It doesn't cost nothing to obtain the rights to music, to convert records or tapes to digital formats, to maintain the servers for downloading the music files or to run the website where consumers go to find the music.
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I suspect that cost of CD has very little to do with cost of printing or distribution. It is most likely based on demand and price manipulation. Printing CD is perhaps $1 while royalties to artist are not more than that. Double that for distribution and we have $4 CD. It is controlled by few companies who set prices as high as market can bear. When CD is less popular it becomes $8 instead of $16. DVDs sold in US are sold in China for much less. 20th Century Fox admitted making small profit after selling them for equivalent of $2. The only think that stops people from importing Chinese DVDs back to US is regional code of DVD preventing US sold DVD player from playing them.
Downloading CDs will be much easier and no out of print issue, I agree, but downloads can take long time. My home internet is running at 3 Mbits/s. In case of extremely long 80 minutes CD (700MB) it will take an hour to download (assuming top speed without interruption or slowdown). Perhaps when artists decide to sell downloads themselves (some already do) it will eventually reduce cost to possibly less than $5 per CD.
Don't know if it is correct but I heard on the radio this weekend that 70% of the music recorded on records has never been released in another medium.
Unfortunately a sizable amount of music that was originally recorded on analog tape was not properly stored, or cataloged, and has substantially degraded, or is missing completely, so original releases or digital copies of original releases will be all that we have.
If the vinyl albums exists it is fairly easy, although time consuming, to convert them to digital. Tape only became widely used in audio recording in the 1950s and only a few of the big companies kept serious archives of their tapes. It really shouldn't be that surprising that the original masters for most music produced before, say 1980, have deteriorated or are just lost. Fortunately vinyl is a superb archival medium and the results of vinyl to digital transfers can be very high quality. If a vinyl recording had even moderate distribution existing copies can nearly always be found. This is true going back to the 1930s, but there are exceptions.
The situation for movies is far worst. It's estimated that 90% of all silent movies and half of all sound movies made before 1950 are lost.
This is a nice idea but probably only in theory. There is a lot of stuff that was never remastered and made available digitally via CD. Even if it were only made available via download, there's still a lot of work to bring it to market. And that's probably the reason that it never went to CD either. Yes, downloads are less expensive, but as Kijanki pointed out, CDs aren't really that expensive to manufacture. -I do agree though that it would be great to have all those older titles available for download so we could hear them again. I sold my last turntable over 20 years ago and have never looked back.