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Would You Pay 5 Cents For a Song?
irikar writes "An academic at McGill University has a simple plan to stop the plague of unauthorized music downloads on the Internet. But it entails changing the entire music industry as we know it, and Apple Computers, which may have the power to make the change, is listening."
Yes, I would pay 5 cents a song and I currently do thanks to some kind Russians. =)
"Facts are meaningless. You could use facts to prove anything that's even remotely true." - Homer Simpson
When the record companies sell what i want to hear. everything i pulled off of napster back in the day was 80's rock and metal stuff that has been discontinued. For god sake guys, put your back catalogues on line, (or even press a cd or two on demand) and then we'll talk. :(
In addition, a 1 per cent sales tax would be placed on Internet services and new computers -- two industries that many argue have profited enormously from rampant file-sharing, but haven't had to compensate artists.
This is the same scheme that we have today on blank CDs and the like and it is total BS to apply it to computers. I have no idea why anyone outside the entertainment business thinks that it's OK to put a music-stealing tax on every computer, or DRM on every computer when not every computer is even considered for such use. What about the company that buys 10,000 computers per year and because some 12 year old is "stealing" music they have to pay an additional tax and further have to have their computers crippled with DRM?
I'm a big tall mofo.
"Just a FYI Apple, no matter how cheap something is it is NEVER as cheap as free. Free will always win out."
Until there's nothing left to be free. Then free loses badly.
No, no and fucking no! I refuse to finance any industry which I don't have anything to do with.
When I buy computers for my business, I don't buy them for anything music-related, so I see NO reason to pay a tax, or levy or whatever the fuck they want to call it to support any music-related thing.
I'm tired of corporations and government thinking society exists for the sole purpose of ensure their profit.
AC comments get piped to
To a certain extent, he's somewhat right. It would substantially lower the bar and you'd have far more impulse buys (and drunk song-buying binges wouldn't hurt as much. Fear the drunken one-click shopping spree!)
However, I am not such a big fan of his idea of taxing PCs. However, the last line of the article is THE MOST INFORMATIVE OF ALL:
These guys don't even get *OLD ESTABLISHED CONCEPTS* let alone "new fangled concepts." Pearlman's response is that if you double the price, you cut the sales by more than half, so you actually DECREASE your revenue.
They just don't get it. [I'm not saying Pearlman is necessarily right with the
When in doubt, parenthesize. At the very least it will let some poor schmuck bounce on the % key in vi. (Larry Wall)
Their bean-counters decide that well if we can make billions selling songs for .05/download we could make 10x as much if we sell them for .50/download and 20x as much if we sell them for .99/download.
Unless their bean-counters have taken Econ 101 and know the most basic things about supply and demand. As you increase price, you decrease volume. There is always a sweet spot that maximizes profit.
When first reading the article, my instinct was to not go along with the notion charging for downloaded music, even only $.05 a song. Especially with DRM, etc., always on the sideline poised to come in and wrap you around the axle anytime to you try to play the song (in the proper spirit of fair use)... (I'm STILL upset about one of my recent CD's purchased not playing on my car CD player.... took it in, they would only exchange it... and, sure enough, the exchanged CD failed to play in exactly the same places in exactly the same way... had to demo this to the store personnel before they would agree to a refund.)
But, maybe they have something there... certainly when: "..., The recording industry is against Pearlman's plan. ..., ", I've got to think
it may be something that could work.
Mr. Pearlman seems to understand economics pretty well, but not IT. Here's the breakdown of an ITunes purchase of $0.99:
Label(s): $0.55
Apple: $0.34
Artist(s): $0.10
Now, let's chop that down to $0.05 instead of $0.99. Let's break it down this way:
Label: $0.03
Apple: $0.02
Artist: $0.1
So, when a customer goes to ITunes, they'll surf through several (large)-database-driven webpages to find the songs they want. They'll make a purchase against their already-paid-for credit through ITunes (of probably $10 increments), then download the 5MB song.
So, Apple now has to run power-hungry servers with a large staff of IT guys making sure they're patched and running correctly. They gotta hit customers' credit cards and give probably 5-10% back to the credit card company.
All of this... for $0.02 per song?!?
His model makes sense, but maybe for $0.25 per song... there's no chance Apple would make money by giving up that much bandwidth.
just my $0.02.
Their bean-counters decide that well if we can make billions selling songs for .05/download we could make 10x as much if we sell them for .50/download and 20x as much if we sell them for .99/download.
Please look up the term "elasticity" in your friendly neighbourhood economics textbook.
Bitchslapped. Neat.
As you increase price, you decrease volume. There is always a sweet spot that maximizes profit.
