Letter: The hidden costs of making CDs

IN HIS article on CD prices 'Bothered and bewildered' (16 May) Gerald Kaufman wonders if he is 'dim' not to understand the arguments being put by the music industry. As most of them do not require an O-level in economics to grasp, he should draw the appropriate conclusion. He and his committee ignored four important threads in the defence of current CD prices.

1 The price of CDs in the UK is parallel with, and mostly lower than, prices of CDs throughout Europe - a more appropriate comparison than the vast market of the US where economies of scale make virtually everything cheaper than in Europe.

2 The price of a cinema ticket is not based on the cost of the paper it is printed on. The price of a CD is not geared to the manufacturing costs, but to the recording and marketing costs.

3 This is a high-risk business. Most projects never recover research and development costs, which are in effect subsidised from income from record sales of a minority of very successful projects. For the managers of Simply Red and Dire Straits this may be galling, but other managements including those of U2 and Genesis accept the arrangement. The early investment in Simply Red was in effect funded from sales of the Doors, Dire Straits funded from Status Quo.

4 There are many other industries which add larger mark-ups than the music industry, often without such substantial research, development and marketing costs: designer clothes, trainer shoes, lawyers, accountants. Cars are much more expensive in the UK than in Europe. Why? And who is doing anything about it?

The same politicians who gave so little help to Britain's manufacturing industries over the past 15 years are now mounting an attack on one of the few that have survived and flourished. Your campaign against CD prices has proved the power of the pen. Will you now have the courage to swap sides and use your influence and energies to defend the music industry against an attack from people whose motives are not as honourable as yours?

Charlie Gillett

Oval Records & Music

London SW9