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Jobs Resists Music Industry Pressure
Drew writes "Steve Jobs is opposed to raising the price of online music sales, calling the music industry greedy, and
implying that price increases will bring about more piracy." From the article: "It may not seem like it, but it has been more than two years since the launch of the iTunes Music Store, and that alone has the music industry brimming with hopes for price-adjustments. They also don't buy Jobs' argument that a price increase will result in more piracy, but probably not for the reasons we might assume. I've long been of the conviction that piracy is not nearly as large of a problem as the RIAA makes it out to be." Also covered at Macworld.
No, they're not going to raise prices so you're not "paying pretty much the same price as a cd to have it in a proprietary, non-portable format with no artwork and nothing tangible."
"This is considered plagiarism."
... why is it that so many songs are missing from iTunes? I recently ordered an iPod nano and so installed iTunes to prepare for its arrival: I was browsing the store to buy some songs I've always wanted but for some reason I wasn't able to find basically anything I wanted:
= Nothing by George Harrison
= Nothing by Queen
= Jamiroquai albums are mostly missing as well
what's up with that? yeah, Jamiroquai might be a little niche, but don't tell me that Queen and George Harrison are.
-- the cake is a lie
No, I'm no advertiser.
http://allofmp3.com/ does it right. Not only can you select what format you want (MP3, OGG, FLAC, many, many, others), the prices are based soley on the size of the resulting file. On average the price is $0.02 USD per megabyte. I purchased 5 songs last night for only $0.54. However, I could have gotten the same 5 songs in FLAC format for only $2.50.
Why couldn't iTunes do the same?
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The problem is that you're a few steps behind the logic curve on this issue*. I shall try and illustrate it for you:
In the beginning, music was tied to a chunk of plastic. Then, the plastic was made optional and you could buy it online (with negligible distribution costs)... but to avoid gutting the existing plastic sales, the prices were fixed similarly.
There was an initial resistance to bits vs plastic because everyone thought the real cost was in the pressing and printing and cover art... but that's faded in the past 2 years. Now that the plastic-free version has taken off and people are starting to appreciate that they're paying for the music and not the disc, the question becomes "What is the music worth to you?"
It's not relative to other plastic discs, it's relative to other pursuits of happiness. If you LOVE this song, it's gotta be worth more than $0.99.
In other words, they had trouble getting over the lack of plastic at first, and now they're so excited about "apples vs oranges" economics that they're DYING to try out selling Coldplay for $3/track. And while YOU won't do it, there are a bunch of "I gots me an AOL" folks who WILL, and that's all you need to make it worthwhile.
I agree with Jobs on this, and I agree with you, but I think everyone underestimates how astoundingly greedy the RIAA can be.
* in all fairness, if you weren't behind the curve, you'd likely be a bad person
The world's only surviving livewriter.
At first, I laughed out loud at your preposterous comment, but then I remembered that they already already do.
Jobs works for $1/year at Apple and gets some bonuses from Apple board of directors sometimes.
...) he lives in a normal house and sends his children to public schools. Gates lives in a bizzaro fun house and Ellison lives in a fake Japanese McMansion.
Most of his wealth is in the form of Pixar stock - and he doesn't give that up because he wants to retain control of the company.
Unlike a lot of rich people (Gates, Ellison,
Yes, he is not hurting for money. But he doesn't *live* like a greedy person. He could be getting paid more at Apple than he does if that was what he cared about. I think he cares more about retaining control at Apple than he does about money. He retains control by keeping Apple healthy, and also by keeping his "moral authority" by being the guy who works for $1/year.
Whatever you might say about Jobs, he's a person that I can have some respect for. He lives his life pretty modestly, works very hard, and cares a lot about quality.
Avoid Missing Ball for High Score
No, people don't use it because it's on *extremely* shakey legal grounds that are only mitigated by the fact that Russia's legal system with regards to copyright is all over the map. In addition, lossless files (up until recently) were transcoded out of 320 kbps MP3 files. Not very honest of them.
