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U.S. Investigating Online Music Pricing
An anonymous reader writes "Times Online has a story about the U.S. Federal Government investigating whether the music labels are fixing prices for online music sales. 'The antitrust division is looking at the possibility of anti-competitive practices in the music download industry ... Mr Jobs suggested such a move would drive owners of Apple's iPod, the hugely popular digital music player, to piracy, a problem that has cost the music industry billions in revenues in recent years.'"
From the fine article:
I wonder, does Mr. Jobs actually believe this, or is this casual conjecture/repetition by the author?
Regardless, I'm still curious about and waiting for the definitve and objective study that shows real correlation, because I still don't believe it.
The biggest "cost" to the music industry over the last five years has been and continues to be their disdain for the consumer (e.g., the SONY debacle, protected "CDs") and their insistance on charging similar fees for songs even while the business model dramatically evolves (e.g., hugely cheaper distrubution channels).
Heck, if the music companies were found to be colluding by charging $15+ per CD years back (they were), what are the chances they are doing the same now when the per-tune cost remains the same as distribution costs drop?
My biggest fear though is the music industry gets "caught" and settles in similar fashion to their previous settlement, à la "giving away" free downloads (by the truckload) to local libraries, but restricting the downloads to non-selling tracks. Sigh.
I don't even have to RTFA to see that one.
At what point does what the RIAA is doing constitute breaking some kind of law? Anti-trust maybe? Anyone have some insight into this?
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
I think the reality is that anti-trust problems and pricefixing problems are pretty much pre-destined anytime you have a monopoly, and when you have a government granted monopoly on copying and distribution (copyrights) it is a money back guarantee.
It always amazes me to see all these people who are in-dignified about this when it's their own belief system in copyrights that pre-destined this to begin with.
Obviously, all of you just DON'T understand. In order to properly make a recording, not only to you need musicians and a producer; you need lawyers, agents, marketing reps, and dozens of other various hangers on. Without this huge support staff, then how else could you justify charging so much for a recording?
In fact Jobs is complaining about the behavior being investigated, I.E., Jobs is objecting to price fixing.
Jobs has been vocal for a long time against attempts by the labels to try to forcibly raise online music sales.
Irritable, left-wing and possibly humorous bumper stickers and t-shirts
Indeed. The message seems clear enough to me: "Don't f**k with Steve Jobs."
The music industry tried to get greedy by forcing Jobs' to raise prices on music. He pushed back and told them it would kill iTunes. The music companies banded together and tried to force his hand. Now, suddenly, the justice department is interested in allegations of price fixing. Coincidence? I think not.
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So for what your government is spending your money on in running this inquiry, customers could sure have alot of free downloads. How much will this investigation cost? $10mil, $20mil? At the end of the day, you're getting screwed both ways -- paying for your music, and paying a government that keeps changing the copyright policies in the US to favor large corporations.
If you want to stop anti-competitive practices, digital distribution needs to adopt the rules of radio:
Download services should have the right to sell any digital recording now, and compensate artists afterwards. There should be nothing "exlusively on iTunes" (or eMusic for that matter).
Opening competition prevents unfair business practices (to some extent, anyway, worth a shot!).
This administration has already proven it's unwilling to pursue anti-trust litigation. They managed to bury the single most important anti-trust suit of our time to date, and microsoft is still doing what they do in the US, while the rest of the world cracks down on them.
Personally I think this is just that, an investigation, with little backbone or political will to see it come to court. It would detract from their "war on terrorism" and listening in on all their warrentless wiretaps.
"All great wisdom is contained in .signature files"
"piracy, a problem that has cost the music industry billions in revenues in recent years"
Please, lets not jump to conclusions like this, ok?
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$1/song as iTunes charges (I think) is hardly a good price. $12 for 12 songs is the price of an average CD. The best deal I ever got was "The Essential Clash" with some 40 (good) songs for $13. iTunes can't deliver that.
"piracy, a problem that has cost the music industry billions in revenues in recent years.'"
I don't buy it one bit. I always find comments/stats like this to be funny. How does that go again, 76.34% of stats are made up?
