Slashdot Mirror
Apple iTunes to End Flat Fee Pricing?
MdntToker writes "According the Forbes, EMI has an understanding with Apple that flat fee pricing will end within the next 12 months, and more popular songs will be priced higher than 99c, while lesser known acts will be priced lower than 99c." From the article: "Label executives have made multiple arguments for flexible pricing. They argue, for instance, that almost all retail businesses have different price points for different products. But they are particularly interested in boosting their revenue from digital music sales, which aided by the sale of mobile phone ringtones, are increasing but not quickly enough to replace the continuing drops in compact disc sales. EMI said today that digital sales, made up 4.9% of the company's sales in the last six months, up from 2.1% a year ago." We've previously reported on this story.
I take it that this will translate into the vast majority of what is downloaded being above ninety-nine cents; otherwise, I don't see why they would bother with "flexible pricing." I know this is cynical - but I suspect that this is intended to be flexible mostly in an upward direction . . .
http://www.busyweather.com/
Greed is eternal
Only way more expensive...
And encumbered with DRM...
No thanks!
Curb CO2 emissions: Kill yourself today!
"Believes"?
It's a story if you have someone say that he "knows" Mr Jobs will do something, or - better yet - if Mr Jobs actually says he's doing something.
But if a record company executive says it, and he has a vested interest in having it happen, and perhaps almost a desperate need for it to happen, well, I don't think his word or judgement is necessarily good.
Record company executives have, from what I've noticed, little reputation for integrity. Until I hear this from Mr Jobs' mouth, or a slick press release and video from Apple about its inevitability, I'm not going to believe it.
D
What a label boss "believes" doesn't translate to "Jobs will do it" for me. I'll wait for word from Apple before calling Jobs out on his previous spine.
...So the most easily pirated material (the popular stuff) is going to be more expensive, while the harder to find stuff (the less popular songs) will be cheaper? Either they're changing their business model more drastically than ever before in their history to expand the appeal of smaller artists...or they're just in it for the short run to prove that digital downloads don't work...
Let the prices change. If someone wants to price their music competitively, let them price their music cheaper. If someone thinks that the latest Britney Spears/Eminem/Metallica album is worth more for a digital file than a CD, then let them get ripped off to their heart's content.
Apple often seems to be on the side of the RIAA over our side, but that's because our side is OUR side and that makes any compromise be less than what we want. I really would welcome price changes in both directions; independant artists being more competitive, and big fat companies ripping off diehard fans more than usual. Go Apple.
Buying music online should be less expensive than buying the equivelant CD, since you're not getting as much value when you buy online (see: DRM), and the manufacturers aren't paying for packaging and shipping. If they push the prices up to where all the tracks on a given CD cost more than just buying the CD, you'd have to be an idiot to download from an online store.
Within that framework though, I don't see any reason not to have flexible pricing. Most of the music I listen to is older, less popular stuff anyway, so I'd probably benefit (if I actually used iTunes in the first place). I hope Krokus, Vixen, White Sister, Rough Cutt, Faster Pussycat, etc. songs go down to about a quarter each... I might actually start buying online then.
// TODO: Insert Cool Sig
It's important to complain, as that provides them with feedback on their decision. Everyone is better off if there is dialogue between the two parties.
If enough people voice their opposition, then perhaps Apple will realize that it is not in their best interests to switch to such a scheme. Thus everyone is potentially better off if Apple listens and responds accordingly. Customers can then continue to purchase the songs they want, rather than to boycott. Apple can continue to receive revenue from such customers, rather than having the customers go elsewhere.
Notice that the same thing happened recently with regards to Novell/SuSE and their switch from KDE to GNOME. They announced the switch, and many customers complained. The customers let them know that KDE was still wanted. And what did Novell do? They agreed to keep offering KDE.
It's better to work out such problems before involving money.
Cyric Zndovzny at your service.
Shouldn't B-sides actually be cheaper than the hits? New material more expensive than oldies? People have been justifiably complaining for years of having to buy whole albums just to get one or two songs they want, and now they don't have to.