Well if you would take Marketing 101 you would learn a couple of other formulas too. You notice at Pizza hut that they sell pizza for $10 dollars for the first one and say $7 for the second one. There is a profit point during the transaction that you can maximize returns buy adding another one to a product that you are already going to buy. Now you have $10 for the 1st $7 for the 2nd and 5$ for the third. Well as you eat more and more pizza there becomes a point where you wont buy another no matter what the price is and then you have reached saturation at that price point. Therefore even though you have saturated the market you can still gather further funds from a fixed sale/profit point.
Comment removed based on user account deletion
While you're completely right that nothing beats free, you can't deny the number downloads iTMS has garnered since its start. While free music will always be available, don't underestimate the 'guilt-free' factor. A clean conscience for 5 cents/song is about as good a deal as you can get.
"...Pearlman was careful to add, though, that he doesn't see his plan killing off demand for CDs."
*BLANK* CDs maybe.
i mean $.05 x 13 songs = $.65
factor in $.25 for a blank CD and voila, that's still under a dollar. Unless they plan on *severely* reducing the price of retail CDs, I don't quite see that working out.
This sig contains repetition and redundancy.
I'm not so sure about that. Granted free is better than paying even a penny, but regardless going via the "free" route is not only more difficult, but leads you down a road of problems. On the extreme end of the scale you can end up having the RIAA knock down your door. Then theres the problem of having spyware/virii ridden software (to this day I still clean/remove Kazaa from people's computer and slap them on the hand/head). Furthermore, theres the issue of not having an entirely clean track. You have to be concerned about having the right song, having the entire song, and then quality, AND the amount of time it takes to be in the queue and to finally download it. All that for what? To save you a few pennies? Unless you're a complete cheap bastard or simply bent on the idea of ripping off musciains, then a major drop in prices will DEFINATLY help. Essentially if they can devise a system where you are a click and a couple minutes (assuming bandwidth conex) away from getting an album for a couple bucks, then I'm positive that pirating would go down.
Much like the scheme presented in the article, please remember that the "free" file sharing networks requires a broad base of participants to make them run. The utility of the "free" networks improves or deteriorates based on the numbers of people engaged in the activity of sharing freely:
even at US$.99, I would bet there has been an affect on the quality/quantity/availability of music on the "free" sharing networks. Presumably, that would deteriorate further if "legitimate" online services appealed to an even broader audience (as some or all of that broader audience would likely participate less in the "free" networks).
I heard many, many different variations. And most of them were sung in the style of Doris Day's version (giddy and happy and making me want to slap the singer). There were some versions that came close, but I couldn't decide whether that was what I wanted or not. Ultimately at the $1 price per song I didn't download any of my "candidates" since I didn't hear enough to convince me before the sale that that was the type I was looking for. Had the price been $0.05 per song I probably would have downloaded most of the candidates and not given the price much thought.
While this wouldn't help sell the big name artists at all, it would get the casual music listener like me. Whether there are enough of my type around is a completely different question and one that I can't begin to answer.
(As an aside, I never found the right version of Que Sera, Sera and in general that isn't the type of music I listen to. Just something that struck a nerve at that particular moment.)
I tried to read the article. I really did. But when I got to the end of the second paragraph, my natural aversion to incredibly bad writing kicked in and my mouse-hand clicked the window's close box without my conscious intent.
Peering out from under his de rigueur cap, music-industry veteran Sandy Pearlman, a former producer of the Clash and now a visiting scholar at McGill, spoke with a kind of nervous glee while describing his idea at the Canadian Music Week conference in Toronto last week.
Awful, vapid writing? You're soaking in it.
They get like maybe 1$ per cd. They've always made money from touring. The rule has been the record companies get the money from the sales and the artist gets the money from touring.
Now the greedy record companies want a piece of artists touring money as well. The folks killing music right now are the record labels not the downloaders.
This is a great idea, a band could pay thier own studio costs, put the music directly up for download and then who needs the record companies??
I don't mind right now paying $.88 a song, I do have a problem that very little of that actully goes to the musicans.
People need to face the facts record labels are as relevent in the digital age as say manufacturers of long bows, chain maille armour and broadswords.
The people I'm referring to are of course the folks working at the record label. In this age of oursourceing, downsizing and cost cutting there is no room left for record labels that suck up 90% of the cash from music sales and then complain that they don't get enough.
So Long and Thanks for all the Fish.
Fast Food is an interesting one because the more calories you can give to your customers cheaper, the better chance that they'll return soon to consume more. :)
It's been a long time.
No, maybe YOU want information for free. Some of us recognize that various industry evilness aside, there are artists out there who deserve something in return for their creative work.
