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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.
Am I missing something? They're going increase the price of songs so you're paying pretty much the same price as a cd to have it in a proprietary, non-portable format with no artwork and nothing tangible? What benefit would people be getting from the iTunes music store at that point, exactly?
Maybe they could cut costs..but, oh, I don't know.. hiring less lawyers to sue their customers.
Apple should partner w/ Google and the recently announced Google Wi-Fi service. Two power houses, major distribution and mind share, not to mention the pile of cash they're both sitting on. Oh and they'd be getting free advertisements w/ 2-3 combined posts per day here on /.
In fact, let's really show those greedy bastards and set the per song price of an iTunes download to twenty-five cents! That way, downloading an album would actually be cheaper than buying the jewel box.
You go, Steve!
Um, he is talking about lowering the prices, isn't he?
Oh.
Never mind.
Yeah, I'm as old as my UID would suggest.
The idea that the prices of music should go up is ludicrous. There is a site out there called AllOfMP3 that charges a nominal fee based on the file size, and it allows you to change the format and bitrate of files you download. It is, quite possibly, the most sophisticated online music store out there. I can get a full album for 1.10$. Since the site operates out of Russia, Russian copyright applies.
It's revolutionary, and it's a model that iTunes could stand to look at. Never will I pay 99 cents a song again.
As the price of reproduction drops, the price of the item should drop correspondingly. At least that's how the economic theory goes. Profit margins drop but profits are made through bulk sales, much like today's commodity ethernet cards and memory chips. It allows for many companies (or artists) to create a product, spurring competition, providing choice. All of this is good for the consumer.
Yeah, the RIAA is still trying to stick it to us.
I never bought a song on iTunes - I've gotten them all for free with Pepsi caps.
I don't usually drink Pepsi, but when I see those yellow caps, I tip the bottles, find a winner, then get a Pepsi (instead of the Coke I would buy otherwise) and get my free song.
So I think this is in response to pressure from Pepsi. If you pay more per song, you'll be more likely to buy a Pepsi for a chance to win a free download.
It's a conspiracy, I tell you!
Ok. First of all, I don't know exactly what they're talking about - online or Pressed CDS. But, selling a song for $.99 or $9.99 an album WITHOUT HAVING TO PRESS A CD, MAKE COVER ART, have a jewel case, and truck it to the stores, is pretty steep. I was part of a survey a couple of years ago asking "how much would you pay to download a song?" I answered, "$.25" Asked why, I answered, "Because the music publishers do not have any media costs other than bandwidth and royalties. Excluding the royalties (which are a constant), bandwidth is MUCH cheaper than jewel cases, CD, physical distribution costs (trucking of the CDs, etc...) and the artwork."
In short, I think Jobs is right on the money here.
Evil people don't think they're evil. - George Lucas, Making of Ep III
But why not cut out the middle-man? We don't need "the music industrie" for on-line music do we?
Artist -> Online shop -> Customer makes more sense to me.
The online shop (iTunes for instance) could take care of the marketing as well.
The glass is half-full. With poison. And there are cracks in the glass. The dirty, dirty glass.
And exactly what would be the incentive for them to release newly remastered recordings if they can't recoup the costs (let alone make any profit).
"It lays golden eggs."
"Do we own the goose?"
"No, but we get half the eggs as long as the goose uses our nest."
"We ain't got to do nuthin' and we still get half the eggs?"
"Yep."
"But we don't own the goose."
"Nope."
"I say we kill it!"
- Crow T. Trollbot
The seller of a product will usually set the price of a product to a level that he thinks the market is able bear without turning to alternatives (theft, competition, abstinence, etc.). If the good ole' boys over at the RIAA think that $9.99 for a downloadable album is not enough (and trust me - they do!) then they'll explore every nook and cranny if they can get away with charging a few bucks more! Businesses have no sense of 'fair', 'good', or 'evil' - they produce a product and will try to squeeze as much profit out of their customers as possible. If the profits are less than expected than they will try to 'instill demand' (think advertising and other types of brainstorming) to somehow part Joe Shmoe with part of his earnings.
At the end of the day, it's a voting game - they rise the prices, we go back to piracy. Trust me, economic consequence is the only language they understand. Companies are by default pathological entities that have no compassion, vision (in most cases at least), remorse, or concience. It will squeeze you for all you got - that's why it is a commercial entity! The democratic mediator is the consumer and obviously most of the responses on this thread (it just started and I'm an early poster, but let me just guess ;-) will be against a price hike. If nothing else the RIAA is looking in the wrong direction - as competition brews I believe that these prices should come down, not go up. After all, there is no physical media involved and selling bags of bites is a great business to be in...
I remember reading an interview with one of my very favorite artists where she said something along the lines that digital music is theft.
