Slashdot Mirror
Downloaded Music Gets More Expensive
Reverberant writes "Just as the online music market is starting to gain traction, what to music execs want to do? Why, raise prices, of course! Under consideration is raising the price of online singles up to $1.25 to $2.49, or bundling less desirable tracks with hot singles."
Magnatune experimented with what I would term "tipware". Here, you pay a certain amount in excess of a minimum (like at a restaurant) as opposed to donationware where the minimum is $0. Data is available from this, and it might surprise you.
-I am an elective eunuch.
Tin-foil comment: What a thoroughly ridiculous idea. I'd almost think they fear the piracy might go down and their pro-legislation arguments might lose weight.
Article:
Downloading music gets more expensive
Ethan Smith
Wall Street Journal
Apr. 7, 2004 11:00 AM
To see the future of online music prices, look no further than "Fly or Die," the new album by rock-meets-hip-hop trio N.E.R.D.
For months, digital-music services have been touting albums for $9.99 to entice more people to buy online. But Apple Computer Inc.'s iTunes Music Store has been charging $16.99 for "Fly or Die," while Roxio Inc.'s Napster service sells the 12-song collection for $13.99. Both prices are higher than the $13.49 that Amazon.com charges for the CD itself. The same pricing shifts are showing up on albums by a growing slate of artists, from Shakira to Bob Dylan.
Unburdened by manufacturing and distribution costs, online music was supposed to usher in a new era of inexpensive, easy-to-access music for consumers. In many cases, buying music online is still cheaper than shopping for CDs at retail outlets. But just a year after iTunes debuted with its 99-cent songs and mostly $9.99 albums, that affordable and straightforward pricing structure is already under pressure.
All five of the major music companies are discussing ways to boost the price of single-song downloads on hot releases - to anywhere from $1.25 to as much as $2.49. It isn't clear how or when such a price hike would take place, and it could still be months away. Sales of such singles - prices have remained at 99 cents - still account for the majority of online music sales.
The industry is also mulling other ways to charge more for online singles. One option under consideration is bundling hit songs with less-desirable tracks. Another possibility is charging more for a single track if it is available online before the broader release of the entire album from which it is taken. There is also talk of lowering the price on some individual tracks from older albums.
Several record-company executives acknowledged that pricing changes are being discussed at all five major companies.
The new pricing developments come as digital-music sales are growing steadily. Some 25 million digital tracks were sold in the first three months of this year, versus 19.2 million for all of the second half of last year, according to Nielsen SoundScan.
That growth is why some in the industry are uncomfortable with the talk of price increases. Most music-company executives believe that the download market is still in a critical early-growth stage, which could be disrupted by raising prices. "For us right now the issue is not, 'Do we make another $300,000 by raising the price five cents?"' says a music company executive. "It's making sure the market grows."
Revenues in the music industry have been dragging in recent years, in part because of the rise of illegal downloading services. Raising digital-music prices could spur additional illicit downloading. Weaning people off those illegal services by giving them an alternative that they consider viable is critical to the industry's future profitability.
N.E.R.D's "Fly or Die" is far from the only album that now costs significantly more to download from iTunes than to buy on CD. And many high-profile albums from two of the big five music companies, Sony Corp.'s Sony Music Entertainment and EMI Group PLC, are now priced on iTunes and its competitors well above the $9.99 norm. Sony artist Pete Yorn's "Musicforthemorningafter," for example, costs $13.99 on iTunes and $10.88 on average in retail stores, according to the NPD Group. Albums by EMI artists from Kylie Minogue to Blur also cost more in digital than physical form. (EMI also distributes N.E.R.D.)
The reason this disparity is so pronounced at EMI and Sony is that both companies routinely set wholesale prices for online albums higher than their competitors, according to people familiar with the matter.
So no, iTMS isn't beyond this. Sure, tracks are still 99 cents but full albums are getting higher prices every day.
Virgin Megastores recently offered 6 CD's for 30, basically working out at a fiver a go. I bought my first Cd's for years during this deal, because music once again became affordable for me.
Similarly, a lot of people don't object to legally purchusaing music from iTunes etc. If they're going to push the prices up again, the same thing will happen, more and more people will turn to downloading it for free P2P. Untill the record companies wise up to these simple facts, we're just going to keep going round in circles.