No, free won't always win. Convenience will always win, and free is part of convenient. But I would rather (for example) pay US$1 to download an episode of a TV show instead of messing around with BitTorrent, as long as they genuinely make it more convenient -- which means a big fat pipe and a choice of unDRMed video formats.
The big mistake that the music industry is making, and the TV and movie industries are stumbling into, is to make their products less convenient on other grounds as well as more expensive -- region codes, release windows, DRM, etc. Once something is released to the public, it needs to be released to the public -- TV shows and movies need to be available for download on the day that they're first shown.
They get like maybe 1$ per cd.
If only that were true. Artists generally make $.05-$.12 a CD. If you want more info about the industry and contracts, etc., I highly recommend This Business of Music. It's chock full of interesting details like formulas used to determine artist royalties. For instance, did you know the labels still take money for R&D costs on the "new technology" of the Compact Disc? Or that many still take out $$ to cover "breakage", which is a hold over from distribution of albums on vinyl?
Oy.
Despite conventional wisdom, I've discovered you can blame a guy for trying. It's called "attempted murder".
Well if you would take Pizza Eating 101 you would learn that I can eat many, MANY pizzas.
meep
There would also be questions of anti-trust involved. We wouldn't want them to become monopolists.
With only 4 major labels, and all of them coordinating distribution and pricing to various degrees, we're basically at the monopoly point anyway.
The suggestion that it's a good idea that the computer companies buy up record companies and become media conglomerates fills me with dread.
Agreed!
There are independent studios that you can record at as well. And yes, they CAN come out sounding really damn good when it's all said and done. Would Britney Spears be able to do it, if she had no money and was just starting? No. But someone who relied on instrumentation and vocals from within the band COULD do it, quite easily. I have TONS of music for you to listen to that sounds wonderful (even if it isn't what you particularly like) that is done independent of anyone. I even have some stuff of two guys who did much of it in their LIVING room and it sounds superb (if you're interested in hearing THAT, go try out Pinback - Microtonic Wave or "B"(Offcell EP) on Launch - if you don't like the music itself, that's fine, but focus mostly on the quality of the production).
It can be done. It may be more work on the part of the musicians, but it's also cheaper. The only thing that would be prohibitively difficult would be in the distribution of physical CDs (but I guess that's where Amazon comes in, eh?). And when you get to the internet...shoo. It all comes together there.
And this is exactly what the article is adressing.
That they are wrong about their pricing, and people have moved on, but not to radio, to downloading the songs for free. The only way to win back these people downloading for free is to offer a price of nearly free. Most people downloading 1000 songs a month would never pay $1 a song. But would they pay $0.05 a song? Maybe. And more likley are the people downloading 100 songs a month. $100 is a lot of money.. but $5? Do you think there are 20x the number of people downloading 100 songs a month than buying 100 songs a month? Probably. Therefore, there is money to be made.
And any mention of artists not liking this sort of distribution system is crap. "Um.. no I don't want to sell my songs for cheaper so that everyone can hear them, only those spending lots get to hear my songs"
Someone mentioned above something about higher pricing to make it appear the CDs (and by association, the music) 'worth more'. Well it's obvious by the number of downloaders that the CD's are not 'worth more' because of their price...
Your argument pretty much justifies the things that I have been saying for years. Most bands don't make hardly any money off CD sales in the first place, they make their money through live shows and merch. So, I never understood why all these big bands/performers complained so much about us downloading their songs...
;) I always "try before I buy" with my music these days. If you make good music, you have nothing to lose. If you are a no talent, one hit wonder pop star, then you don't deserve to be in the music industry in the first place. My current favorite band, Celldweller, has no record label and distributes the majority of their music from the web.
But, then you also have to take into consideration musicians who only produce studio work and never play live. There are quite a few people, especially in electronica, who only record music and never set foot on a stage.
I say a mixture is in order. Release all your songs online in a lossy format, with a slightly sub par bitrate, and allow them to be distributed freely (96k mp3 or even better, a Q0(~64k) Ogg). Then charge people for the "full quality" CDs or Lossless (FLAC,etc) files. I wouldn't mind paying $1 for each song if I got to download a "decent", full length version of it for free and try it out for a while first. And of course, no DRM encumbered formats would be used
"A truly wise man realizes he knows nothing."
But illegal downloading far outstrips legal downloading. What the article is really talking about is what would it take to get nearly everyone downloading music legally. I believe that his price point would probably do it as it is an almost disposible amount of money to consumers. And hey, you would have a legal download, too.
