The most expensive part of a CD is the jewel case. In 1995, material costs were 30 cents for the jewel case and 10 to 15 cents for the CD. Wholesale cost of CDs was $0.75 to $1.15, which retailed for $16.98. On average, the store received 35 percent of the retail price, the record company 27 percent, the artist 16 percent, the manufacturer 13 percent, and the distributor 9 percent. When 8-track tapes, cassette tapes, and CDs were introduced, each was marketed at a higher price than the format they succeeded, even though the cost to produce the media was reduced. This was done because the apparent value increased. This continued from vinyl to CDs but was broken when Apple marketed MP3s for $0.99, and albums for $9.99. The incremental cost, though, to produce an MP3 is very small. COUNT 5
QSN1 What is the priciest component of a CD? ANS1 jewel case QSN2 Why did the cost of audio music increase when the production costs decreased? ANS2 value increased QSN3 What did CDs retail for in 1995? ANS3 $16.98 QSN4 Who received the most profit from the sale of CDs? ANS4 the store QSN5 How much did a jewel case cost in 1995? ANS5 30 cents