AllOfMP3.com
Da Blog
ITunes let's you listen to 30 seconds of each song. Generally speaking I think that give you enough of the song to get a feeling if you're going to like it.
The other day I was at Barnes & Nobles (Waterfront in Pittsburgh) and they have these neat machines where you can listen to the whole album (no 30 second limit per song) for every single CD in the store. These little machine have a built-in bar code scanner. Scan the barcode, it starts playing! I am sure somewhere in the store there is a big server with lots of MP3s...
Well, capitalism ( not competition ) is intrinsically designed to drive prices down, simply because of economies of scale ( ie. costs less per widget when a million widgets are made as opposed to when a hundred are made )
Competition can drive prices up or down -eg. In his classic book, Professor & psychologist Robert Cialdini talks about one common tactic to get customers to buy your product - RAISE prices!
Customers have this mistaken perception that price equals value, so higher price translates in their mind to valuable, lower prices to inferior/cheap goods ( this actually goes waaaay back, to Karl Marx's Labor Theory of Value )
The masses might actually buy a $5 song in the mistaken assumption that it is somehow more valuable than a song for $0.99.
"While that's still a fair price,"
8 2/ qid=1081463479/sr=2-2/ref=sr_2_2/103-4414021-79838 27
No, not really. Look here:
http://www.amazon.com/exec/obidos/ASIN/B000002U
(the lameness filter will kill this, so I'll save you the trouble)
The NEW version of DSOTM is $14, you can buy it used from Amazon for $7.25
And you get the full version, not a compressed version.
So tell me again how $17 is a good price? Maybe for the record company, but certainly not for the consumer!
You were mistaken. Which is odd, since memory shouldn't be a problem for you
Agreed. Radio kills otherwise good albums. Several years ago (1998), there was a song called "Ava Adore" by the Smashing Pumpkins being overplayed on the radio. I didn't care for the song, and after hearing it far too many times, I began to despise it. I never bothered checking out the album (known as "Adore") that the song was from, because nothing else from it was played. About a year and a half ago I finally downloaded the album, and it's become one of my favorites. Every track is good except for the one that was played on the radio.
AEIOU: open-source anonymous internet currency
and it costs 79 cents for a single song.
Activists United
Copyright is a limited time (ha!) license by the government that they will enforce your ability to limit distribution.
Copyright is not equal to property or ownership.
Really, try to think a bit before you post.
I like to be able to take even my legitimately purchased music and reduce it to the set of what *I* want to listen to. Isn't that my right as a consumer?
No, it's not. It's up to the seller, dude. It's the package they want to sell you. If their package is a CD with 12 songs on it, then you have no "right" to demand you only get one song.
If the concept you listed above was in fact true, I would be able to buy 20 seconds of a song because it's my "right" (it's the only 20 seconds of that milkshake song that i like anyway)!
A good analogy is telling picasso that you only want the top half of his painting for half the price.
To many people, the entire album is the art they want to share. If you don't want the entire album, you don't have the right to demand a portion of it!
Also, is it pretentious of me to claim that usually the rest of the album doesn't suck, but in fact people don't listen to it enough for them to appreciate it?
You're out of your mind if you really believe the record companies pay for all of this stuff. Most, if not all of the items you listed, are fronted by the record company, but the band has to pay all those expenses back from their royalties. This is why very, very few musicians make any money from their recordings.
"That's exactly the problem with CD distribution in the first place! They still want me to believe I need to spend over $ 16 bucks on a disc that I know damn well cost them only $ 0.40 to manufacture and distro. Even with a couple bucks to the artist and the studio, it's overpriced."
To clarify, CDs are sold to distributors for about $8. Anything beyond that goes to the distributor and the retailer. I know, I know -- thus they are surely evil greedy fucktards, etc. -- but many if not most products we buy go through similar two-tier sales channels.
Of the eight bucks or so that the record company collects, the manufacturing fees are among the least significant of the costs. Among others:
The bottom line is that CDs have a net margin of 30% or less, which is far lower than many other things we buy regularly, such as clothing, groceries, computer peripherals, and software. A CD released by a major label typically requires sales of a million units before it breaks even; the indies (which have much smaller promotion budgets but also typically sell fewer CDs) must sell about 100K.
