Slashdot Mirror
Apple Sets Tune for Pricing of Song Downloads
PygmySurfer writes "Apple Computer on Monday revealed it had renewed contracts with the four largest record companies to sell songs through its iTunes digital store at 99 cents each. The agreements came after months of bargaining, and were a defeat for music companies that had been pushing for a variable pricing model."
Funnypics
big label artists are still being boned
So maybe they need to stop being big label artists. Easer said than done I realize, but if they can maintain and even use their fanbase to move to a more progressive indie label they will pave the way for artists who currently need the clout of a big label to get noticed. Once listening to bands on a Internet only indie label becomes trendy, then digital music will be all that we want it to be, right now there is still too much $$$ in the old corperate giants, because people still go for the big corperate product.
We are all just people.
I don't think so. See, you represent one end of the bell curve we'll call 'cheapskate' and the fact is, no matter what the price were set to, someone will fall further along that curve than you and claim that everyone is missing out on huge profits by not dropping the price in half.
The reality is that given the enormous success of the iTMS, it seems that Jobs et all were spot on with their pricing model (which one would assume was arrived at after much research). Reality check - nobody sells a BILLION of anything that's outrageously overpriced...
Think outside the... Hey, where'd the friggin' box go?
... maximize profits.
Profit Maximization and its importance is taught in econ classes, and the sales crowd give it a rather exagerrated importance, but the fact that the 'market' is in fact people which have a tendency to behave according to their own choosing and not as mindless drones of the 'invisible hand' is not.
They always go for getting the maximum profit achievable with a given or minimum quantity of sales. The very thought at the end does not deliver what they want to get indeed :
If you make an easily obtainable/copyable product overpriced, you pump up piracy, or at the least unwillingness to buy your products in the target crowd.
How many of us would think 'well, its just nothing, let me get 5-10 songs tonight' if the price per song was $5 or $10 ? or would any of us get a 'cheaper' song because the song we wanted was priced much higher ? is it that simple that we are going to get the 'best obtainable' from the songs provided ? a sheer stupidity scratch for the marketing crowd ? yes .
Not only the 'profit maximizing' concept actually hampers the profits, but it also shatters market reach and market control - which is something priceless in most respects. Sell a song for just $0.10, and youll get hordes of people buying songs because 'its just nothing' in price - youll become a net standard.
Sell them for $5, and youll get piracy.
Read radical news here
Price as Signal
... so Econ 101 says they should lower the price and try to get a few more bucks filling up the theater with price-sensitive moviegoers.
Forbes: "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."
The story they're trying to tell you is that "older, less popular songs could be discounted, and in-demand singles could go for more than a dollar."
Let's think this through, because I think the recording industry is lying about why they want different prices.
Before I start with that, have you ever noticed that movie theaters charge the same price for all movies, whether they are Steven Spielberg blockbusters or crappy John Travolta religious quackery disguised as science fiction that nobody in their right mind would want to see?
Theoretically, when a super-duper-blockbuster comes out, like, say, Lord of the Rings, there's so much demand that the movie theaters just end up turning people away. