Why is vinyl so expensive
May 31, 2022 14:11:18 GMT -5
Post by Gary on May 31, 2022 14:11:18 GMT -5
Why Is Vinyl Getting So Expensive?
Supply chain problems and rising costs continue to plague pressing plants, labels and retailers — but CDs may be a stopgap.
BY CHRIS EGGERTSEN
OOn May 20, Universal Music Group raised its wholesale prices on roughly 2,400 vinyl titles, adding new pressure to a format struggling to keep up with increased demand, supply chain issues and skyrocketing materials costs. Whether the vinyl boom will suffer from sticker shock remains to be seen, but retail prices are climbing.
“Out of the 2,400 [UMG] titles that are lifting, 1,200 of them will now have a [wholesale] cost of $19 or higher,” says Carl Mello, director of brand engagement at Newbury Comics. “So those are all essentially becoming like $30 price tag items.”
Some vinyl albums are already selling for even more: Harry Styles’ new Harry’s House, released by Sony/Columbia, has a wholesale cost of $24, according to Mello, while retail prices range from $32 to $40.
UMG’s pricing increase follows a similar move by Warner Music Group, which raised wholesale costs on roughly 600 titles last October. “We’re waiting for the shoe to drop from Sony, too,” says Laura Provenzano, senior vp of purchasing and marketing for vinyl wholesaler and distributor Alliance Entertainment. “They’re all feeling the same cost pressure.”
Vinyl sales spiked 51.4% in 2021, with 41.72 million vinyl albums sold, making it the biggest year for the format since Luminate began tracking it in 1991. It’s too early to say how much the price increases will affect sales, but rising materials costs and shortages are stretching the vinyl industry to the breaking point.
Pressing plant executives tell Billboard that over the past year there have been three price increases on vinyl pellets that have nearly doubled the cost. “Pre-pandemic, the price of black compound [PVC] was $1.16 and $1.17 a pound. Now it’s over $2 when you factor in all the fees,” says Mark Rainey, co-founder/CEO of Cascade Record Pressing in Milwaukie, Ore.
Another emerging concern for the industry is a potential shortage of nickel, a crucial element for producing the metal stampers used to press records. In early March, the London Metal Exchange temporarily suspended the trading of nickel after prices more than doubled on fears that the supply chain would be disrupted due to sanctions against Russia, which supplies roughly 10% of global nickel output. Ed Gross, who runs Nipro Optics, an Irvine, Calif.-based company that supplies stampers to pressing plants across the United States, says the price of nickel doubled in early March to more than $30 before settling into the $20 range by late April. As a result, the plant was forced to tack on an additional $16 surcharge per stamper that went into effect on May 1. Matt Earley, co-founder/vp sales and marketing for Gotta Groove Records in Cleveland, says that his plant — which he estimates goes through 5,000 to 6,000 stampers per year — is absorbing the stamper price increase for now, banking that the situation will resolve itself quickly.
Electricity, labor and fuel costs have also all spiked, and those costs are being passed down to labels. Andy Hsueh — global director of label operations at Partisan Records, home to IDLES, Fontaines D.C. and Laura Marling, among other acts — says costs per unit have increased anywhere from a few cents to $2, depending on packaging needs and quantity.
A greater concern is turnaround times, which have stretched to nearly a year in some cases, according to Zena White, managing director/senior vp at Partisan. “Vinyl production’s a volume game,” says White. “It inadvertently hurts independents more than majors because majors are able to guarantee a higher volume.”
Catalog has also been hard-hit. “It’s astonishing when you look at the gold catalog titles that are not available for months at a time,” says Mello, who cites as one example Taylor Swift‘s 1989, which Newbury hasn’t received on vinyl since last August.
To try to meet demand, more pressing plants are coming online and others have increased their production. Cascade has moved to a seven-days-a-week schedule, looking to increase production by 50%. The Denver-based record club Vinyl Me, Please plans to open a 14,000-square-foot pressing facility by the end of the year, and Memphis Record Pressing is working on a nearly $30 million expansion, including 36 pressing machines slated to be operational by September.
With vinyl demand surging as production struggles, some are looking to CDs to fill the void. The CD manufacturing process is less complex, the turnaround time quicker and sticker price more consumer-friendly. Demand for the format is also robust. According to the RIAA, CD shipments rose from 31.6 million in 2020 to 46.6 million in 2021, a 47% increase, while revenue rose from $483.2 million to $584.2 million. That’s the first sales increase for CDs since 2004, and proof that the clamor for physical product is expanding to other formats.
“More vinyl-only stores need to start considering adding at least some [CD] offerings to the mix, particularly when it’s a key artist where they don’t have a vinyl counterpart to sell,” says Steve Harkins, vp of sales and marketing at distributor and wholesaler Ingram Entertainment.
CD manufacturing also suffers from supply chain issues, but “it’s nowhere near the same ballpark as vinyl,” says Harkins, who adds that manufacturing times have increased from three to four weeks to roughly six to eight weeks today.
Some sources voiced concern that rising prices and the unavailability of product might slow sales. But most remained hopeful about the future, with some suggesting that production problems might even have an upside. “You could also argue,” says Provenzano, “that the scarcity of product kind of drives the demand, too.”
