Price/Value of HD

[wdomeika]

I was just perusing the Linn Records website. No scientific sample here, but looking at about 20 different records from several labels, the general pricing structure seemed to be:

 

--$13.... 16/44

 

--$24... 24/96

 

--$27... 24/196

 

I even found a couple recordings that were 24/44 for $24 vs $13 for 16/44.

 

Considering the general quality of our individual high end systems, do you feel the step up from 16/44 to 24/96 or 196 to be worth 2x 16/44?

 

Do you think this level of extreme premium pricing to be sustainable?

 

Inquiring minds need to know...

 

Cheers,

 

Bill

 

[James1776]

Remember, we live in a world of $40 new vinyl...

 

[The Computer Audiophile]

Hi Bill - This is a very interesting topic and one that will receive answers from one end of the continuum to the other.

 

After writing the following few paragraphs I came back to the simple fact that things cost what people will pay for them. Period. I'll leave the rest of my thoughts below but some may not pertain directly to this conversation and some are just ramblings.

 

 

 

I don't think a sample rate alone justifies any price.

 

Above all we must remember items cost what people will pay for them. That said, some influences on price can be licensing, high or low sales volume, equipment used to record the performance (microphones that cost tens of thousands of dollars and great A to D converters must be paid for), recording studio/venu fees, elaborate recording setups like a whole orchestra versus a single acoustic guitar performance, travel expenses, the best engineers (recording, mastering, etc...) and skilled artists don't come cheap and they shouldn't. Equipment to produce high sample rate recordings at top quality is not cheap either.

 

These are just a few items that can influence the price of music. I frequently talk to people in the business of making and selling music. This is where I learned of some of these items although some are fairly obvious.

 

Since the original post references downloads we should also consider the cost of a downloaded product versus a physical product. I can 100% guarantee that higher sample rate products cost more money to sell via download because of bandwidth pricing. However the cost to download a 16/44.1 album to a 24/192 album ranges from pennies to less than a dollar. If any company is paying more than $1 in bandwidth to sell a complete album I'd be surprised.

 

Another cost difference between sample rates may have something to do with file preparation. I know that Reference Recordings converted its digital 24/176.4 master files to Analog then back to Digital at 24/96 or 88.2 with two identical Pacific Microsonics Model Two converters in order to sell them via HDtracks. This process is not cheap considering the time of Keith Johnson was involved. As one of the best recording engineers on Earth he could be billing his time to other endeavors at a pretty high rate.

 

Pricing all the different sample rates in tiers may also be a method of distributing the cost of the whole recording albeit unevenly.

 

[wdomeika]

I can understand the economics of niche new vinyl costs...in principle.

 

But music downloads? Material/manufacturing costs are zero relative to other forms (in other words be it vinyl or shrink wrapped CD...they all have relatively comparable cost of recording production...perhaps vinyl is more expensive, dunno) and distribution costs are equal regardless of whether your downloading mp3, 16/44 or 24/192.

 

We all understand that it's a "what the market will bear" pricing. The question I was reaching for was more about the incremental value of the sound quality of 24/96 on up...

 

Do we get twice the sound quality?

 

Cheers,

 

Bill

 

 

 

[wgscott]

There are at least two factors, or questions to answer with this:

 

(1) Should price scale with bit depth, sampling frequency, etc.? Be careful what you ask for, since 17-bit is twice as big as 16-bit. If you are presented with the option of buying 16/44.1 vs. 24/96, how much more expensive does the 24/96 have to be to make you buy the 16/44.1? One could argue that if it is priced such that 1/2 of all potential purchasers buy the 16/44.1, it is optimally priced.

 

(2) Are you getting anything of increased value? I think most people would agree a good 16/44.1 recording is better than a crappy 24/96, so let's just assume for sake of argument that both are very good. Given that, 24-bit is a large improvement in dynamic range, and used properly, the effects are clearly audible. As for sampling frequency, it is much less clear that anything above 44.1 does anything other than hide Fourier truncation artifacts, and there are very few examples of high sample frequency that aren't 24-bit, so it is harder to deconvolve the effects. For me and my DAC, anything above 96kHz is wasted. For me as a listener, anything above 24/48kHz is undetectably different. So in short, I pay for the 24 bit depth primarily. It has to be something I really like to begin with. I purchase a lot of music via iTunes that sounds perfectly fine to me. I reserve high-resolution purchases for classical music and a few others where sound quality and lossless compression really matters.