"I like to be able to take even my legitimately purchased music and reduce it to the set of what *I* want to listen to. Isn't that my right as a consumer?"
If you're curious as to your rights when downloading music from iTMS, check out the fine print on the iTunes store.
Many people discuss "fair use rights" with the understanding that there is a list of activities that rightsholders are not allowed to prevent. This is not the case. Fair use doctrine is a loose list of instances in which you can make a copy of somebody else's work without running afoul of the law. Many of these relate to educational purposes. For example, you could occasionally Xerox a page from a magazine and distribute it to your class without fear of being hauled off to court, but this does not supercede a magazine publisher's right to, say, print a magazine using special ink and paper that cannot be Xeroxed.
Sitting in my day care, the art is decopainted.
Believe me, I hate the record industry MORE than you do, but movies make money at the theatre first, then go to DVD for more cashola. This isn't the case with music. You know, even indie music sells for 10 - 15 dollars, it's not just the RIAA that sets these prices.
The iTMS doesn't play the first 30 seconds. I believe the authoring tool Apple supplies to the labels lets them choose which 30-second block is excerpted, per track.
Yes, but you know (or ought to) that marketing, recording costs, returns, promotions, etc. are usually recoupable expenses in standard artists' contracts . Any money spent by the record company on those things is recouped from the artist, out of the (roughly) $1 that the artist makes in royalties.
Now, if you want to say that the record company deserves that extraordinarily disproportionate level of recompensation for taking the risk on the artist, that's at least a somewhat legitimate argument. But you didn't. And I'd disagree on that, as well. However, that's an opinion. The part about recoupable expenses isn't.
Ce n'est pas un vrai mouvement de robot!
Have you talked to artists? I have. A friend of mine got a record contract a few months ago. She's highly in favor of people swapping her music around. It gets her heard. She signed with an indie label, and they too are in favour of that.
If you're a small, independant musician, then the 'net is great, it gets your music out to people who would never hear about it otherwise. If you're a small record label, the same applies. You know who p2p sharing of copyrighted stuff hurts? The ones who don't benefit from the advertising -- the ones who are so heavily advertised that you already know about them. But guess what, These are the monstrously huge acts. These 'artists', including the pop band du jour, the current cute boy band, the mass-produced "edgy" rocker, etc. are not ones I have much sympathy for.
So yes, I've talked to an artist. A non-big-name, just-getting-started-in-the-bizz artist. She, and her company, are in favour of their songs getting out over the Internet, even if they don't make money from it.
The record labels were nailed for price fixing a few years back. Universal and a few others were giving co-op money to TWE and Tower Records as part of a MAP (minimum advertised pricing) program. In short, if the stores ran print ads with CDs at a certain minimum price, the record companies would help pay for those ads. MAPs and co-op advertising funding are a common practice in lots of industries, including the computer industry.
By the way, this came about because the big box retailers like Wal-Mart and Best Buy were selling CDs at low or no margin as a customer draw, then making their money on the higher-margin items in the store. Specialty retailers like Tower, which didn't have a store full of high-margin products, couldn't compete with Wal-Mart and Best Buy on price, so they complained to the record companies. The record companies implemented the MAP/co-op program with these retailers, so Best Buy and Wal-Mart complained to the government.
For what it's worth, DVDs and CDs have similar price controls -- that is, not many -- and the big box retailers heavily discount both.
As an aside, one person's opinion on why a CD is worth $13 to them while a DVD is worth $20 to them can't be "wrong" as it's their personal observation. A CD is worth about $13 to me, but a DVD is worth about $8, for the same reason he mentioned -- I'll listen to a CD squillions of times but I might watch a DVD just once or twice. I can't buy DVDs at retail for $8, so I use Netflix instead. There are lots of other industries (food, clothing, cars) where the retail price is often more about the perceived value by the consumer rather than the manufacturing cost.
Sitting in my day care, the art is decopainted.
>>Then why does The Matrix Revolutions the movie (Widescreen) cost only $4 less than Matrix Revolutions the soundtrack? What do the musicians need that the actors, writers, producers, etc. don't need? And, remember that the sound track is INCLUDED in the DVD.
.99 cents. But if you make 1 track unavailable for download, then you can set the price of the download. Though Apple still strongly discourages the vendor from pricing it too much higher than the cost of the CD itself.
