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