Now the why not 10 cents argument is valid, but I think its still basically a curve. Where 5 cents is the point at where almost everybody leagally downloads music, I think 10 cents might be the point at which half of the people leagally download music.
The music industry is being greedy, not logical when they determine their pricing right now. We we already burned on the change from cassettes to CD which were going to be much cheaper once they were adopted. So the real feeling allowing people to live with the fact that they're illegally downloading music is that the price for music is obscenely high. No CD is worth $ 16, most aren't even worth $ 13, some aren't even worth $ 2.
In real manufacturing, real market forces cut the margins down, but with the recording industry prices are artifically set by the RIAA.
If the recording idustry took an honest look at their options this 5 cents/download option would make them huge amounts of money and save them boatloads on legal fees and bribes for government officials.
My wife and I have been talking about this quite a bit recently. We've been watching "American Idol". Anwar Robinson is clearly the most musically talented person to ever be on that show, but the stuff he does is not what the record companies want to market. This past Monday he got up and sang Louis Armstrong's "Wonderful World". He started out singing like Louis Armstrong, then series of runs as he moved the style into something more reminicent of Sammy Davis Jr., and finally ended the song in a soul style. His talent should win, but he won't fit into the marketing machine of the record companies.
I'm confused at your point. The "sweet spot" he was talking about was the maximum profit point. That is, selling 100 units at 1$ each earns you $100 whereas selling 10,000 units at 5 cents a piece earns you $500 dollars. The question is where is price*volume at a maximum and that requires understanding the volume that people will buy as a function of price.
"They feel that 99 cents / song maximizes their reveues. Their choice - it's their product, and if you don't like it, move on and listen to the radio."
That's true. Any company is allowed to do things less than best for themselves and even drive themself into the ground. It certainly doesn't mean 99 cents actually is the sweet spot to maximize their profits thought. They might make a lot more money at 5 cents per song if that entices more than a 20 fold increase in sales.
The point is that the RIAA aren't a monopoly any more. They are competing with "free" downloads.
The other points are that "free" downloads are not free. You need to spend time searching for songs, wading through the crap, learning new tools as the RIAA fight the old ones, and there is a risk of getting caught, etc.
The final point of the article is that legal music distributors can regain the advantage if they offer a cheap, quality service as a competition to the eDonkeys of the world.
Hence there is competition going on, and as long as the RIAA doesn't understand it at that level, the situation will not improve for them.
To be precise, cartels only work when consumers PERCEIVE that they can't "do without". Most American consumers can't distinguish between wants and needs.
Well, I don't know about you, but my perception is that the music industry is way over to the right of the "sweet spot" on the sales-against-price graph. I hardly ever buy CDs these days, because I hardly ever see them for a price I'm willing to pay.
When Mute Records released a sizeable chunk of their back-catalog for under $10, I sent in a $150 order--as opposed to a $0 order while the prices were $15 and up.
As I wrote to a record store owner who was wondering how he could stay in business: I could easily put together a list of ten CDs I'd buy tomorrow if they were $10 or less. But they're not, so I spend $0 and wait for a sale.
GCHQ Quantum Insert installed. If only our tongues were made of glass, how much more careful we would be when we speak
cheap goods are made for cheap people
There is a saying that goes something like this:
I'm not rich enough to buy cheap things.
Even though cheap goods are made for cheap people, it's a false sense of cheap, because the cheap good will inevitably break, forcing you to buy another one and another one, when for the same amout of money as 2 or 3 cheap goods, you could have bought a more expensive high quality good that would last you a lot longer than 3x lifetime of cheap good.
I've seen it time and time again, especially with electronics, umbrellas, and of course, digital watches, which, for some reason, seem like a good idea.
The music industry is being greedy, not logical when they determine their pricing right now. [T]he price for music is obscenely high. No CD is worth $ 16
The hair on the back of my neck stands up whenever I hear someone claim that "CDs cost too much." CDs are the cheapest form of entertainment, on a dollar-per-hour-enjoyed basis of anything I can think of. For the price of $12 or $15, you can buy an hour's worth of high-quality (fidelity, if not artistic merit) music and enjoy it over and over, for thousands of hours, as many times as you want. And when you finally get bored with it, you can sell it and recoup some of your money.
NOTHING else is as cheap. No pro sports, concerts, operas, plays, ballets, movies, dinners, truck shows, car races, or comedy clubs give you anywhere near that many hours of entertainment, for anywhere close that such a low price. Nor can you get any of your money back when you're finished "enjoying" anything I just listed, except for CDs.
Quit complaining. CDs are cheap.
Like woodworking? Build your own picture frames.
So a 5 cent song will break before a 99 cent song?