As usual Nigel makes the basic mistake so many critics of cd prices make. The free cds have re-couped their initial costs over many years usually. Yes, manufacturing the cd itself is cheap, but pricing a new one usually has to include the costs of production, studio time, musician hire, royalty payments, design, profit margin for shops etc.
My last cd cost me £7000 before I sold a copy.
Recently, at the end of a gig a rather drunk man came and told me he had borrowed my last five cds from his sister and copied the lot onto cd. He thought this was hilarious.
I didn't.