Yeah, and now the B-sides will be $0.99 and the hits will be $1.29. What will be cheaper (if anything) is the stuff you find in gas stations.
If you think imaginary property and real property are the same, when does your house become public domain?
The world's 14 year olds can pay $2 for the latest 50 Cent "song", and I'll pay 50 cents for real music.
Yeah, but is anything really going to happen?
From what TFA says, this is based on what one music industry exec thinks Steve Jobs might do. Now, if it was something the exec had heard that Jobs was going to do, that might be something.
This looks to me like nothing more than wishful thinking. And Slashdot jumps in with a sensationalist headline proclaiming certitude, never one to let a little thing like reality (or sanity) get in the way of a nice flamewar...
Dan Aris
Fun. Free. Online. RPG. BattleMaster.
I'm guessing that with the increase in "popular" music people will say f'it and just download the cheaper, still .99 cents music, and the popular artists will cry foul since they won't be popular for much longer ;)
Come on, record labels get your heads out of your butts and think of a new business model! There is no frick'n reason to raise prices on a product you don't host, sell multiple times and only out of pocket expenses are to support the artist on tour. How about that you don't sign those artists for mil $ contracts have people pay $150 for tickets and $75 for t-shirts.
To be frank, music artists, sports stars and movie celebs should be making the same wage as the rest of us working stiffs for the area they live in, that way the price to make, produce, and distribute entertainment costs could be reduced instead of paying these outrageous sums of cash for each picture, effects, arena's etc.......... Same goes for the ceo of the companies and their companies they should be making "reasonable profits" not oodles and oodles of cash just because they inflate the "worth" of their product.
sheesh.
Users will be more willing to use digital downloads now, since the whole debacle over "malicious code" infected CDs from Sony. So, the industry might have to come to terms with their pricing just to keep consumers.
It just means people wont use the iTunes music store anymore, IF at all that, since Jobs has been on record saying this is NOT going to happen and this is one of the assholes trying to get it to happen who is saying it will now and not Apple.
Who cares if iTunes is too expensive now, all I will endup doing now is finding the obscure tracks (which is all I ever downloaded anyway and not the rubbish they play on the radio) and rip CDs again which i can probbably buy cheaper now. All it does in the end is make the RIAA look even MORE foolish.
"Slashdot, where telling the truth is overrated but lying is insightful."
It is their stuff, and they can price it at any level they want.
Of course it's their prerogative to set their prices as they like, but their liberty to do so doesn't include an immunity from criticism.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Steve Jobs is quoted as saying the opposite and further than music companies are "greedy" for wanting this price flexibility.
I for one welcome flexible pricing because I think there is some music I would buy for less than $0.99 that I have not bought because of its current price. Pay more an a dollar for a single? That would have to be some great music, I doubt I would do it. Everyone has their price. mine feels like a dollar.
I only came here to do two things; kick some ass, and drink some beer...looks like we're almost out of beer.
...that lays the golden eggs? What a bunch of morons!
The iTMS achieved its status as the most popular online music store by being easy to understand: You get the same rights for every song, and every song is the same price. That's called being customer-friendly. Contrast that with the stores where songs are all different prices, and some can't be burned to CD, etc.-- they're all also-rans, killing each other for the small sliver of the market not controlled by the iTMS.
When the prices go up from 0.99 and that psychological barrier is broken by a nonzero digit left of the decimal point, sales will go down as people balk at song prices and go back to p2p for their music. And does anyone think the record companies will really lower the prices on anything people would actually buy? Haven't they demonstrated that they have no stomach for charging x when they could be charging x+1?
When will these jackals learn? <shaking head in disgust>
~Philly
Much cheaper. Also I have to agree I won't beleive it till I hear it from Jobs.
Kosh: "Understanding is a 3 edged sword, your side, their side, the Truth."
Why does anyone complain about anything? Why are you complaining about other people complaining?
