Slashdot Mirror
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.
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.
Javascript + Nintendo DSi = DSiCade
"piracy, a problem that has cost the music industry billions in revenues in recent years"
Please, lets not jump to conclusions like this, ok?
Kiteboarding Gear Mention slashdot and get 10% off!
"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
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
Steve Jobs says all songs are worth $0.99, and it's the record labels that are being investigated for price fixing? I think we already know which monopoly is setting the price.
What on Earth are you talking about? iTunes is one company with a set price - they set the price there because it's affordable for consumers. Price fixing usually happens at level outside of the common view. In this case: Sony, Virgin, Arista (whatever other shitty labels) are being investigated because there is speculation they are meeting to set the base price of their product in order to make more money.
iTunes might have an agreement with Sony for $0.25 per song, while Virgin iTunes has to pay $0.28 per song (Yes, numbers I'm pulling out of my ass). iTunes still sells each for $0.99 . The idea here is that the labels are potentially meeting to rise the price up to an agreed upon price (say $0.60 per song - another number straight from my ass) to increase their bottom-line and force iTunes to raise their end-user price as well. This would give more viability for consumers to go back to buying CDs at the artificially high prices and not be able to save money when buying online.