 

[wdomeika]

To some extent, I think you've helped support one side of my question. Be it pennies or a dollar, the cost of bandwidth is largely immaterial to the cost of goods. In a way, you could almost assume it away as free. If anything the cost of bandwidth will decrease over time, so if it's at a dollar now, it'll head towards pennies going forward.

 

You make fair point about the Reference Recordings cost of conversion, however, that's a one-time cost. At some point, after X downloads the conversion cost is amortized...so the next zillion downloads are free from a COGS point of view.

 

I happen to believe what you say, "I don't think a sample rate alone justifies any price." Assuming that's true, then we're happy suckers of a sort. I can say this with some level of confidence because I have paid (frequently) the $24 bucks for 24/96+.

 

However, over time couldn't we predict that such a drastic premium creates a big window for creative competition to slide under? Assuming this, prices for HD would come down...maybe even rapidly...if/as competition accepts a lower margin in favor of market share.

 

I'm starting to bore myself...but it is a really interesting topic to debate around at this stage of HD lifecycle.

 

Cheers,

 

Bill

 

[wdomeika]

I think that over time, more audiophiles than less will merge towards your buying behavior. I know I have. I know that this will ignite a host of iTunes bigots who look down their nose at the service. But, fact of the matter is, more of us than fewer have to engage a form of reverse cognitive dissonance to justify 24/96+ downloads.

 

(Reverse cognitive dissonance would go something like: "I purchased a DAC that can handle 24/196...I feel bad about my DAC purchase if I don't play material that max's out the DAC's absolute potential...regardless if I can actually hear the difference...in fact I should make myself here the difference.)

 

Wow, merging behavioral science, economics and audiophilia.

 

That's hot...

 

Cheers,

 

Bill

 

[wdomeika]

Of course this is purely fact-free speculation, but I bet the distribution of 16/44 vs HD sales is more like 80% 16/44...20% 24/96+...maybe even more skewed. If the distribution of sales was at equilibrium, then the smart move would be to tinker with the HD pricing until sales skewed over 50/50 in favor of the extremely higher margin HD product.

 

My hunch is given the early stage of lifecycle and marketing/management maturity of HD download sellers, they haven't done a lot of pricing optimization modeling and testing.

 

Everyone probably looks at eachother's prices, adds a touch of Kentucky-windage and sets the price as high as they can without exceeding their direct competition by much.

 

Again, fact-free speculation. But the logic is there.

 

Well, at least for me...

 

cheers,

 

Bill

 

[1audio]

Sales volume for Hi res is still small so if you want it to be the future, especially because you hear an improvement, then vote with a few dollars and that will grow the market. The HRx project is not generating a lot of money, but it is enough to keep the momentum going. As more hi-res content of any and all kinds appears then there will be more incentive for more content and the prices will go down. This is the first new format EVER to not require 100's of millions of dollars to get launched. All the previous ones (back to Edison's cylinder recordings) required an enormous investment in an infrastructure to get them out of a lab. This just requires some reuse of existing technology and a demonstrated willing customer base to get going.

 

For price, look at the pricing that the Tape project gets for dubs of master tapes. The equivalent digital copy of a digital master, which has infinitely more fidelity to the original, sells for 1/5th the price or less. For some its a bargain, for others its highway robbery. Its all in the value given the transaction by the buyer.

 

[diogenis]

In my personal view, the gap from 16/44 to 24/96 is currently huge. And sadly what is worst, is that it wont guarantee a better recording, just a marginally better sound using better technology, original recording still rules over sound quality/atmosphere.

 

Logistic wise, high definition files do not present a burden for companies that they do sell files, therefore charging almost twice and paying for a premium that simply is not existant is -for me- bad marketing.

