1.723 (+14.5%), the unit-value of an album on cassette dropped to 1.325 (-19.4%), and the unit-value of an album on cd was 2.072, which is a 20% premium over vinyl and a 56% premium over cassette.

of course, the old formats were on the way out (some are still predicting the end of the cassette, but the source tables say about 13 billion cassettes in 2002…), and the value-gap widens.

by 1996, the unit-value of the album-on-cd had dropped to 1.621 (-22%), but it was still commanding a significant premium over vinyl (16.6%) and cassette (82.8%).

would i have invested in a record-store chain with a hot new technology on the horizon that commanded a premium? maybe. if i was convinced that the industry was really behind this new-fangled silver cd-thing – and the case is easy to make (indestructable! no pops! no scratches! no hisses! digital! new! longer playing! smaller than vinyl! flatter than cassettes! cheaper to manufactuer than cassettes! wow!), yeah, i might think there was a future in the retail business of recorded music. but i’ve been a sucker before.

just the industry-wide growth might be enough to convince me – even without the cd… just look at the totals: market value went from 292,844 to 583,862 in 16 years. that’s real close to doubling value, but not fast enough (less than 10%/year) to make it interesting as a venture investment…. but then again… if i was a an established retailer… and i thought i could scoop off the cream of this crop….

i didn’t quite finish my thoughts on this (i really wanted to bring in the whole musigeeks thing), but i’m late getting out the door. i’m sure i screwed up some of the math, so if you notice something funky with the numbers, let me know so i can fix it for posterity. have a good weekend!

i don’t do stock market predictions… and i barely touch economics, but i do stumble across charts every once in a while, and even i can see that there’s a difference between the last few i ran into….

for the positive (that is, bullish) pictures, we turn to an old meta-roj friend, barry ritholtz, who posts on confirming a market turn – presumably a turn up, based on the picture he points to.

on the other hand (we’re doing that balance thing again), there’s the negative picture (that is, bearish)… and for this we came across this extensive and practically panicky analysis of the money supply and some esoteric technical mumbo-jumbo. this one, i think i found through metafilter.

anyway, there’s a pretty big difference between these views, so i’m just going to point at the pretty charts and let the experts shred the opposition (if they so desire).

and while i’m synthesizing things, i should toss in the little echo in the back of my head from a story about alan greenspan’s increasing coziness with the white house.

Greenspan frequent visitor to White House these days

…the number of appointments with other White House officials jumped sharply with the new administration, from an average three per year from 1996 through 2000, to 44 per year in 2001 through 2003.

we don’t know the substance of the meetings, but perception is often more important than reality in the world of markets and speculation, and this data does suggest that the independence of the fed is, at the very least, under a great deal more scruntiny with bush than in previous administrations.

what does it all mean? is it safe to change the world this month?

i guess synthesis is what i do here, so here’s a quickie on the business of music…

with a nod to barry ritholtz, whom i’ve neglected for too many moons, and john buckman, whom i’ve pretty much neglected since i dropped some first impressions here… two statistics worth considering from very different sources, but mostly about that little thing we call the album.

CD prices drop slightly [barry ritholtz – big picture]

The average retail price of full-length CDs fell to $13.29 in the first quarter of 2004

Magnatune summary for April 2004 [john buckman – magnatune]

The average purchase price for Magnatune albums in April was $8.59

anyone want to guess which statistic is closer to “real market value”?

update 8:30am: barry responded to this in the ungodly hours of the morning, so i was inspired to go after another metric i knew i could put my fingers on quickly:

cd baby current numbers:
1,007,312 CDs sold online to customers.
$7,953,216.85 paid to artists.

that works out to $7.895 per cd, plus the $4-per-cd terms that cd baby works under, makes the average retail price of cds that move through cd baby $11.895. i do have to note that this is the average of all cd’s ever sold through cd baby, which is not a good comparison for the spot-prices of the other metrics in this post, so take it for what it’s worth…. maybe we can encourage cd baby and magnatune to publish monthly data (that seems like a reasonable sampling window) and see what’s hiding in there.

because i’m feeling a bit positive, and because i’ve returned to a more-active blogging state of mind, i’ve added the positive changing the world cateogory, and… because i believe in a philosophy of balance… also added the you might be a terrorist category (entries pulled from the not my america category).

and now, i return you to your regularly scheduled surfing….

tonight, i present an interesting follow-up to a recent, if general, bit of material here at meta-roj.

i finally wandered over to tim oren’s corner of the net. some of you may remember that i introduced tim to the meta-roj blog on social capital and venture capital, and we got into a bit of an extended blogologue on the business of music. tim’s a smart guy, and not just because he and i agree on a lot of things (even if i occasionally forget we agree 🙂 )…

a couple days ago, tim put out a call. today i heard it. today you get to hear it too.

tim’s definitely more the pitch-man than i, and definitely has the deeper rolodex (well, palm), so i’m going to let him make the case. what you need to know from me is that this is important, and that tim is a good guy. go. do something.

thanks, tim. let me know what else i can do.

i need to drop a link to this story in here, despite the massive coverage all over the web, because someday, i’m going to come back to this and make a point or two.

Enron Traders Caught On Tape

“He just f—s California,” says one Enron employee. “He steals money from California to the tune of about a million.”

“Will you rephrase that?” asks a second employee.

“OK, he, um, he arbitrages the California market to the tune of a million bucks or two a day,” replies the first.

i’m leaving grandma millie out of this for now.

yeah, as much as i think there’s life in the 12cm polycarbonate platform, particularly for those of us who aren’t major labels…. eventually, all good things must come to an end…

and before that, there’s still a few billion (?) aol cd’s you can work with….

so what do you do with a cd? make it a record.

[via boingboing]

update: here‘s a related thought from the archives.