Whos to say that Redneck Billy Bob would really have paid for that Britney Spears album that had the song that he pirated? Or that your great aunt Ethal, really would had bought that Iron Maiden album from that song she pirated?
I think these numbers are grossly exaggerated and most likely, just made up. How are you to statically calculate a loss of a non-material product that you are "assuming" someone "would have" purchased legally?
The RIAA and MPAA need to get knocked off their little soap box and stop preaching their bullshit. It isn't like they aren't making enough money as it is, those fat cats pockets just keep getting bigger. Not to mention, established artists are not hurting either. The people that are getting hurt buy this are the struggling artists, that the music industry is already raping as it is. But do you hear these stuggling artists bitching, no, most of them are not. Most of them realize the more people that can hear the music, the more fans they are going to get. True fans that will buy their albums and support them.
Do you think online music is priced fairly?
No, and here is my suggestion:
0.20 cents for each 128 kbps song
0.40 cents for each 256 kbps song
0.60 cents for each 320 kbps song
0.80 cents for each lossless song
The better the audio quality, the higher the price.
He who knows best knows how little he knows. - Thomas Jefferson
Record Industry Buiness plan
1. Fix your price at a point higher than what the market wants.
2. Find comsumers who priate your music because they dont want to pay set price.
3. Extort said persons for more than they would ever spend in a year for music.
4. ???
5. Profit
They got it pretty good, they make money of those who acutally buy thier songs and make money of those who dont.
In America we are imprisoned by our fear of them.
... but say "limp dick fine" on the radio or TV and you owe the FCC $500k.
Chris Anderson the Editor in Chief and the Author of the soon to be released Long Tail Book posted this on his blog last year why the labels need variable pricing and the fixed priced model is flawed and the reason that Steve Jobs opposes it is because hes in the business of selling iPods and the sale of iTunes music is only a secondary part of his business .
Could the labels actually be right?
Ipod_although it's tempting to assume that the evil record labels are once again trying to gouge us, there's some sense in their latest efforts to get Apple to abandon it's one-size-fits-all pricing model. A New York Times article over the weekend reported on the ongoing struggle between the labels and Apple over its fixed $0.99 price point. The labels would like to sell most new music for more--$1.49/track?-- while older or more obscure tracks could go for less.
There's plenty to like about variable pricing. For starters, it's almost always the most efficient way to maximize markets of disparate goods and customers. As Barry Ritholtz puts it:
It's a basic rule of economics: goods that have elastic demand (i..e, non essential) are highly price sensitive. Further, any item easily available for free (albeit illegally) will have an even bigger response to price increases.
Apple has argued that single-price simplicity was necessary in the early days of the service, when people were just getting used to paying to download music. But now, after 500m tracks have been sold, we're clearly past the early adopter phase. So what's the right pricing model going forward?
Most accounts of the dispute between Apple and the labels have focused on the industry's efforts to raise prices, which are undeniably a big part of their plan. No surprise there. The research we've been doing for the book shows that within the bulk of the online music business--the top 100,000 downloads--only 3.5 tracks on the average CD sell. So the record labels are getting less than $3 in revenue (wholesale) from albums when the music is sold by the track. That's less than half the wholesale price of a CD (although with none of the physical costs of making and distributing a CD). The shift from an album model to a track model is indeed an alarming thing for the labels, and it's easy to see why they'd want to raise retail prices online as a result.
But there's more to the story that that. The labels may be evil, but they're not (all) stupid. They--to say nothing of many of their artists--also see the virtues of dropping the price for lots of their music, too. For decades they've been playing with CD pricing models that range from cut-price classics to top-dollar boxed sets, and when freed of the overheads of traditional retail, they're likely to experiment more, not less. Although some of the more vocal commentators have encouraged Apple to hold the line at $0.99, there's a strong argument that introducing variable pricing might ultimately lead to a more consumer-friendly outcome.
The reason is simple Long Tail math: there's a lot more music in the Tail than there is in the Head, and labels are generally more willing to experiment with discount pricing outside of the top 1,000 than they are with their hits. Those niches represents most of the music available today, measured by number of titles, and because they're only modest sellers individually they're less likely to create channel conflict with CD retailers, who tend to only stock the hits.
