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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/
... I go back to snail mailing money to the artists and downloading the mp3. Shrug.
Shadus
Only way more expensive...
And encumbered with DRM...
No thanks!
Curb CO2 emissions: Kill yourself today!
Why complain ? It is their stuff, and they can price it at any level they want. You can always buy from somewhere else or refuse to buy it altogether if YOU think it is too expensive, but I'll bet you that lots of people will keep buying at the new, higher prices. Why leave money in their pockets if they are willing to give them to the record companies ?
Happy Posting.
According to Slashdot, popular music sucks. As a result, non-sucky music will cost less than it does today. This is good.
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I wonder if 'flexible pricing' will allow them to adjust prices 'on the fly' - let's say 10,000 users download Song A priced 99c and software automatically then adjusts the price to say 1$ 29c or similar price.
Then again, there is no end to corporate greed so I'm expecting to see this in action.
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.
"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
Yeah, and I'm sure their opinion is 100% pure and unbisased. This could very well be a ploy to pressure Apple into complying. Also, even if it is true, Steve Jobs will send them packing for pre-announcing it.
Help save the critically endangered Blue Iguana
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.
As part of the deal, Sony has agreed to include malicious code that will open gaping security holes on your devices with the higher-priced downloads.
i got ball this is my adress 108 20 37 av corona come n do it iam give u the sidekick so I can hit you wit it
The reason people complained before is that the record company exec was insisting that Apple raise prices but not lower any prices, which is just foolish. You can let the market help you set pricing to maximize profit, but you can't have it both ways. If you just raise prices that's not letting the market decide, and you'll lose money from people who would pay $.49 for a less popular song but not $.99.
It makes sense to me that the one good song on an album would go for more than the rest. The record companies are ticked that they're losing revenue that they used to get; it used to be you had to buy an entire $12-$16 album to get the one non-sucky song. Perhaps $.99 is too low for that song, if people are willing to pay more, as evidenced by the fact that they used to spend MUCH more.
There will be the inevitable replies to this about how you can get it all for free on P2P, but Apple has demonstrated that people will pay for music if it's convenient. Now they get to fine-tune the pricing model.
Personally, I look forward to it. If the latest top 40 goes up, and the older and obscure stuff that I want goes down, I win, at the expense of the rubes paying $2.49 for whatever is hot today.
If they are going to use demand for a product to determine pricing, they should also be required to factor in supply. The supply is infinite, so then the price should be practically nothing!
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.
From the article:
/. seems to be slipping...
"Today EMI Group boss Alain Levy said at press conference today that he believed Jobs would introduce multiple price points for iTunes music within the next year."
This does not say that "...EMI has an understanding with Apple that flat fee pricing will end within the next 12 months..." as the story claims.
Why was this story allowed to be posted this way?
The actual Forbes story is talking about how the labels want to take advantage of the consumers while Steve Jobs does not want to change the pricing structure. He's fought against it from the beginning and there has been nothing reported to support that the labels have won the fight yet.
I like ITMS - a lot. But if songs start rising in price I will simply use AllOfMP3.com any time I consider a price to be unreasonable, possibly dropping ITMS altogether if variable pricing gets too crazy.
What I see happening is the EMI song sales on ITMS start dropping substantially.
What I would do if I were Apple is tell EMI they would be happy to drop thier music altogether. Apple can only do that to a certain extent of course as ITMS wouldn't hold up well with no major label support (or, perhaps it will would with indie stuff? Hard to say) but record companies are getting a fair amount of money out of ITMS and I think being cut out cold might have a few exec heads rolling at the loss of many milllions in recurring revenue, and probably some arsists chafing to drop the label. Record labels can only afford so much heat and if new acts wont sign with you because you're not on ITMS then it could affect the bottom line substantially.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
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.
Greed is eternal
The funny thing is that the usual arguers on both sides of this issue will think you're talking about the other side. People who produce and distribute the product are eternally interested in remaining profitable as the do so, and the people who want popular music seem to eternally want their entertainment for free. At the intersection is (supposed to be) a market economy. But a lot of people on the consuming end seem to have lost touch with the general notion of "the person selling it is asking more than I want to pay, so I'll buy something cheaper, instead" and have shifted to "so I'll rip it off, instead" without any sense whatsover of causality (when it comes to the consequences).
Don't disappoint your bird dog. Go to the range.
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."
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." Who decides the price points, however? Who decides which albums/songs are popular vs. less popular? Would Apple decide, or the music companies? Is it "according to traffic on iTunes" -- e.g. when more people buy it, the price goes up, like a stock -- or "measured by radio play or CD sales or Billboard ranking", or "what the record companies are declaring as popular"? What's the reference???
$nice = $webHosting + $domainNames + $sslCerts
1) Start signing bands on a 50/49 cent split. (OMG...can you imagine it, artists getting more money than the label for a change)
2) File a lawsuit on behalf of the artists...that said artists only negotiated "analog" recording distribution rights. That none of the old contracts covered digital distribution. And that all of the artists retain the rights to their digital distribution, including the right to negotiate a digital distribution contract.
(Think about it, a) the common people would support it as I would buy a lot more music at $0.99/song if I knew the artists actually benefited. b) think of how many artists would support such a move? big names too like "Paul McCartney"... As many artists were screwed over big time. Even big name artists saw very small percentages of their songs. This would allow Paul McCartney to regain ownership of his music (for digital distribution only). RIAA would still retain the analog rights (but we all know that's a dying medium). And with RIAA pushing so much legislation distinguishing the difference between Analog and Digital (DMCA) there may in deed be enough cause for a court to decide in Apple's favor especially if 90% of the artists and consumers are in favor of it as well.
RIAA would find themselves the owner of an extinct business model. Left with a rotting carcass...
- The Saj
And do I make that check out to "50 Cent" or "Fiddy Cent"?
The law of supply and demand in action, I guess... It would be a shame for them to run out of the more popular songs, so they price them higher to keep the demand lower, right?
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.
It's a non-story anyway. From TFA:
"Today EMI Group boss Alain Levy said at press conference today that he believed Jobs would introduce multiple price points for iTunes music within the next year."
So one guy says with no control over the situation tells Forbes magazine that he thinks Jobs will make this happen, and it gets reported on Slashdot as fact.
For fuck's sake, not even the various Mac rumor sites have run with this one yet. When did MacSlash become MacWildGossip?
Information wants to be anthropomorphized.
I was talking with a guy that works at the iTMS today and he said that there are no plans for that, and Steve's still strongly opposed.
Of course, the real issue isn't really legality-- it's whether the record company will sue. If it's illegal and they sue, you're screwed, and if it's legal and they don't sue, you're fine. However, if it's legal and they sue, you're still screwed, and if it's illegal and they don't sue, you're still fine.
To date, I have no knowledge of anyone being sued for copyright infringement for simply having mp3s on their computers. It's always the sharing that gets you, partially because it's easier to find you if you're sharing, but also because it's easier to demonstrate you did something illegal-- copyrights were intended to deal with unauthorized distribution, not unauthorized viewing/reading/listening.
Ok, all that to say, it's not that clear. You pay your money, you take your chances.
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.
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.