Should prices affect Billboard Charts?

[Adonis the DemiGod!]

Post your view points. If audience affects charts shouldn't Cd prices and revenues affect the charts as well.

Billboard's theory is that airplay is the amount of plays times the number of listeners so shouldn't the same logic apply to album sales.....number of buys times the price they were sold at?

Billboard's airplay logic and sales logic should be consistent IMO.

spins * audience + price(the amount people are willing to spend) * audience

Record companies are in the business to make money not sell CDs. Cd's are just one avenue with which record companies can make money.


Post your thoughts....

[Devil Marlena Nylund]

I don't see why not. Or at least have a chart that is based on cost.

Would it include entire cost or just the amount that everything except the retailer makes? Or be based on the suggested retail price?

[Adonis the DemiGod!]

The actual price the CD's were sold at the point of sale to the end customer.... What is the general public paying for this CD... What amounts at what cost are people willing to pay for CDs...

[dperkins]

I think so. Because people might be put of to buying Christina's new CD cause it is more than some others. It is selling on itunes for $15.99 while Justin, Pink & Beyonce are selling for $9.99. Thats $6 more. So people might not want to buy it.

[Jennifer]

Beyonce is actually selling at 10.99 which is odd since her CD is by far the shortest (and hottest! lol)

[John77]

adonis said:

Billboard's airplay logic and sales logic should be consistent IMO.

I agree it should be, but it hasn't been anything close to that in about 15 years. :(

[spooky21]

I really don't understand what you are trying to get to.

[mst3k]

spooky21 said:

I really don't understand what you are trying to get to.

Simplified explanation: The chart would be based on total dollars as opposed to total copies.

Simplified example: An album that sold 100,000 copies at $7.99 would rank the same as an album that sold 50,000 copies at $15.98.

[drock89]

Then an album sold at Wal-Mart would have to cost the same as an album sold at Best-Buy or FYE. Now you've completely eliminated competition and open the way for a monopolization of album costs, which could be devastating.

[mst3k]

shaniagotchagood said:

Then an album sold at Wal-Mart would have to cost the same as an album sold at Best-Buy or FYE. Now you've completely eliminated competition and open the way for a monopolization of album costs, which could be devastating.

No no no... that's why my example was "simplified". In the real world, stores would still be able to charge different prices just as they do today. For this "money" chart, SoundScan would basically tabulate how many total dollars each album "generated" as opposed to how many actual copies were sold.

[mst3k]

Almost forgot to give my opinion... ideally, Soundscan would be able to tabulate both charts. The current "units" based chart would continue, and the new "dollars" based chart would be published as well. (For comparison, BDS compiles data for both "detection" and "audience" based charts, both of which are used by Billboard for various charts.)

[Pink Champagne Ricochet]

So basically the labels would have to make up a whole new system. Nowadays you have the big albums getting a push going for $9.99 or less to get them to move a lot of copies, while other releases on a lower tier are $11.99 or more because they don't care as much if they sell.

lol i just find it funny to think that if that had been in effect this week, Ruben Studdard would most likely be ranked higher than Diddy b/c his album cost more everywhere

[John77]

mst3k1 said:

shaniagotchagood said:

Then an album sold at Wal-Mart would have to cost the same as an album sold at Best-Buy or FYE. Now you've completely eliminated competition and open the way for a monopolization of album costs, which could be devastating.

No no no... that's why my example was "simplified". In the real world, stores would still be able to charge different prices just as they do today. For this "money" chart, SoundScan would basically tabulate how many total dollars each album "generated" as opposed to how many actual copies were sold.

That makes logical sense... try to sell that idea to Billboard though. lol.

[Adonis the DemiGod!]

Record comapnies should be in the business to make money. If you aren't making any money then why even bother being in the record business at all. It is just like the 49 cent singles.....Now companies have resorted to lowering the price of albums to maxi-cd singles prices in order to get them off of the shelf. If I am willing to pay a higher price for one item VS. some other item, it implies that the item with the higher price is more popular ie more valuable.

[spooky21]

adonis said:

Record comapnies should be in the business to make money. If you aren't making any money then why even bother being in the record business at all. It is just like the 49 cent singles.....Now companies have resorted to lowering the price of albums to maxi-cd singles prices in order to get them off of the shelf. If I am willing to pay a higher price for one item VS. some other item, it implies that the item with the higher price is more popular ie more valuable.

I don't get what record companies making money has to do with a separate Billboard chart tabulation on price of units (lol at the trending of my questions in this thead).

I think it is pretty obvious that the impact of "not making money" would be evident in the quarterly financials of those public record companies and would be reflected in their stock price, financial metrics/leverage and overall financial health and success of the business.  Companies that don't do well financial over time simply roll over and die..........or get bought out.

Record companies make their money from sales to retailers, not consumers.  The price margin  to retailers already ensures some level of acceptable gross profit to the record company.  As long as they are getting an acceptable percent of gross profit and net income (acceptable to them and their shareholders), it really doesn't matter what they sell the CD for.  Different businesses have different business strategies.  Some make money on lower price points and big volume while others go more higher margins on lower volume.

Your example of pricing something at 49 cent is misleading as we have no idea of their cost structure.  They could sell each unit at 49 cents but the cost of goods sold per unit could have been 20 cents.  That would still be a very good return 60% GP.  Subtract out SGA expenses another 10 cents per unit and the company made 19 cents as IBT.  That's income of 40% of the gross sales.