Imagine, for starters, that Apple introduces a three-tiered band of pricing: $1.49, $.99 and $.79 (that would no doubt soon expand to include $.49, but below that the transaction costs of credit card processing and the like start to loom large). Tiered pricing--gold, silver, bronze--is still pretty simple for consumers to understand, yet it introduces a valuable new dimension of demand creation.
Rhapsody, for instance, saw demand triple last year when it cut prices in half, to $0.49. And the average usage per customer in the all-you-ca
and it creates a monopoly-style pricing situation.
Imagine if Intel and AMD got together and agreed to not sell CPUs for less than $500. Suddenly you would have to pay much more for a computer, and Intel and AMD would get much higher profit margins. As long as they keep to this agreement, people who want to run an x86 computer, don't have a choice but pay the extra.
The reason the prices are so low for most CPUs at the moment is because of the competition between those two manufacturers.
The suggestion is that the large music companies, rather than trying to compete against eachother on price, have an (informal?) agreement on what they will sell their music at, somewhat above their actual cost.
One important difference is that music companies don't compete on price as much as they compete with their "artists". No matter how low a britany spears album is priced, I won't buy it.
No more cd media costs.
No more cd container costs.
No more printed liner costs.
No shipping costs.
Drastically reduced distribution costs.
And it ends up costing me more than ever to download a wrapped physical CD worth of music that has been shipped to a retail location.
Something is not right here.
Coincidence? I think not.
Given the fact that Apple lost its lawsuit against MS, the DoJ abruptly dropped its case against MS when Bush came in on his first term, and Al Gore is on Apple's board, I find it unlikely that Jobs has much pull with the federal government. That said, Apple is a major force in the tech economy right now, so the feds might be willing to give Jobs more of an ear than usual simply because he runs a high-impact, successful company.
Read the EFF's Fair Use FAQ
The problem with this variable pricing, based on the product's age, is that many (most?) people will simply wait until the price of the item drops to purchase it. Just like DVDs.
How many people now skip seeing a movie in the theater and buy the DVD? How many of those wait 6 months after the DVD release for the price to come down?
The movie industry still mainly counts only the opening box office receipts as the guage of a movie's success. Who's to say the music industry doesn't do something similar.
It must have been something you assimilated. . . .
Unless you're Oprah...
What are you talking about. Just because people can use substitute goods and can't get any price they want, doesn't mean that there isn't price fixing and anti-trust behavior.
If the RIAA manage to extract $20 for a CD or $.99 a song from your neighbor despite the fact that you can put your own music for free or for $.10c on the net then MORE POWER TO THE RIAA. It's called MARKET POWER. It means that they have invested the time and effort to make their product worth what the market is willing to pay. You and I may not like sylvia browne's shite books or britney's shite music, but they have managed to convince the market that they are worth paying over the odds for them.
Well the problem is that the RIAA can't extract that much, so instead they try to kill alternate distribution chanels while screaming bloody murder about incentives and property rights. Well bullshit. Alot of people make it investing their time and effort without a little personalized government monopoly, in fact most artists do, because only 1% of 1% benefit from the way the copyright system is set up now.
The basic economic phenomenon here has NOTHING to do with copyrights ....
If I artifically restricted the natural supply of food to people arround the world because "I had no incentive", most people would see that as the pure economic evil that it is. But when they restrict the natural flow of information, then oh my God "It's a RIGHT !!! " ... Well bullshit, it's not a right and has everything to do with economics.
Courtney Love said:
She goes on to say that the internet removes those gates; but it doesn't quite do so, because of copyright...For the Intel/AMD collusion, and the entrance of IBM with a cheaper chip, we would need to arrive at a 5th major label who was not only willing to undercut the existing majors, but could attract sufficient talent to become a major label. Others have tried - I'm not holding out hope.
If you think imaginary property and real property are the same, when does your house become public domain?
Jobs should have iTunes give not just the price, but also a list of how much goes to iTunes, the recording company, and to the artist.
That would get the message across really fast.
Those who do study history are doomed to stand helplessly by while everyone else repeats it.
..unless, of course, you get music from sources that dislike low-quality incomplete files.