You have supply and demand working in reverse to the real world. So does the music industry.
Just imagine if all retail worked like this (your suggestion). You'd go to a clothing store, and instead of last year's stuff being marked down, it would actually increase in price.
Note that this is pretty much how DVD sales go. Seems to work for them. Video games too. New, popular stuff expensive, older items that don't sell well become cheaper. Eventually it's pennies on the dollar. Why does this work? Because by that time, the manufacturer/retailer has ALREADY MADE THEIR PROFIT. The rest is gravy.
Music is one of the only things that starts cheap, and gets more expensive as time goes on. It's weird, really. They can get away with it because of two factors:
1. Music is one of the only products that people will continue to buy decades after release.
2. Perpetual copyright.
Endless arguments over trivial contradictions in books written by ignorant savages to explain thunder in the dark.
I am sure the conversations between Apple and Music EXECs where something along these lines:
.99 is working just fine, its an excellent price point sure the less popular stuff we are probably way over charging for, but its made up for by the fact we undercharge for the more popular stuff so money gets made on volume...you can look at it the other way too and the model looks just as good.
.99 its an effective sweet spot price point, we will stick with that, besides we control 85% of the online distorbution model we must be doing something right.
.99 is what the consumer will pay, they are tired of $18 for a CD with two good songs on it, they would rather pay $1.98 to get those two good songs, or $18 to get 18 good songs. Your trying to achive price parity we see it you want the same cash for that CD without selling the end user the physical media. Nice cost savings for you, no raw materials cost, no shipping, no brick and mortar, You must really think those users are idiots.
.99
.79 on that Metallica song from 1990, that .20 is coming out of your share not ours.
Execs: You need to allow a flexible pricing model where more popular stuff costs more so we can all make more money
Apple: No we don't
Execs: We don't care about the less popular stuff from the bands with actual talent, never did, those acts could drop off the face of the earth for all we care, charge whatever you want for that stuff, here is a list of the artists we care about and have the payola going to promote them even though we all know they suck, oh wait crap *sleep* When I snap my fingers you will akwake and not remember I ever mentioned anything about payola *snap*
Apple: huh, wa...oh yeah, no we are sticking with
Execs: We'll stop selling our stuff through iTunes, then where will you be?
Apple: Eh, whatever you'll be back...we control 85% of the market and sell the most popular player.
Execs: Oh yeah we wanted to talk to you about that we want a cut of the iPod hardware sales too, its only fair.
Apple: Na, You don't seem to understand you need us as I've pointed out we basically own this market yes you make the widget we are the only effective way of getting the widget to the customer
Execs: We'll take our toys and go home, without the music you have no store....
Apple: Without our STORE you have NO STORE
Execs: so there see we need each other so lets talk about that pricing
Apple: no really you don't seem to understand
Execs: (TO self) Oh shit they are on to us.
Apple: No really I think we are going to stick with
Execs: I think you don't understand, we really are going to take our ball and go home, ALL of us where will your store be if none of us provide the music to sell in it. NONE. Other stores will work with us on it, sure the players they support are not as good, the store isn't the best model, but hell they will charge whatever we tell them to charge just to get their hands on the product...
Apple: Well you don't have to go that far, maybe we can work "something" out.
Execs: Well thats more reasonable, perhaps we can work "Something" out.
Apple: (TO Self) umm humm you just keep thinking that, sure we'll agree to your "Flexible" pricing...BUT just wait until you see the terms, and when the sales slump on the first couple of releases under this plan, because TRUST me they will, we will make sure of it...
Execs: So we have a deal
Apple: Sure Sure we'll phase it in like the next year
Execs: Excellent!
Apple: (To Self) Umm humm more like 2-3, never, perhaps a token release here or there for a higher price, actually you have played right into our hands, yeah we'll rasie the prices on a few things, but wait until you see the price drops on the back catalog...Volume, its all about Volume, and didn't you notice that clause in the agreement that says we always get the same wholesale cost and keep the same amount of the profits per purchase no matter what, when the price goes down to
Power Corrupts,Absolute Power Corrupts Absolutely, leaving one person(group)in charge is absolutely corrupt.
