First of all, an update on the progress of the album. We have the second batch of mixers from mix-master Rob and we're just about there. One song to be tweaked then we're on to mastering. With this in mind, we bounded in to town on Sunday to do a photo shoot for the album cover. Without giving too much away, we were standing in the middle of broadmead with a tripod and many passers by looking on in curiosity. For those that know broadmead shopping precinct (not the new Cabot's Circus) you may imagine just how uncomfortable this was. Still, we came out unscathed (with all equipment intact and in our possession) and got the shots we needed. The theme for the album cover is similar to the Hypochondriac CD single cover (above). Well, it's not the theme I suppose, we haven't done another cover of me sitting in a mock doctor's surgery. But you'll notice the similarities when you see it. I was putting the wording together for the inlay last night and it is quite hard trying to think of meaningful things to say on the inside of a CD case. I am not sure that many people buy CDs anymore, let alone read inlay cards. Personally I love to and it's one of the reasons why I will always buy a physical product over a digital release any day. At the end of the day, as well as the music, someone (much like I did) has sat down for a few hours and worked out what to write in the cover. Whilst you could clearly include all this sentiment in a digital release, it doesn't feel quite as 'valid' as something that ends up in print.So the next step is for manufacture of how ever many CDs we chose to manufacture. This leads me on to my next point about economies of scale, in this case within the CD duplication market. There are a number of option available to small bands/labels when releasing music. By far the cheapest is to go for a digital release. It's very easy and very cheap to get music on to all the major digital distributors these days. But based on my previous comments it should be obvious why we have not opted for this route alone (we will have a digital release). The second option is to be 100% 'DIY'. Get a very limited run of CD-Rs produced (or burn them yourselves) and make quirky home made packaging yourself. If done properly it can be stunning and will give the purchaser a real sense of owning a piece of artwork. Rowena from Santa Dog is the absolute queen of DIY packaging. It obviously helps that she is an artist and has an amazing amount of patience for making things. Just check out the amazing bags she makes http://www.etsy.com/shop.php?user_id=5429379. Whilst we have a graphic designer for a guitarist, none of us really have an aptitude for making 'arty stuff', and when done badly DIY packaging can do terrible detriment to the integrity of the product contained within.
The third option is to use professional duplication services, a lot of which are adapting to offer relatively good deals for small manufacturing runs (perfect for independent labels). Which brings me on to my current bugbear, economies of scale. Economies of scale, for those that don't know, means the larger the quantity of something you produce, the cheaper it becomes. Economies of scale arise from high fixed start up cost (imagine creating a mold for a model of the Eiffel tower) but low ongoing costs (the cost of pouring plaster of Paris in to the mold). The more models of the Eiffel tower you make from the original mold, the lower your average cost per model becomes and the more profit you can make for each model. This concept applies equally to CD manufacture when there is a start up cost involved and is very important when the profit made from a CD is so reliant on the cost of production relative to the price of sale. In this case, the start up is the manufacture of the glass master disc. Once this has been produced, the master disc is used to create any number of further copies. The option that confronts us when making our manufacturing decision is whether to produce 500 or 1,000 CDs. 500 CDs is probably a good number (the original number used in my share holder example). That's 100 odd for the shareholders, perhaps another 100 used as promo then 300 left to distribute at gigs and hopefully sell. CDs come in boxes which are quite cumbersome and with CD jewel cases, only fit around 100 to a box. So the last thing you want is boxes and boxes of unwanted CDs lying around. It's both discouraging from an egotistical point of view and down right jarring from a space point of view. So it is important to try and gauge your market well and manufacture the correct amount.
The question to raise then would clearly be 'why consider making 1,000 CDs?'. Well here is my gripe. To glass master, there is a one off start up cost of around £125 for orders of less than 1,000 units. The cost per unit to print on the CD is around 25p. So to produce 500 CDs, there is cost to the customer of £125 + 500 x £0.25 = £250. For 1,000 CDs the start up cost falls away and the cost is solely 25p per unit. It doesn't take a calculator to realise that 1,000 CDs cost £250. Yes, you read that correctly, manufacturing 1,000 CDs cost exactly the same as manufacturing 500. Doesn't seem right does it? It gets worse. Most professional print runs are restricted to a minimum order of 1,000 units (presumably, again, to do with high start up costs). So if you order 500 CDs with a colour inlay card and CD tray insert, you actually pay for 1,000 inlays and inserts. What do they do with the other 500? Throw them away, that's what. So far, there is no price differential between 500 and 1,000 CDs. The only part of the process which is different is the clear plastic jewel cases, which are per unit with no initial fixed costs, around 12p a unit. So the only price differential between 500 and 1,000 CDs is 500 x £0.12 = £60. Given this information I find it very hard to believe why anyone would order a run of 500 CDs instead of 1,000. Which doesn't seem terribly fair to me.
Being a stubborn person I asked the manufacturers for a quote for 500 fully finished CDs in cases with 4 page inlay and CD tray backing, plus 500 'raw' CDs and inlays/booklets. The quote was produced and not entirely surprisingly was exactly the same as a run of 500 fully finished CDs. It does seem a little odd that this is never given as an option when you ask for quotes (effectively you can get 500 unpackaged units for free). I am fairly sure few people have ever asked for it as it took a while to explain to the sales team.
Why not just pay £60 for fully packaged CDs you may ask, it's not that much extra? Well, firstly, space. The jewel cases are the bit which take up most room, as anyone who has bought a large number of CDs on spindles will vouch. Secondly, when sending out CDs as promos, it is a good idea if you can get the package in to a standard first class envelope instead of a jiffy bag. The difference in cost between a first class stamp plus a standard A5 envelope compared to a large first class stamp plus a jiffy bag is around 60p. If you're sending out 100-200 promos, that's a decent saving. The raw CDs can be packaged with the inlay in to slip cases and sent in a standard envelope with a standard first (or even second) class stamp. Jewel cases need jiffy bags and fall in to the 'large' package category. So that will leave another 300 to 400 'raw' CDs and inlays which can be used in the future if stocks sell out (just buy some CD cases and get packing). So that's what I did, and very pleased with myself I am too. So pleased I thought I'd write about it!
Thus concludes today's lesson in the economics of music production 101. I must now write to our shareholders as they may think that we have run away with all their money by now.
Until next time.
Steve FOTG
