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The Real Reason Behind iTMS Tiered Pricing
Raindance writes "Joel on Software has an interesting piece on why Big Content is making loud noises about moving from 'flat fee' to 'tiered' pricing models on the iTMS. According to Joel, it's not about pricing songs commensurate with their economic value; rather, it's about allowing the labels to manipulate public perception of value through pricing." From the article: "And now when a musician gets uppity, all the recording industry has to do is threaten to release their next single straight into the $0.99 category, which will kill it dead no matter how good it is. And suddenly the music industry has a lot more leverage over their artists in negotiations: the kind of leverage they are used to having. Their favorite kind of leverage. The "we won't promote your music if you don't let us put rootkits on your CDs" kind of leverage."
I agree. How much "leverage" is this tiered pricing if the artist doesn't get a piece of it anyway? (unless they are.. I have no idea)
The whole argument here seems to be that major label singles are a Veblen good. Wikipedia has information on Veblen goods.
Lets set aside the "its so they can r00t j00" for one second.
Perhaps its due to the fact you can maximize profits by having your price vs demand combination maximized...
If 10 users will buy Achey Breaky Heart at 0.99, and 50 users will buy it at 0.50, it is much more profitable to sell it at 0.50.
So, this is an obvious reason behind flexible pricing.
[I can picture a world without war, without hate. I can picture us attacking that world, because they'd never expect it]
Music labels just need to go ahead and die, first they rip off the customers, now they are ripping off the musicians. I can understand greed but what they have been doing, are doing and are trying to do is way beyond greed.
The snakes have found a way to keep the rats in a coral, or so they think.
They still don't understand that the new age of music and songs and publishing is upon us. You don't need fancy million dollar studios to make music. You don't need radio airplay if you're good enough. You don't even need a marketing blitz if you're good enough.
This article is further proof that the music industry is at heart greedy and evil. They treat their artists like slaves and keep them bound to them with the "company store" tactics. Artists, break away. You don't need them.
What we need now is a MAJOR artist to break away and go it his or her or their own. Someone like Neil Young, or Dylan or the Stones or U2. A major musical act. They have the money to break away, and they can show that it CAN be done. Cut out the middle man, that's all these record companies are. They're unneeded in today's world.
"Leo Fender was in a 'state of grace' when he designed the Stratocaster." -- Paul Reed Smith
Oh stop it already. We're used to Economics-101 ignorant, occasionally semi-tongue-in-cheek-I-hope paranoioa from slashdot, but this is really too much.
Economics 101:
Any time you as a seller of a good price an item at other than a profit-maximizing value, your profit decreases. This is true regardless of whether the item is a luxury good or a commodity. Or, in other words: while the labels might be able to use the mechanism as the headline naively suggests they might, this would be generally just as against the label's own interest as taking the latest blockbuster movie and shoving it straight into the 99c VHS bin would be.
The real fact of the matter, from anybody who has taken economics, is to recognize that truly fluid, market-driven pricing is a great thing for buyers (taken as a whole) as well as sellers. I applaud any news of this being the case as should any and all readers here.
By the way, I likewise finally doing away with the idiotic ways agencies sell tickets to sporting events. The prices of those too, or at least sure-to-be-sold-out-at-current-prices events, should be sold in some kind of auction system to ensure a) maximal profits for the sellers and b) fair availability for those willing to pay. In other words, in market terms, a win-win.
Anybody who thinks of replying to my post and ranting about how tickets are a finite resource whieras digital music is not is ignorant and should save their breath. This is irrelevant to the basic economic argument I am making here.
...they just might eventually.
At this point they are not allowed to become a record label themselves because of the deal that they had to cut with "Apple" records (aka the publishing company front of that wildly popular band from to UK)...at some point I see Apple Computer cutting some reasonable deal with "Apple" records...apple going to the artist directly to get the music out there.
Power Corrupts,Absolute Power Corrupts Absolutely, leaving one person(group)in charge is absolutely corrupt.
The point is you're less likely to hear it if it's in a lower price bracket. Lower price brackets won't get the same amount of exposure as higher priced songs get. That means you will probably not hear it on the radio, MTV, whatever.
Is it conspiracy theory? Yeah, probably. But most definitely believable.
Yeah, that's what I gathered too. Their point of view doesn't make any sense to me, though. If I hear music I like, i get more excited and more likely to buy it if it's cheaper. like a $8.99 CD is way more appealing to me than a $13 CD for instance.
With services like Pandora becoming available, it becomes way easier to be inroduced to acts and artists you don't know, but still really would like. The control of delivery and marketing is slowly eroding, and this should bring the peaks and valleys closer together. i.e. acts considered "less" popular will get more exposure, and acts considered "more" popular will get less, if only because people learn about music different now that radio is being eroded.
atleast, that is the future i would like to see. who knows what's going to happen. Pandora is a great start. I hope it does not lose momentum or run into RIAA roadblocks.