From AllOfMp3.com's Legal Section
Is it legal to download music from site AllOFMP3.com?
All the materials in the MediaServices projects are available for distribution through Internet according to license # LS-3-05-03 of the Russian Multimedia and Internet Society. Under the license terms, MediaServices pays license fees for all the materials subject to the Law of the Russian Federation "On Copyright and Related Rights". All the materials are available solely for personal use and must not be used for further distribution, resale or broadcasting.
Users are responsible for any usage and distribution of all materials received from AllOFMP3.com. This responsibility depends on the local legislation of each user's country of residence. AllOFMP3.com's Administration does not keep up with the laws of different countries and is not responsible the actions of non-Russian users.
"As the price of reproduction drops, the price of the item should drop correspondingly. At least that's how the economic theory goes."
What economic theory is that?
Given infinite supply to a market (which is the case here, unless supply is artificially limited -- i.e., only the first 1000 people can download each day), the only pressure on price is demand. Recording companies spend tons of money on marketing to increase this demand. Cost of goods sold has absolutely nothing to do with price -- only with profit and loss.
In this case, though, we have an artificially fixed price. This does not change demand, but instead changes what proportion of that demand is met through the black market.
"Profit margins drop but profits are made through bulk sales, much like today's commodity ethernet cards and memory chips."
Hogwash. No consumer buys "song downloads" in bulk to resell them. Unless the recording companies are selling rights of transfer for x number of downloads for y dollars to Apple, which I highly doubt.
I think what you mean is that companies will still see increased profits due to larger sales volume, if they lower prices. While this may be true, it may not be the most profitable method of pricing.
If at $1 ea, I sell 100 songs, I realize $100 revenue. If I price the song at $0.50 ea, but sell 180 copies, my revenues are only $90, and my marginal costs will be higher, since I sold more copies. The pricing curve for songs will determine what price I should set to maximize my profits.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
I'm afraid that copyright law precedes the invention of recorded music.
But who am I to get in the way of you playing the victim because you're too poor to pay 99c for a luxury item (music).
A hint for the moderator who made 'viewtouch' +2 insightful: when 'viewtouch' was born, copyright law was in force. If he/she has made a copy of some music without the permission of the copyright holder at any time in his life, it would have been illegal. Therefore, 'viewtouch' is lying, he never remembered such a time because such a time never existed in his lifetime.
But who am I to spoil the party? Mod him up to +5 for playing the 'feel good' card, and mod me down for pointing out reality. We have to maintain the RDF, even at the expense of reason and fact.
Japan? Cheap? Are you talking about popular music? Because last time I went to Japan, a popular new release could run anywhere from $20-30, which is much more expensive here. Most of the cheap CD's I found were used.
Uhm, let's break that list down a bit
I was also going to point out http://www.magnatune.com/. It's one of the best sites I've seen for music purchase. 50% of the money goes to the artists, they get to keep their rights to their creations, and the music distributed through their site is chosen for its quality. It's everything I could want in a music store.
I think the record company would do well to mimic these guys... but then of course, they'd have to play nice.
I think a lot of people assume that using iTunes/iPod you are stuck with DRM software. You aren't people. You only get that with PURCHASED music from iTunes Music Store.
It's either on the beat or off the beat, it's that easy.
I moderate therefore I rule!
--
"How about thinking 10 years later when Apple is it's own record company and the competition has been greatly downsized?"
Apple is already a record company... Apple Records. It's the label the Beatles started.
Apple Computer can never be a record company. They have a longstanding contract with Apple Records stating they won't do that. They're already involved in a very costly litigation over the fact that they're distributing music at all. To become an actual record company would threaten Apple Computer's ability to use Apple as a brand for anything, which currently rests on the agreement with Apple Records.
The music industry could pull out anytime it wanted and could destroy iTunes.
