Your article on Rose Records' financial problems [Culture Club, September 16] has me baffled. Rose is complaining about the Best Buys and Circuit Citys selling CDs at or below cost. But is that the real problem?
In order to simplify the mathematics, let's round off the retail prices and supposed wholesale costs. First, let's round off a below cost price to $10 and the assumed wholesale price at $11. If we can agree on this, let us flashback about two years ago when the Reader paid a visit to a CD manufacturing plant in Indiana, where it was established that the cost of making a CD was $1 (or less). If the Reader was accurate in its reporting, what we have is an 1100 percent markup to the retail store. This being the case, Rose Records should not whine about the Best Buys and Circuit Citys, but instead should deal appropriately with their wholesalers.
I admit to not being an economics major, so if there is something I'm missing, please fill me in.