And I thought to myself, that if she saw me listening to her music on my iPod she's probably be angry with me, but how many times did I buy the same album by her? I could actually count 4 times: LP, Cassette, CD, remastered "special edition" CD. The only records of hers I haven't bought more than once are out of print.
Avoid Missing Ball for High Score
And of course for non-chart music, you could probably pick up the actual CD for less just by scouring eBay, zShops or even a sale in a regular bricks & mortar store.
"calling the music industry greedy"
Shitheads from the end of that sentence...
"We are all geniuses when we dream"
- E.M. Cioran
I'll probably get modded as a troll for not saying "apple R0X0RZ", but whatever.
check out the best blog ever:
http://oehlberg.com
I find I like the original recordings better mostly. It's like Black and White movies. The artists work with whatever medium they had at the time, and got it to sound (or in the case of B&W movies, look) the way they wanted, and that was that.
I'm sure that the Beatles could have done some funky ass stuff with Dolby Surround. Lucy in the Sky with Diamonds could have been tripped out big time. But they didn't have access to it. So....why would I want a DTS5 channel version of it? Did John help remix it? No.
I do like my classic jazz remastered. But anything past like 1965 or so should be left alone.
It's either on the beat or off the beat, it's that easy.
I moderate therefore I rule!
--
Industry associations like the MPAA (and, I presume the RIAA), take a cut off the top from producers. About half of that cut goes, supposedly, to anti-piracy efforts.
So, they need to make it look like they're fighting piracy. What better way to get headlines proving you're fighing piracy then to go off suing a bunch of 13 year-olds??/
Then, of course, there's the fact that, if they can legally squash fair use, then they can ultimately charge and track people for each time they listen to a song. More money for less work. It's almost like printing the stuff.
Sometimes boldness is in fashion. Sometimes only the brave will be bold.
However, organized crime (particularly in Asia, former Soviet Union and now offshore on boats in international waters [read: no law], there is a very large problem. Anything that exists on disc (music, games, software, movies) is subject to theft and distribution. Traditional Organized Crime via physical goods is still more profitable than electronic business.
I believe the RIAA could make a great deal of headway in its piracy campaign if they would focus attention on the real problem. They would "pick up" the little guys they claim to be the problem and would sway public opinion (who dispise organized crime other than the Soprano's).
I'm hardly advocating for the RIAA here or suggesting that increasing levels of encryption is the way to go (this will never will work with any media that can be heard or seen imho) but don't ignore the fact that you can find any movie (including ones that have never been released to DVD) on the street in NYC. That guy with the blanket full of discs isn't a small businessman - he's working for organized crime.
The difference between Steve Jobs' wealth and the RIAA is that Steve grew his own business and continues to do so. The record companies want to raise prices for doing nothing. Being a billionaire is not necessarily a sign of being greedy if you work for it. The RIAA is a bunch of middlemen that lets others work for their wealth, so they are decidedly greedy.
Bill Clinton: Pimp we can believe in. - The Shirt!!!
Nothing by George Harrison
See "Apple Records vs. Apple Computer".
I am sure this is a casual comment by Jobs, because he is in the catbird seat and has no reason to worry. He has the power here.
What are the labels going to do if they don't like the terms of iTunes music store? Go to another store? No.
1. No other store has near the volume or reach of Apple's. No one else has the brand recognition or ease of use.
2. By far the number one music player is the iPod, and only the Apple music store can sell protected music files that work on that player. The labels could try and sell unprotected MP3 files but this seems unlikely.
So going above 99 cents per track means either convinving Jobs (not likely) or moving music off the Apple music store -- which means lost sales and possibly more piracy. Not going to happen. Jobs is in a great position.
"I SHOULD BE ABLE TO FREELY DOWNLOAD THE NEW VERSIONS as they represent a more accurate representation of the recording I purchased the rights to hear."
Just like you should have the rights to download OS or applicaiton updates forever? If you weren't happy with your music choice at the time you should not have purchased it, simply because it's improved later does NOT give you the right to receive a free upgrade.
"How come no one has ever brought this up?"
Because it is a stupid idea.
Because iTunes isn't operating out of the ex-Soviet-Union.
Hey! None of that! Talk Like A Pirate Day was yesterday!
You are not alone. This is not normal. None of this is normal.
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
"I'm still waiting for the day that iTunes hosts *FREE* albums."
.99 each.
/ viewAlbum?playlistId=18294623
While not free, I've noticed several albums in iTunes that were around under a dollar...which is wierd when you realize that each song bought individually were
For instance:
http://phobos.apple.com/WebObjects/MZStore.woa/wa
This is $0.49 (I bought it a couple weeks ago thinking it was a mistake). Not a bad deal, considering someone has to pay for the bandwidth and storage fees.