Maybe, maybe not. The RIAA has already been convicted of price fixing. Taking all their songs and going home from the number one online music seller might result in some serious legal problems. Forcing price hikes might result in the same for that matter. You might think, "so what the legal system is corrupt anyway" and you'd be right, up to a point. But unlike operating systems people understand increased music prices and they understand the itunes store having all the music unavailable and I seriously doubt they will be happy about either. Jobs making this all public is step number one. And any politician who is looking for speaking points and free press has a new cause to champion and a new villain to vilify. Aren't you going to vote for the gubernatorial candidate who promises to "stop those fat cat music moguls and make them offer music at a reasonable price again!" The RIAA better think very carefully before they play the bully with this one.
their message is pretty clear, it is about independent music. I think the use of a Java player is pretty smart considering that Windows and Mac don't support Ogg natively. This can give people the opportunity to hear the music. All they have to do is download a codec that this site has been generous enough to go and find, for it to work in Windows or Mac, once they have purchased it.
Do you know how much a license for MP3 usage costs? They start at 10,000 dollars. Do you have that kind of money? Who cares what format it is in, as long as there is a way to play it. Since you seem to know everything about online music though...I'm sure none of this matters anyway
No, the message is muddied by the cobranding of F/OSS software and propoganda throughout the site.
e nseFAQ.html
And the idea that Ogg isn't supported natively on either Mac nor the PC is a perfect example of why this is a bad idea.
Do I know how much licensing for MP3 usage is? Sure -- if you are making less than $100k a year, its absolutely free. Its not worth Fraunhofer / Thompson's time for anything less.
If you are making over this amount, then we are talking a royalty rate of 2%. Thats right, if you are bringing in over $100k, you might have to pay a small token amount in royalties. I don't know about you, but I pay a *LOT* more than that for my licensing / taxes / software for my online business (I have worked for the music industry in the past, and still do consulting within this area...$2k ain't much if you want to be taken seriously).
So $10k? Where did you get that number? Obviously not from folks that license the product:
http://www.mp3licensing.com/royalty/emd.html
If you are worried about royalities (and want to stay unencumbered by DRM), take a serious look at AAC. The only charge there are for encoders / decoders. It looks as though your site is already encouraging an assbackward software package to encode into OGG on the client side...so why not just use iTunes to do the conversion -- that too is free. I know there are several free encoders on the Linux side as well (because I had to batch transcode several gigs of waves over to this and it was faster to just use a spare linux box and let it do this in the background).
But if you want to see the royalty rates on AAC, take a look at Dolby's site:
http://www.vialicensing.com/products/mpeg4aac/lic
As for being able to play music -- I can't play it without a wierd format that isn't supported by my hardware. At least all my current hardware can play WAV / MP3 / AIF / AAC all without having to transcode it. So, yes, it matters, because I can't hear it. I didn't buy from the iTMS either until it was supported by a large (more than 10%) of the players sold.
But yeah, its part of my job to know this stuff. Again, I agree with your commitment to open source, but don't take it as a religion. Use the best tool for the purpose. Otherwise, it looks at those you are more about promoting F/OSS than you are promoting another means to an end for musicians -- which again is a noble cause. Why don't you do an experiment? Set your store up to sell both Ogg and MP3 (or AAC) and tell the end use they have to pick which format before buying (give them the choice to download all 3 if they want once the experiment is over) and stop the experiment just before $99999 in sales (or whatever you hit for the year) and see what sold the most. You might be surprised...hell, if ya published it, *I* might be surprised.
Sorry if my last post seemed antagonistic in any way -- I didn't mean it that way, but the "Since you seem to know everything about online music though" comment seems as though I was. No, I understand the marketting of musicians and this is one of the reasons the big industry is starting to fail -- they are more about marketting themselves and promoting what is good for the industry but not necessarily what is good for the artist. And this is exactly what I see when I visited the site.
Focus on the musicians and nothing more....