Too bad it's not legal (in the United States). If I'm going to commit copyright infringement, I'm not going to pay for that privilege.
You may be in the middle of a curve where decreasing prices will increase volume, but due to the finite nature of N, there may not be sufficient demand to recoup the difference.
In other words, you gave money away.
Any sect, cult, or religion will legislate its creed into law if it acquires the political power to do so.
First of all, I don't think wholesale prices have anything to do with it here, because IIRC Apple has a contract with the music companies (which no doubt offers guarantees against price changes). Apple can say no to the new prices, and if they do, the record companies will counter, and so on until an agreement is negotiated.
Also, while it's true that the online market is small, it is, unlike CD sales, a growing market rather than a shrinking one, and it's growing much faster than I think anyone anticipated. The music companies have done this dance before, and know the writing is on the wall; that online sales will grow and CD sales will fall just as cassettes sales fell as CD sales grew. The record companies are thus under serious pressure to sign a new deal with Apple, and that does give Apple some significant leverage to keep terms favorable for them. I think neither side wants to walk here, so I wouldn't come to foregone conclusions about what will happen (like, say, /. does).
That only helps prove his point. The smaller the cost of goods is, the smaller the reduction is net profit per unit with a price reduction.
But what's most important to notice is this: a variable pricing scheme as described in TFA could seriously hurt Apple's sales. While I have no data to support this claim, I'm sure that Apple makes most of its money from popular songs. However, remember that when an album is new and popular, the retail price is usually lower to boost first-week sales. I doubt that this same policy would apply to the iTunes Music Store. Thus, if the price is higher at the iTunes Music Store, a full album could very well end up being more expensive than the retail CD.
We live in an impatient world, and this has at least two implications: people won't wait for the price to come down and will buy the CD at retail, or people will pay more for the instant gratification of the iTunes Music Store. I think the former is more likely, because in reality you would be getting more (a real CD) for less. People love a bargain.
So if you're the kind of person who buys popular music when it first comes out, which many if not most of the iTunes Music Store's customers are, chances are good that you will never have cause to buy an album from the iTunes Music Store again. Plus, suppose that when an album is no longer "new and hot" that Apple is permitted to lower the price. By that time, people have lost interest that Apple could lower the price substantially and they still wouldn't sell many copies -- everyone who wants it already has it.
There's also a psychology at work here. $.99 seems a lot smaller than $1.00, even though for all intents and purposes there's no real difference. That's why you rarely buy anything in a store that is an even dollar amount because $39.99 looks a lot smaller than $40.00. Suppose Apple starts selling at $1.19 for a popular track. That's only $.20 more and 20% higher than $.99, but gosh, $1.19 looks huge compared to $.99. That $1 mark makes a big difference in terms of the perceived cost of a song.
In the long run, I don't see how this can be anything but bad for Apple. And, the more the record labels try to screw people over with high prices, the more people are perfectly content to screw over the record label by downloading illegally. So it may even end up being worse for them. What it boils down to is this: one way or another, people will download music. Whether it happens legally or not is entirely in the hands of the record companies.
If it's not one thing it's your mother.
You have good points but, in a sense, I think this isn't a non-story. It is just that the wrong story got reported. The story is that, after Jobs' earlier refusal, an EMI exec is attempting to strong-arm Jobs into doing what the RIAA wants by presenting their desire as a "done-deal" publicly. They can then claim outrage when Apple "backs out" of the agreement.
The problem with this argument is that it equates different artists' music with quality. If you have three electronic radios, they will be more expensive depending on quality and features. Music, however, is perceived differently by everyone. I might enjoy a song priced at 50c a lot more than you enjoy a song you download for $1.50. To set the pricing this way attempts to enforce the idea that the music of one artist is "better" than the music of another artist.