Compare for instance, Linn Recordings against Society of Sound. How come P.Gabriel & co. be able to sustain the SAME price for 16/44.1 & 24/44.1 or even 24/48? They work for fun?

I mean if you come thinking of this, its like paying for better CD plastic quality or the best printing of its sleeve, using press technology on an old Guttemberg pressing machine... This is ridiculous: they sell music not technology.

As far as I am concerned, they can burry 24/196/38... most of DACs dont even support them let alone music fidelity.

I am expecting all this to change for the better, whenever Steve Jobs decides to step in and fix the landscape.

 

[wdomeika]

At least that I was unaware of. I wonder if there are other P.Gabriel & Co's out there with radically different (and significantly fairer) pricing strategies?

 

It might be that voices heard from a forum such as this could be the grassroots start of more rational pricing for HD.

 

Stranger things have happened.

 

cheers,

 

Bill

 

[dsnyder]

Hello,

 

Quote: So in short, I pay for the 24 bit depth primarily.

 

Same here. Is it worth 2x the price vs. 16-bit? It depends. I guess it's worth 50% more at least since we're getting 50% more bits in each sample. :-)

 

Related to this, I'm usually willing to pay a dollar or two extra for a physical redbook CD release vs. a digital download of the same resolution. I'm not sure why though. Perhaps it's because I feel more in control of quality assurance during the RIP process? HDtracks does a very nice job with metadata, embedded album art, and liner notes scans (better than I do myself), but there's no "AccurateRIP" log file or other certification regarding the source and heritage of the digital files, so I'm always left wondering...

 

That said, I do love HDtracks convenience and the near instant gratification of purchasing a new album (hi-rez or just redbook) and then being able to hear it on my hi-fi within minutes.

 

-- David

 

 

[Paul R]

Assuming all else is equal, and the recording and mastering are done well, I would pay for 24/96 or 24/192 - or even higher when it becomes available - just to avoid having to re-purchase the music when higher end gear becomes affordable and easily available.

 

That's just me I suppose. I do buy significant quantities of music from iTunes, but a lot of that is because it just isn't easily available to me anywhere else. I prefer to rip the music from CD's rather than buy from iTunes, but - for example - I don't have a CD of Steve Hackett's _Voyage of the Acolyte_. I snagged it from iTunes and at least get to enjoy the music!

 

As to how much more I would pay- for some albums I would pay a lot. For others, not much at all.

 

We have a bunch of Doris Day hits (Tacos, Echiladas, and Beans is playing right now in fact) that sound every bit as good from iTunes as they will from a CD. Julie London sounds better from iTunes than from many of the rip-off CD versions available.

 

Obviously, I would not pay a premium for those recordings.

 

Just as obviously, a great orchestral recording would probably get me to shell out 2x or even 3x the base cost. But I just dig listening to a recording of great music where the horns appear to present in the room, opposite some strings, and you feel like you are in the best seat in the house.

 

Incidentally, that is what will drive me to spend money on "audiophile" gear as well - which kinda puts me in the "not quite a real audiophile" class. I don't really care about the gear used to make that happen, and tend to choose the minimum cost gear to get there. I doubt seriously I would even pay $10 for a power cord, much less $100. It just will not make enough difference to me.

 

But I would pay $100 for a top quality recording that could move me to tears, or make me laugh. For example, Liszt's Hungarian Rhapsody #2 - can anyone listen to that and not be amused by the picture of Bugs Bunny conducting it?

 

Just a bit of rambling as well I am afraid, but yeah - I can easily see paying more for music.

-Paul

 

[firedog]

I think basically the companies are charging whatever they can get away with, and at this point they have little info about what the market is and what it will bear.

 

I don't have any problem paying somewhat more for 24/96, but it definitely shouldn't be twice as much as 16/44. Generally (at least with new recordings or new digital transcriptions) both files are sourced from the same master, so other than bandwidth, the extra cost to the companies is nil.

 

What bugs me more is that the price for a download is often the same price or more than a physical CD, even when the download is only 16/44. That is a rip off, as clearly the CD is costlier to produce and distribute.