I have a friend that sells exclusively through the iTMS these days (after getting dropped from his lable) and he mentioned that while you *HAVE* to charge $0.99 per song, you can charge what ever you want per the album (i.e., make the album $300 while the individual songs might only come to $9.99 if bought seperately).
Why not encourage people to use this loophole. Put up a lot of album only songs that are within the $1 range for the entire set. I'd be glad to drop that kind of money on unknowns...
First, iTunes exists purely at the discretion of the music industry. Without "hit" and popular songs from the RIAA dervived companies iTunes would essentially be worthless. The music industry could pull out anytime it wanted and could destroy iTunes.
Second, the music industry does NOT want iTunes to succeed. Let's assume that iTunes took 50% or greater of the total market of music sold. Why would an established artist re-sign to a label when he or she could simply hire a marketer and sell directly via iTunes and keep more of the money?! iTunes would BECOME the new music industry and the RIAA and its bosses would go the way of the buggy whip manufacturers.
Jobs and Apple is in a very lopsided relationship with the music industry, and I'm not sure whether either side knows it.
If someone says he and his monkey have nothing to hide, they almost certainly do.
The list goes on and on dude... all great musicians... all 100% American!
Well, it is - but not really. The issue is about control.
Right now, the RIAA can pretty much dictate terms to a new artist. You want to get into Wherehouse Music stores, Borders and the rest? Then you're going to have to sign a label with us. Sure, you won't get much money, but we're providing this big service for you, right? So you have to take the terms we give you!
Now along comes the music stores, and the RIAA is hoping for the same thing. Between Napster and WalMart Music and MSN Music (whenever that opens) and Rhapsody and iTunes, if you want your music on their, you're going to have to go through the RIAA who will do the cheerleading, spend the money on advertising, and make you a star!
Except there's a problem; only iTunes is being used. Oh, sure, there's *some* people using Napster like my Dad (until he got a free Shuffle at a CIO conference and switched to Apple, then all of his music to MP3 format from WMV by reripping the CDs and now he's just buying music from the iTunes store) - but far and away, iTunes is the #1 player, not with monopoly power, but certainly with a huge level of influence.
Which means that, as more people have portable MP3 players and less have CD players, the shift of power goes from "If you want your music in 5000 stores across the United States and worldwide markets, you have to talk to a big record label", to "Want your music on the iTunes store? Sure - it costs this much, and we get X amount of every CD sold". Apple, for example, could charge people $100 - $200 to get a new band onto the iTunes store (currently, I'm not sure how their deals with Indie bands are), and give them 50% of the profit per song sold after that point. A new band could pretty cheaply get their music distributed across the nation without having a single major publisher help them out - and if they get popular, they can, like the Lascivious Biddies, do their own thing and be profitable, and if they get famous, then even better.
Which scares the RIAA major publishers to death. As with any major shift in technology (sheet music to player pianos, player pianos to radio, radio to cassette, cassette to CD), sometimes the old winners vanish and are replaced with the new winners. In this case, the RIAA members are hoping to have the same situation as they have now in the future: several online stores that carry their music, with the RIAA as the gatekeepers for getting new artists in.
But if iTunes is practically the only game in town - a situation that Jobs is helping along with the DRM only working with iPods, and there's nothing on the horizon that's going to replace iPods for the next 2 - 4 years (barring some incredible technological advancement), that puts Apple in a huge position in power. RIAA members can huff and puff about taking their ball and going home and not being on the iTunes store anymore if Jobs doesn't do what they want.
Except they don't dare. Remember when the iTunes Music Store finally opened up in Japan just a few months ago? You had artists who's publishers weren't putting them onto the iTunes store doing an end-around and doing it themselves. Granted, most artists aren't technologically savvy, but how long would it take for Artist X to hear his label is pulling him off the iTunes store (and all of those iPod potential sales) before they get pissed and threaten to change labels or some such? Maybe one or two isn't a problem - but it could add up.
So the RIAA is hoping by jacking up the price they can make online music unpopular enough that CD's will be more popular for awhile, until a good iPod competitor can kick Jobs off the top of the heap and make the market more even and they can keep playing the game.
Granted, this is all my opinion, so I could be wrong. Either way, I'll probably work to listen to Podcasts (which is where I'm hearing new music from thanks to shows like "Coverville" (which got me turned onto a new Tori Amos CD I didn't know I wanted, a Will Shatner singing "Common People" that kicks ass, and a few other tracks), "Insomnia Radio", and a few others), or just support artists directly (like buying songs from thier website instead of a store).
