It is a common notion which is reflected in Kevin's post, that distributing
electronic files is free or at least cheap simply because "there are no
warehousing, shipping, packaging or distribution costs". This is simply
not true. Those costs are merely the tip of the iceberg. The legal
bills and administration fees can easily exceed them.
Every single title that goes online needs legal clearance - for every
Every contract with every artist has to be reviewed - to check if
digital rights are covered or if new negotiations are necessary,
especially since many of those contracts were made long before even
the idea of digital files existed. (Again these things may differ from
country to country.) The royalties have to be administrated constantly.
If a title is downloaded only a few times the simple process of transferring
5 cent here and 10 cent there can cost more money than they make from
the download. I am not even talking about software, server space and
Titles are usually out of print for one reason only: The company thinks
the demand is not enough to make it profitable. This rule applies online
as well. By offering a title at the same price but at reduced costs a
title might become profitable. By reducing the price the number of
estimated downloads may not cover the costs.
If they would stick to new releases only where all the proper contracts
are in place they could certainly be cheaper. But opening the back
catalogue the way they do is a huge task that probably costs them a lot
I never thought I would ever defend DG's prices!!! But I do think that
these things should be taken into account.
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