 

[The Computer Audiophile]

"What bugs me more is that the price for a download is often the same price or more than a physical CD, even when the download is only 16/44. That is a rip off, as clearly the CD is costlier to produce and distribute"

 

Hi firedog - This is a topic I'd like to have more information about. Physical CD distribution has been around for quite a while and I'm willing to be the cost has decreased as the product matured. Many record labels have no idea how to run an online download site so they must pay for this service. Without more information I'm willing to bet the cost for a download is not that much different than physical discs.

 

Does anyone have more information on this?

 

[Old Listener]

I'm a fan of the conductor Charles Mackerras. When Linn brought out a set of performances of the Mozart Symphonies 38-41 conducted by Mackerras with the Scottish Chamber Orchestra, I was interested in the download format. However, I didn't want to pay for the hi-res. version until I was sure that the performances would be worth a big premium. I purchased and downloaded the 16/44.1 Flac format version. None of the performances displaced my current favorites so I didn't purchase the hi-res versions.

 

More recently, Linn released another set of Mozart Symphonies conducted by Mackerras. I purchased the 16/44.1 Flac version. The performance of Symphony No. 31 might be worth buying the hi-res version. I'll probably buy just that symphony rather than the entire set (2 CDs worth of music.)

 

I'm buying mostly used CDs from Amazon for $ 7-8 max. My sense of what I'm willing to play for recorded music has been shifting to lower prices for years.

 

Bill

 

 

[wdomeika]

I really wonder if that's true. Let's say you assume the absolute most efficient supply chain delivery system (Amazon). Even though they likely have vender managed inventory for most new items...they still have the cost of handling (boxing, logging, tracking systems support etc) and hand off to fedex or UPS...which all require some level of manual intervention.

 

Even the worst case situation, I would presume the cost per download has got to be materially less than the interim supply chain costs between Amazon and fedex.

 

Just a hunch...

 

Cheers,

 

Bill

 

[Old Listener]

> I really wonder if that's true.

 

I don't know whether you are referring to my post or to some other post.

 

I was commenting on the actual costs of products I buy. Downloads should be cheaper in theory. When they are cheaper in practice, I'll buy them instead of physical CDs.

 

I'm sure that the record labels just hate competing with used CDs. Down the road, the supply of used CDs may dry up.

 

> Let's say you assume the absolute most efficient supply chain

> delivery system (Amazon).

 

I gave a price of $ 7-8 as my ceiling. That includes $ 2.98 for shipping.

 

> Even the worst case situation, I would presume the cost per

> download has got to be materially less than the interim

> supply chain costs between Amazon and fedex.

 

Some of the used CDs I buy on Amazon are shipped from the UK for the same $ 2.98 per CD. It boggles my mind but since the sellers continue to offer their products on those terms, I assume that they can make money.

 

Bill

 

 

 

 

[ziggyzack]

Your messiah will not save you!

 

[ziggyzack]

That's my limit for regular CDs, especially for fleshing out the back catalogue - I sometimes pay more for fresh new releases.

 

For high res? The society of sound thing is a good deal, but you have to remember who's doing it. Not sure how profitable it is, but it gives a lot of good PR (nothing wrong with that) for B&W, and furthers the high res cause - I wouldn't be surprised to learn it's quite heavily subsidised.

 

For good hi-def, I do pay Linn's prices, but they are only occasional purchases. Occasional 3 for 2 offers help. Linn say it takes a lot of work (negotiation with labels and so on) to get hold of genuine studio masters. The selection is growing but they are not awash with high res. You pay the top £18 rate for the studio master, whatever bitrate that may be - 24/44, 24/192, or anything between. Not all studios master in 24/192.

 

ZZ

 

[sjsanford]

Pricing is extremely complex...going to put on my economics/MBA hat here for a minute. I don't think the hi-res pricing is outrageous - but then, it's extremely hard to say what's "fair" or "correct" with pricing.

 

On the seller's side, it's really about companies testing prices, seeing who bites, whether it meets their expectations, covers costs and pays back investment, and so forth. For buyers, if the price is right for what you get, you buy. Otherwise, on to the next thing.

