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How to Reduce Your
CD Manufacturing Costs
Copyright 2005 by Keith Holzman,
Keith Holzman
Solutions Unlimited.
All rights reserved.

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Keeping down the costs of printing and manufacturing makes lots of sense at any time, but particularly now that most labels are selling fewer CDs per title. To use Nicholas Negroponte's metaphor from his "Being Digital," sales of atoms (manufactured goods) are declining, partly because of illegal downloads, while sales of bits (legal downloads) are increasing due to the success of such online retailers as Apple's iTunes Music Store.

You can start controlling costs by reducing your printed materials to just the necessary numbers of pages required for the project. For example, do you really need to print lyrics in the package? Perhaps not, especially if you make them available on your website and indicate as such on the package. Directing buyers in such a manner also encourages those who want the lyrics to visit your website where you can also post interesting stories or articles about the project. More important -- you might also be able to entice them to buy other recordings or merchandise. That's just good marketing.

Another, and an increasingly likely factor, is that more and more consumers are copying their CDs to their computers and loading them onto to their iPods or MP3 players -- probably never looking again at the packaging. So why spend any more on the package than you have to?

By the way, this does not apply to special compilations or "legacy" projects where you may intentionally want to publish value-added material.

In addition, consider printing only the outside folder or booklet panels in four colors, printing the reverse side simply in black and white (one-color.) This kind of printing is called 4/1 (four over one.)

Another way of controlling costs is by not using a "clear-case" jewel box, eliminating the need to print on both sides of the tray (inlay) card. This is not only a considerable savings in print costs, but also in materials, since a standard jewel box usually costs a little less than a clear-case.

These simplifications needn't have any impact on sales so long as the folder/booklet front and the tray card are eye-catching and attractive. It will require excellent design, but at no real increase in cost. Fancy but uninformative packaging is not going to get you better placement in Borders, Tower, or Barnes and Noble.

Eliminate any unnecessary materials such as drop-in cards or stickers -- a savings in both printing and labor for inserting or applying materials.
I also recommend that you place all your production printing work with a single supplier, and in fact, all your printing if that's possible. This helps create economies of scale, and engenders supplier loyalty.

The same suggestion applies to your CD replicator or manufacturer.

In the case of a CD manufacturer who also has a wholly-owned printer, you might consider having them do both printing and replication for you. I don't refer here to a replicator who jobs out or brokers printing for you, since they'd be dealing with a third party who has to make a profit and bear the costs of shipping printed materials.

Here's something else to keep in mind. Estimate carefully your print and manufacturing needs for each new release. Begin by calculating how many DJ (promotion) copies you'll need to have available for shipping to press, radio, and other promotional purposes -- both prior to release, and for the first sixty to ninety days after. Add to that quantity your distributor and house account initial orders, plus copies you'll require for in-house use, mail and online sales, artist sales, etc. Total these quantities. The resulting number is the minimum you'll need to press or replicate.

As for printed materials, you should make not only enough to cover your replication needs, but I suggest you print enough extras to enable you to manufacture two or three additional re-runs of CDs, and also allow for shrinkage of three to five percent -- an inevitability at busy pressing plants. Also see where your printer's normal price breaks enter in. Sometimes raising your print order to their price break quantity results in very little extra outlay of cash because the per unit cost goes down. More important. it saves you from having to place small, and expensive, print-re-runs.

It doesn't hurt to take a good supplier out to lunch or dinner once in a while, and be sure to invite them to see one of your acts when there's a local performance. Specifically, be sure to check that you're getting the lowest and most competitive prices possible.

There are lots of ways to control the costs for operating a label. These are just some of the possibilities.

And if you need additional advice on how to keep your operating expenses under control, or any other suggestions to manage your label in a business-like manner, let me suggest you take a look at my book, "The Complete Guide to Starting a Record Label." It's available as a downloadable eBook (in Adobe Acrobat® PDF form) and as a printed, spiral-bound book.  

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Copyright 2005 by Keith Holzman, Solutions Unlimited. All rights reserved. Adapted from "Manage for Success," Newsletter #49, May 2005. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Keith Holzman is the principal of Solutions Unlimited, a management consultant specializing in the recording industry. A trusted advisor and troubleshooter, he is a seasoned music business senior executive with extensive experience in all aspects of running a label. He was President of ROM Records, Managing Director of Discovery Records, Senior Vice President of Elektra, and Director of Nonesuch Records. He publishes "Manage for Success," a free monthly email newsletter devoted to solving problems of the record industry. You can subscribe at his website <
http://www.holzmansolutions.com>. Keith is a member of the Institute of Management Consultants and has served as a panelist for the National Endowment for the Arts, and as a board member of many arts organizations. He can be reached at mailto:keith@holzmansolutions.com. Keith is also the author of the recently published "The Complete Guide to Starting a Record Company" available both as a 235-page, printed spiral-bound book, as well as a downloadable E-Book.

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