Supply chain problems and rising costs continue to plague pressing plants, labels and retailers — but CDs may be a stopgap.
BY CHRIS EGGERTSEN
OOn May 20, Universal Music Group raised its wholesale prices on roughly 2,400 vinyl titles, adding new pressure to a format struggling to keep up with increased demand, supply chain issues and skyrocketing materials costs. Whether the vinyl boom will suffer from sticker shock remains to be seen, but retail prices are climbing.
“Out of the 2,400 [UMG] titles that are lifting, 1,200 of them will now have a [wholesale] cost of $19 or higher,” says Carl Mello, director of brand engagement at Newbury Comics. “So those are all essentially becoming like $30 price tag items.”
Some vinyl albums are already selling for even more: Harry Styles’ new Harry’s House, released by Sony/Columbia, has a wholesale cost of $24, according to Mello, while retail prices range from $32 to $40.
UMG’s pricing increase follows a similar move by Warner Music Group, which raised wholesale costs on roughly 600 titles last October. “We’re waiting for the shoe to drop from Sony, too,” says Laura Provenzano, senior vp of purchasing and marketing for vinyl wholesaler and distributor Alliance Entertainment. “They’re all feeling the same cost pressure.”
Vinyl sales spiked 51.4% in 2021, with 41.72 million vinyl albums sold, making it the biggest year for the format since Luminate began tracking it in 1991. It’s too early to say how much the price increases will affect sales, but rising materials costs and shortages are stretching the vinyl industry to the breaking point.
Pressing plant executives tell Billboard that over the past year there have been three price increases on vinyl pellets that have nearly doubled the cost. “Pre-pandemic, the price of black compound [PVC] was $1.16 and $1.17 a pound. Now it’s over $2 when you factor in all the fees,” says Mark Rainey, co-founder/CEO of Cascade Record Pressing in Milwaukie, Ore.
Another emerging concern for the industry is a potential shortage of nickel, a crucial element for producing the metal stampers used to press records. In early March, the London Metal Exchange temporarily suspended the trading of nickel after prices more than doubled on fears that the supply chain would be disrupted due to sanctions against Russia, which supplies roughly 10% of global nickel output. Ed Gross, who runs Nipro Optics, an Irvine, Calif.-based company that supplies stampers to pressing plants across the United States, says the price of nickel doubled in early March to more than $30 before settling into the $20 range by late April. As a result, the plant was forced to tack on an additional $16 surcharge per stamper that went into effect on May 1. Matt Earley, co-founder/vp sales and marketing for Gotta Groove Records in Cleveland, says that his plant — which he estimates goes through 5,000 to 6,000 stampers per year — is absorbing the stamper price increase for now, banking that the situation will resolve itself quickly.
Electricity, labor and fuel costs have also all spiked, and those costs are being passed down to labels. Andy Hsueh — global director of label operations at Partisan Records, home to IDLES, Fontaines D.C. and Laura Marling, among other acts — says costs per unit have increased anywhere from a few cents to $2, depending on packaging needs and quantity.
A greater concern is turnaround times, which have stretched to nearly a year in some cases, according to Zena White, managing director/senior vp at Partisan. “Vinyl production’s a volume game,” says White. “It inadvertently hurts independents more than majors because majors are able to guarantee a higher volume.”
Catalog has also been hard-hit. “It’s astonishing when you look at the gold catalog titles that are not available for months at a time,” says Mello, who cites as one example Taylor Swift‘s 1989, which Newbury hasn’t received on vinyl since last August.
To try to meet demand, more pressing plants are coming online and others have increased their production. Cascade has moved to a seven-days-a-week schedule, looking to increase production by 50%. The Denver-based record club Vinyl Me, Please plans to open a 14,000-square-foot pressing facility by the end of the year, and Memphis Record Pressing is working on a nearly $30 million expansion, including 36 pressing machines slated to be operational by September.
With vinyl demand surging as production struggles, some are looking to CDs to fill the void. The CD manufacturing process is less complex, the turnaround time quicker and sticker price more consumer-friendly. Demand for the format is also robust. According to the RIAA, CD shipments rose from 31.6 million in 2020 to 46.6 million in 2021, a 47% increase, while revenue rose from $483.2 million to $584.2 million. That’s the first sales increase for CDs since 2004, and proof that the clamor for physical product is expanding to other formats.
“More vinyl-only stores need to start considering adding at least some [CD] offerings to the mix, particularly when it’s a key artist where they don’t have a vinyl counterpart to sell,” says Steve Harkins, vp of sales and marketing at distributor and wholesaler Ingram Entertainment.
CD manufacturing also suffers from supply chain issues, but “it’s nowhere near the same ballpark as vinyl,” says Harkins, who adds that manufacturing times have increased from three to four weeks to roughly six to eight weeks today.
Some sources voiced concern that rising prices and the unavailability of product might slow sales. But most remained hopeful about the future, with some suggesting that production problems might even have an upside. “You could also argue,” says Provenzano, “that the scarcity of product kind of drives the demand, too.”