I made the numbers up but the point is you can't criticize a price point until you understand the cost structure that allows them to price at those points. 

Obviously selling at a higher price could increase the % of GP and net income, but i'm 100% certain that someone, one day, came up with a financial model or analysis that said something like "in current market conditions, consumers are only willing to buy 100 units at $1.50, but if we decrease the price to .49 cents, we can sell 500 units."  Meaning all things held constant, they would make 39% more money just by lowering the price as opposed to selling at a higher value and moving less units.

I went off on a tangent, but I suspect that it was because we are mixing two seperate discussions......or I say that they are different discussions in which a direct relationship have not been established.

[mst3k]

Wow spooky, you went way over my head.

I think Adonis's basic thought was simply that a price-based chart would show "true" popularity more accurately than the standard unit-based chart. Then again, I'm not schooled in business and economics so maybe I didn't think about it as deeply as you did.

[Adonis the DemiGod!]

spooky21 said:

adonis said:

Record comapnies should be in the business to make money. If you aren't making any money then why even bother being in the record business at all. It is just like the 49 cent singles.....Now companies have resorted to lowering the price of albums to maxi-cd singles prices in order to get them off of the shelf. If I am willing to pay a higher price for one item VS. some other item, it implies that the item with the higher price is more popular ie more valuable.

I don't get what record companies making money has to do with a separate Billboard chart tabulation on price of units (lol at the trending of my questions in this thead).

I think it is pretty obvious that the impact of "not making money" would be evident in the quarterly financials of those public record companies and would be reflected in their stock price, financial metrics/leverage and overall financial health and success of the business.  Companies that don't do well financial over time simply roll over and die..........or get bought out.

Record companies make their money from sales to retailers, not consumers.  The price margin  to retailers already ensures some level of acceptable gross profit to the record company.  As long as they are getting an acceptable percent of gross profit and net income (acceptable to them and their shareholders), it really doesn't matter what they sell the CD for.  Different businesses have different business strategies.  Some make money on lower price points and big volume while others go more higher margins on lower volume.

Your example of pricing something at 49 cent is misleading as we have no idea of their cost structure.  They could sell each unit at 49 cents but the cost of goods sold per unit could have been 20 cents.  That would still be a very good return 60% GP.   Subtract out SGA expenses another 10 cents per unit and the company made 19 cents as IBT.  That's income of 40% of the gross sales.

I made the numbers up but the point is you can't criticize a price point until you understand the cost structure that allows them to price at those points. 

Obviously selling at a higher price could increase the % of GP and net income, but i'm 100% certain that someone, one day, came up with a financial model or analysis that said something like "in current market conditions, consumers are only willing to buy 100 units at $1.50, but if we decrease the price to .49 cents, we can sell 500 units."  Meaning all things held constant, they would make 39% more money just by lowering the price as opposed to selling at a higher value and moving less units.

I went off on a tangent, but I suspect that it was because we are mixing two seperate discussions......or I say that they are different discussions in which a direct relationship have not been established.

I understand what I think you are trying to say.

What I am saying is that if one album sells for 5.00 but sells 100k and the other album sells for 10.00 but sells only 90k. Which do you think is the more popular album. The album that made 500k or the album that made 900k....

The value that buyers place on a product should be considered when measuring popularity. In the event that it was better to lower the price the price chart would automatically reflect that so i'm not sure what point you were trying to make....

[Devil Marlena Nylund]

Honestly, I'd say the album that sold the most was more popular in more cases than not.

But I think it would interesting to see because sometimes prices are low to sell more. Not that that's cheating. Labels that lower the price deserve to sell more.

[Adonis the DemiGod!]

I agree to some extent Max... usually the album that sold more made more...I think in the event that things were close it could make for an interesting chart. I believe the chart would have more of an effect between positions 11-200 than for 1-10... It still would be interesting to see who is generating the most revenue... People don't measure the popularity of Movies or Concerts by how many people went they meausre it by how many people went and what price they paid to be there.

[banet2001]

Maybe Billboard should change their formula to reflect costs? It is an interesting thought. It would stop all of the chart manipulations from record labels that charge one dollar for singles with the intention to drive up sales and chart positions.

So the new formula would be total money generated (as opposed to singles sales). If an artist sells a single for three dollars, this would be worth three times as much as the one dollar single. Of course, who’s to stop an artist randomly charging $1 million for a single and he or she buys the single for $ 1 million from him or herself?

[EvanJ]

One thing I don't like about the fact that movies are judged based on how much money they made, not how many people saw them, is that when comparing two movies released many years apart for all-time rankings, inflation is a factor. The same criticism would apply to albums if they were judged by prices. Does anybody know the average price Michael Jackson's album "Thriller" was selling for when it came out?

[mst3k]

evanj said:

Does anybody know the average price Michael Jackson's album "Thriller" was selling for when it came out?

Going by my feeble memory, LPs and cassettes generally sold for 7.98-9.99 in the early '80s.

[Hot AC Archiver]

mst3k1 said:

evanj said:

Does anybody know the average price Michael Jackson's album "Thriller" was selling for when it came out?

Going by my feeble memory, LPs and cassettes generally sold for 7.98-9.99 in the early '80s.

Yes, that sounds about right.