Not that I agree with the way CDs are priced, but you really can't compare CDs with DVDs. First off DVDs are from movies or television show. The actors and writers involved are paid regardless of if the movie generates a dime. So typically, if a movie goes directly to DVD and cable the goal is to recoup expenses already paid, which includes (typically) a 'fair' artist compensation. Your average movie star isn't going work without getting paid, unless its their own project, a friends project, or something they truly believe in.
For your average album, typical the label has fronted the cost of production, and some living expenses (depending on the artist). The artist really gets paid based on album sales. Well actually the record label gets paid based on album sales, and if the sales are high enough the artist will make some money as well. But even if the sales are just average or slightly above average the artist can make money doing live work. So unless your talking big pop stars like Justin, Britney, etc., where they get paid regardless of album performance, then your talking about artist who need sales and sales money as part of their livelihood.
So what musicians need that actors, and writers don't is typically a paycheck. Since actors and writers have already received their paycheck, typically way before the movie or video hits distribution, while musicians may have been forking up $10s of thousands of their own money just to get the record made, without any avenue for distribution besides live shows.
I think record labels are greedy, but know doubt that their greed is enhanced by the fact that many of the top selling items on Apple are those mini Apple Exclusive releases which contains the primary song you want, and then multiple mixes, or one or two other songs. This combined with the returned success of the EP on sites like iTunes. I can understand why labels would try to bilk it. I just don't understand why they can't restrain themselves.
It is already irritating, and you can tell which labels do it, that a number of labels take advantage of the one loophole in terms of pricing that Apple gives them. Apple's contract terms are pretty much the songs can't be more than $0.99, and that albums can't cost more than the combine costs of the total tracks on the album priced at 99 cents. But the exception is made for albums that hold tracks back from individual downloads.
With Apple's contract, you can have a 10 song CD, and their basic agreement is that that album CAN NOT cost more tha $9.99, based on 10 tracks times
For example, with the NERD album Fly or Die. The album has 12 songs. Apple recommends that the price be $9.99 ideally, but no more than $11.99 if all songs were available for download. NERD like a number of Virgin and EMI artist take advantage of what I call the iTunes Loophole. Two songs on the album are not available for individual download, which means if you want the whole album, you either buy it elsewhere or you pay the price requested by either the artist or the label, which is $13.99.
Personally, I was planning to buy the NERD album, until I saw the pricing. I've heard the album is really good, and I like that they do a lot of experimenting. Plus I'm all for artist who stand up against their labels. What I'm not for is when I can tell an artist or label is directly trying to bilk you, and this is easy to tell at iTunes, since we know the contracts between ALL the major labels and all the independent labels are virtually the same.
But the record company still paid for the crap to be recorded. Yes, a cd may have only cost $.40 to produce, but a single video for MTV will set an artist back 100,000 cd sales. So now if people are buying the single for .99 instead of the cd for $12, the company needs to sell 1.2million downloads to offset the video. This is why they are going to raise the prices. They can't sell that many downloads. Soon enough they will have to justify charging $4 per song since Britney Spears, Justin Timberlake, and a whole host of other names I can't think of right now only have 3 or 4 songs per album that the majority of people would consider buying.
I remember periodically buying 45RPM singles at Woolco in 1980 for between $1.00 and $1.50. According to the bls.gov calculator that's $2.26 to $3.39 in 2004 dollars. If a single comes without DRM, I don't see what the complaint is about. If it does come with DRM, I don't know why anyone would listen to it unless they were paid a significant amount of money, since a good song with a good hook is like a drug.
Epitonic.com has free, full-length, totally legal downloads by non-mainstream bands with internal links to similar artists and short (a few paragraphs at most) write-ups about the band. It's a wonderful source for finding out about new music.
IF they would keep the tracks to .99 a piece and FINALLY get ONE FREAKING place to take your pick of music from, I'd stop downloading it.
BUT, here we go again. Good god the level of stupidity in the music industry is mind boggling - although I guess not THAT stupid, as they've managed to maintain CDs prices for this long.
I just cannot believe they don't see the outcome of this - I REFUSE to buy crap music I don't want. THAT's the main reason I don't buy CDs. Well, back to my 4mb downstream cable modem...