 

Ideally, with hi-res music downloads, there would be a good selection of comparable samples that allow consumers to decide whether the extra resolution for the extra dollars is worth it. Even without free samples, given what most spend on this hobby, even investing $50 to conduct one's own comparison test is not a bad price to discover this information!

 

Some thoughts on pricing:

 

First, pricing rarely represents some "cost-plus" formula. Even if it did, deciding the correct "cost" to use would be extremely difficult.

 

Sure, on the most extreme margin, the cost of pressing a CD and shipping it probably exceeds the cost of incremental electricity and bandwidth to supply a hi-res download. But even if true on the extreme incremental margins, so what? That doesn't mean the prices have to follow suit. I could charge more for the hi-res digital download just because it's "cool" and/or "new" and/or geared toward a clientele with more money than the average consumer. A "premium"-positioned product can often demand premium prices, regardless of production cost. Of course, that doesn't mean you have to buy it - if you don't, the price might fall, or the product may even stop being manufactured. But we see this phenomenon with so many different products, it shouldn't be surprising - premium champagne (how much "extra" to create the $200 bottle vs the $20 bottle?!), premium theatre seats (did the primo seats really cost double to install?!), etc etc.

 

Moreover, with hi-res music, the cost structure may be much more complex. The cost of "warehousing" a new album of hi-res digital music might actually be expensive beyond the TBs needed to store it - i.e., hiring some tech nerd(s) to manage servers, IT security, bandwidth, uptime, etc. (Consider those costs versus dropping a pallet of pressed CDs in the corner of some brick warehouse!) Not to mention the production process, engineers and quality control personnel Chris alluded to.

 

Another huge consideration is volume. People on this forum live and breathe hi-res audiophile mania -- which is great. But I am certain this hi-res music market is a TINY fraction of a rounding error of the (declining) multi-billion-dollar music sales and licensing industry. That context is important, and could explain why premium-quality digital music is demanding premium prices. It could be an attempt -- whether successful or not, who knows -- to claw back lost revenue and battle the concept of "free" music that has dominated the last decade. Also related to volume, the economies of scale that exist in CD production and sales (don't forget the cost of sales as part of the picture!) are almost certainly several leagues beyond those of hi-res digital music. We're talking established infrastructure, sales and marketing channels, etc., vs a nascent hobby that we on this forum would hope becomes mainstream but remains for the moment far from mass-market. THAT affects pricing, too.

 

I'm not defending these hi-res pricing strategies by any means -- I'm agnostic -- I'm just trying to offer some possible explanations. (For example, they could employ a totally different strategy by pricing them cheaply, even at a loss, to grow a potentially new lucrative market quickly, create buzz, gain market share, etc.) Their current pricing may even indicate they lack a strategy and are just guessing. Maybe it's greed. Or maybe they're trying to make a profit early to organically grow additional hi-res offerings. Unless someone can get a contact on the production side to reveal their true pricing strategy, we won't know.

 

Anyway, regarding the specific question in the original post, I would say pricing almost never linearly follows utility. And it's hard to measure, in any case. Can anyone on here say that a $2000 DAC is 2x "better" than a $1000 DAC and is 4x "better" than a $500 DAC? (How in the world do you quantitatively measure "better" to even make the comparison?) Depending on whom you ask and which DACs you consider, the answers will all vary widely. Someone might say 10x better. Others might say 1% better. It's pretty subjective.

 

I think this is the same answer to the hi-res pricing question posed. Someone audiophiles may feel it's easily worth spending twice as much for an album with, let's say for the sake of argument, a 5% incremental improvement. Others may demand much more performance for their money. It just depends on your point of view, how much money you have and how you view it, your ears, your equipment, etc etc.

 

Bottom line: (BTW - Not being cheeky here at all - I really think this is the only way to get at the answer!) Submit yourself to the economic experiment that only you can perform -- invest a bit of money and time to compare hi-res to low-res. You'll gain either way, because you'll either 1) save loads of money in the future on all those hi-res downloads you avoid that you now know aren't worth it to you, or 2) you'll have discovered the premium really is worth it and you'll be delighted at all the future enjoyment you gain!

 

- Steve