All that theory seems to be based on buying things solely because they're expensive. I mean, he would have us believe that the cool kids would immediately go down the 2.50 new releases, buying each one and scorning the cheap songs. I don't see it working like that.
If I like a song and I see the album, and the album is cheap, I'll take a chance on buying it because I may like more stuff on the album. But if I like a song, and the album costs a fortune, no way will I buy it for just the one song.
And online, I never buy songs that I haven't heard before. Why would anyone do that? It's the proverbial pig in a poke...Don't buy something when you're ignorant of what you're buying, for the proverb impared. So if you already know, then the only reason they can be pushing the higher price is because they think they'll be able to sell enough units to make more profit than they would have made at a lower price.
That's just common sense.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
It's interesting that you bring up the christian rock bands. I've been in several bands and filled in on bass or guitar quite a few times in various bands. I've done about 30 christian gigs and I can tell you that almost every band I was with were not Christians...some were downright atheists. A couple were even devout Jews.
The thing is, there's good cash to be made from the christian circuit, but that's what they're out there for, for the cash and the experience...certainly not for "our lord".
Think about that next time at your church when a new band comes rolling through spouting christian ideals. lol
It's just the concept that higher priced 'stuff' tends to get more press and/or public envy. A song that is generating ALOT of money (higher pricepoint) will be promoted more (on the likes of MTV) than a .99 song that isn't bringing in as much. Simple economics.
A while back a friend of mine was telling me about a particular purse that she was trying to sell in her store... $10.00 for a rather plain purse... they stayed on the shelves for months. Finally she instructed one of her employees to mark them down to $7.00. Apparently there was a misscommunication and the purses were marked UP to $70.00. They flew off the shelves. She sold em all within 2 weeks. Price playes a HUGE part in public perception of value.
urgh. RTFA. No one is saying you are not going to buy music you already like because its cheap. Its about unknown music. Its the CD's/DVDs in the "Sale" box. Sure, we look in there sometimes and will grab a movie we have seen before cuase its cheap. But how often do you buy a movie you have never heard of out of the sale box? Never. Because the assumption is that if it is in the sale rack, it must be crap.
Whatever happened to artists of integrity, artists like Tom Petty who want their record prices kept low so their fans can afford them?
The "we won't promote your music if you don't let us put rootkits on your CDs" kind of leverage.
What does that have to do with this story? What does that have to do with tiered pricing? How is that an example of leverage over artists, when artists aren't the ones most likely to take issue with such measures?
---GEC
I'm but the humble pupil, seeking to snatch the scratchbuilt pebble from the master's fully articulated hand
I can't see how Apple can get away for long with charging $1 for muddy sounding 128Kbits lossy when something like MusicGiants is charging only $1.29 for full quality, major label, lossless downloads. If the "premium" between the iTMS low quality and the "full" quality tracks is only 30 cents, then I am missing something. Either MusicGiants will be raising its prices soon, or Apple will be lowering its prices for 128Kbps or upping the quality.
My thinking on this is that if successful, it should prompt Apple to offer lossless downloads from the iTMS Service, if only because Apple likes to present a "high end" image, and having a competitor actively dissing iTMS by lumping it in, quality-wise, with "pirated music from p2p networks" has got to hurt.
Da Blog
The RIAA is equal parts accountant and advertiser. This gives them an enormous grasp of the practice of distorting reality to serve their needs. They don't need to lie when they can pick and choose which figures suit their goals best.
I used up all my sick days, so I'm calling in dead.
What will happen if a supposed 1.50 song is released at .99? More of it will sell and it will be considered a bargain.
The "percieved value" argument only works at the post-$1000 pricepoint. A Carl's burger isn't better than a McDonalds burger because it costs more (though it does cost more). It's better because there's more meat and it tastes good.
That's right. To protect the rights of copyright owners and the general public, there should be different classes of copyrights, each with limits on their transferability.
The copyrighted work of a human should be protected from big buisness interests. It is totally unreasonable to transfer the copyrighted work to a buisness entity. The use of this copyrighted work should not exceed a reasonable contractual agreement. If this contract defines exclusive use of the copyrighted material, then this contract should define how the buisness entity is allowed to use the work, how it is expected to promote the work, and how it is expected to compensate the copyright owner for this exclusive use.
Actually, the current generation tend to watch damatically less tv then previously. Video games and just simple blog surfing have definately found their niche. And in marketing to teens, use of internet buzz, happenings and other tactics is gaining more and more steam. I think many truely undersestimate how savy our current generation could be. What are the effects of an entire generation of people that are growing up in a society where everyone can talk to everyone everywhere at any time. I think it is nothing less then evolotion of the mind.
There's a Joni Mitchel quote that I'll have to paraphrase. "Back in the sixties, record execs were just as conniving and greedy as they are today. The difference is that they actually liked music back then."
It's not offtopic, dumbass. It's orthogonal.