Why are recordings getting so expensive? – Billboard

On May 20, Universal Music Group raised wholesale prices on around 2,400 vinyl titles, adding further pressure to a format that is struggling to meet rising demand, supply chain issues and surging material costs. Whether the vinyl boom will suffer from sticker shock remains to be seen, but retail prices are climbing.

“Of the 2,400 [UMG] titles that rise, 1,200 of them will now have a [wholesale] cost $19 or more,” says Carl Mello, Director of Brand Engagement at Newbury Comics. “So it all essentially becomes like $30 price tag items.”

Some vinyl albums are already selling for even more: Harry Styles’ new one Harry’s housereleased by Sony/Columbia, has a wholesale cost of $24, according to Mello, while retail prices range from $32 to $40.

UMG’s price increase follows a similar move by Warner Music Group, which increased wholesale costs by about 600 titles last October. “We are also waiting for the shoe to come out of Sony,” says Laura Provenzano, senior vice president of purchasing and marketing for vinyl wholesaler and distributor Alliance Entertainment. “They all feel the same cost pressure.”

Vinyl sales soared 51.4% in 2021, with 41.72 million vinyl albums sold, making it the biggest year for the format since Luminate started tracking it in 1991. It’s too early to tell how much price increases will affect sales, but rising material costs and shortages are pushing the vinyl industry to breaking point.

Urgent factory executives say Billboard that in the past year there have been three price increases on vinyl pellets that have nearly doubled the cost. “Before the pandemic, the price of black compound [PVC] was $1.16 and $1.17 per pound. Now it’s over $2 when you factor in all the fees,” says Marc Raineyco-founder/CEO of Cascade Record Pressing in Milwaukie, Ore.

Another emerging concern for the industry is a potential shortage of nickel, a crucial element for producing the metal dies used to press records. In early March, the London Metal Exchange temporarily suspended nickel trading after prices more than doubled, fearing supply chain disruption due to sanctions on Russia, which provides about 10% of the world nickel production. Ed Gross, who runs Nipro Optics, an Irvine, Calif.-based company that supplies stampers to pressing plants across the United States, says the price of nickel doubled in early March to more than $30 a pound before settle in the $20 range at the end of April. As a result, the factory was forced to apply an additional surcharge of $16 per punch that went into effect May 1. Matt Earleyco-founder/vice president of sales and marketing for Gotta Groove Records in Cleveland, says his factory — which he says uses 5,000 to 6,000 pads a year — is absorbing the rising price of pads so far. pads, assuming the situation resolves quickly.

Electricity, labor and fuel costs have also all increased, and these costs are passed on to the labels. Andy Hsueh — the label’s global operations director at Partisan Records, home to IDLES, Fontaines DC and Laura Marling, among others — says costs per unit have increased from pennies to $2, depending on packaging needs and quantity.

A bigger concern is turnaround times, which have reached nearly a year in some cases, according to Zena White, Managing Director/Senior VP at Partisan. “Vinyl production is a volume game,” White explains. “This inadvertently hurts independents more than majors because majors are able to guarantee higher volume.”

The catalog was also hit hard. “It’s amazing when you look at gold catalog titles that aren’t available for months at a time,” says Mello, citing Taylor Swift’s example. 1989which Newbury has not received on vinyl since last August.

To try to keep up with demand, more pressing plants are going online and others have increased production. Cascade moved to a seven-day-a-week schedule, seeking to increase production by 50%. Denver-based record club Vinyl Me, Please plans to open a 14,000-square-foot pressing facility by the end of the year, and Memphis Record Pressing is working on a nearly $30 million expansion. dollars, including 36 pressing machines which should be operational by the end of the year. September.

As demand for vinyl grows as production struggles, some are turning to CDs to fill the void. The CD manufacturing process is less complex, the turnaround time faster, and the sticker price more consumer-friendly. Demand for the format is also robust. According to the RIAA, CD shipments increased from 31.6 million in 2020 to 46.6 million in 2021, an increase of 47%, while revenues increased from $483.2 million to $584.2 million. This is the first increase in CD sales since 2004, and proof that demand for physical products is expanding into other formats.

“More vinyl-only stores need to start considering adding at least some [CD] offers to mix, especially when it comes to a key artist that they don’t have a vinyl equivalent for sale,” says Steve Harkinvice president of sales and marketing at distributor and wholesaler Ingram Entertainment.

CD manufacturing also suffers from supply chain issues, but “it’s nowhere near the same as vinyl,” says Harkins, who adds that manufacturing times have dropped from three to four weeks to around six. at eight weeks today.

Some sources have expressed concern that rising prices and unavailability of products could slow sales. But most remained optimistic about the future, with some suggesting production issues might even have an upside. “You could also argue,” Provenzano says, “that the scarcity of the type of product is also driving demand.”

Jack L. Goldstein