John Hummel
52 Weeks, 52 Religions with John Hummel
He's charging you for the development and maintenance of the iTMS interface, as well as for the not insignificant cost of negotiating deals with the labels for distribution and sale. I'll gladly pay him--what is it, 5 cents a song?--to do all that dirty work for me.
I SHOULD BE ABLE TO FREELY DOWNLOAD THE NEW VERSIONS as they represent a more accurate representation of the recording I purchased the rights to hear.
yes because we all know bandwidth costs are free, and no one would try to download their same song every morning because they want to make sure they have the latest 'version'
As a rock-in-roll Physicist once said, No matter where you go, there you are.
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.
CDBaby
:D
These guys are exactly what you're talking about. They stock your CD, process transactions, and send the CDs out for a small fee per disc. They also sign you up for digital distribution. My band's only sold 20 CDs but we're on iTunes.
vk.
Check out our music store then. We are an independent music store, where the artist sets the price for their music. We have free downloads, as well as music for sale. We provide free software and codecs for your computer system.
Our files are in the Ogg Vorbis format as well. Check us out.
http://ind-music.com/
I have nothing clever to put here...
He wouldn't be able to buy an iTunes song on what he makes if the price goes up!
Uh huh. Stevie boy is a good old guy with no ego. Just a normal guy you can respect. And Bill Gates he's the devil incarnate. Well, the billionaire philanthropist devil incarnate, who's donated 7 billion dollars to various causes as diverse as AIDs research and the United Negro College Foundation.
Oh but that's just good press for Microsoft you say. So what? Running the largest charitable foundation in the world is an excellent way to get good press, and it benefits people all over the world.
So Jobs gets a $1 salary. Wheee. And a Lear jet, and hundreds of thousands of dollars in reimbursements from Apple.
I'm not trying to say Jobs is the evil one. Hell, both of them are business men, both have used nasty business tactics (if you think Jobs is a saint, read some of what Woz has said happened at Apple), both of them are rich and can afford a fancy house or personal jet plane. There is no reason to deify or demonize either of them. But buying into Apple's PR image of Jobs is just silly.
(Larry Ellison however, IS the devil incarnate)
Sometimes my arms bend back.
I don't believe parent is talking about the end-user machines the content is delivered to.
If you don't think there are real costs associated with distributing music, you are mistaken. The server space, the CPU, and the bandwidth needed to store, process, and deliver the ~5mb/each songs to the end user, are not free. Apple pays royalties on the songs and pays for the above, so their profit, while significant, is not 100% of the money they get.
I, for one, applaud Jobs - instead of succumbing to pressure and using the price increase to increase his profit margins, he's doing something decent by resisting the record companies' pressure. Granted, his motives may not be entirely altruistic, but nevertheless, Apple is setting a superb example that, no doubt, many companies will follow. If Jobs keeps prices at 99c a song, competing services will hardly be able to raise prices without losing customers to Apple - something they decidedly do not want to do. So in this case, Jobs is keeping the market stable in the face of significant pressure from the record companies.
The age of free legal (or even semi-legal) mainstream music has come and passed. You still have advertisement-supported radio, but to legally get ad-free, high-quality music, you can no longer go to a source like KaZaa and BitTorrent and expect the transaction to be risk-free (although I haven't heard of anyone being nabbed for getting MP3s from newsgroups, IRC, or various FTPs.) Not to say that there is significant risk - about 15 of the ~1200 tracks on my iPod were obtained through "good" sources, and I've yet to hear a word from anyone - but it is no longer as convenient or as safe to download them illegally as it is to buy them. This creates a balancing act between the difficulty of obtaining music freely/morality/risk factor and the price of legal music, and Jobs realizes that disrupting that balancing act by raising prices could create a trend of dissatisfied customers that decide to switch to illegal methods.
What puzzles me, though, is how blindly record companies are pressuring the distribution networks that are, in a way, their safety net for the tech-savvy majority of the highly appealing 18-25 demographic. While I've stopped expecting intelligent decisions from them long ago, the RIAA are now crossing the boundary between pure greed and pure stupidity. I believe that this will, eventually, kill them, and I, for one, have no objections to that.
Genius may have its limitations, but stupidity is not thus handicapped.
I don't think you got the point at all.
It's not about the cost of his house. Its respect for his taste.
I don't have a problem with Bill Gates having a mansion - its that I think his mansion is tacky.
I also respect Steve Jobs for being able to save Apple when everyone counted him and Apple as both being irrelevant to our industry. I respect him for the fact that he has great taste and an intolerance for poor quality.
I am not under any illusions that Steve Jobs is a "nice guy", or "morally better" than anyone else. I don't personally know him and I'm not entitled to an opinion about it.
And I'm not saying that I don't also respect Bill Gates for his philanthropy.
Avoid Missing Ball for High Score
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....