On the bright side, this could encourage more downloads of songs that less people would have listened to previously and boost listeners for that artist. More likely though, it will simply chip into the profits of those still trying to make a name for themselves, and have no effect on the success of those artists more people are already listening to.
Read My Blog - Building Online Businesses
I know how many drives, floor space, power, and maintenance you need to run a datacenter with 30 TB of data (required to run a site with 1 million + songs). I know how much bandwidth and servers you need to deliver these songs to the desktop. This is not cheap.
Gahahahaha haHAahahHA Hhahaha!!!! *snort*.. HAHahahaha!!!!!
Sorry, that's funny. I run a 400TB high performance data archive, all on disk. 30TB is nothing. It's piddly crap. A tiny investment even a small company could swing. This is nothing to Apple. It's not even a drop in their collective bucket of money.
Drives, floor space, power and maintenance? For 30TB? LOL! My 400TB fits into 5 racks. I could run it out of a spare bedroom in my house, performing maintenance with my free time. 30TB would fit under my desk and require a couple hours a week worth of tinkering to keep online.
The web interface - the "human" part of the equation - and the bandwidth is where their costs really lie, not in the disk archive. That part barely counts at all.
OK, so assume that RIAA member company Three Initial Recording (TIR) have a lock-in recording contract with the hottest band around, the Hong Kong Cavaliers. TIR makes a fistful of buckaroos from every one of HKC CDs they sell. But music from iTunes is a really close substitute, if not a superior replacement; changes in prices of one will affect the sales of the other pretty easily. Raising prices so as not to undercut sales makes sense to TIR.
The problem is, there are other substitutable choices besides CD and iTunes. TIR considers DRM-Rootkitted music disks: consumers don't like those much, but most are easily confused sheep, so the substitutibility is fairly good until ingenious folk at Sysinternals notice. Maybe they try it, maybe not.
There's live concert performances... but that's not a good substitute for most working stiffs who want to listen to the band at any given time of day, and the HKC can only do so many concerts; TIR can live with that.
There's music from other bands; although some folk feel there is no alternative to the HKC's unique sound, others are just as happy listening to Electric Mayhem, who are signed with another RIAA member. Well, it's within the cartel. But the band Disaster Area tends to have a wide overlap in the fan base, and they've not only working with an independent studio, they took pot shots with a sniper rifle at the last TIR contract rep who tried to persuade them to join up. Hmm...
And really, any form of entertainment might be a substitute; cheap, safe, designer hallucinogens might leave everyone just sitting around giggling at their fingers, but the War on Drugs makes most people stay away. Movies are another alternative, but the MPAA has enough overlap and common interest that they're not likely to be a deliberate threat. Books... well, nobody reads those any more. Video games are a growing problem, but they look to be gelling into a cartel pretty soon.
But that leaves the big one: there's pirate copies of the music, in all of their many forms. Recorded live in concert while in the audience. Sketchy dealers on NY sidewalks selling counterfeit CDs. Music ripped to MP3/Ogg/FOO format and traveling over the internet by FTP, HTTP, NNTP, KaZaa, BitTorrent, and the six surviving Gopher sites. Yes, it's illegal... but cheaper, all the way down to free. The extra costs are only to the pirate's self respect (which there's less to lose of each time they give in) and if they get caught. And almost EVERYBODY is doing it.
Some flexibility in pricing might help both Apple and the RIAA, especially if they put more of the long tail up on iTunes (which would probably be the best way to grow revenue), with opportunities for having sales, and making a litte more on the megahits. (Yeah, bands with gold albums probably ought to be going for $1.25 IMHO). But my back-of-the-hand guess is that if the average price (weighted by number of sales) of iTunes song starts rising, there will be more "sales" really lost to piracy, as opposed to the RIAA claimed losses. And with those short-term real losses come longer term erosion to the foundation social mores (EG: piracy=theft=bad) that the music industry is reliant on. And that is something TIR and the other RIAA members aren't factoring in on their economics.
//Information does not want to be free; it wants to breed.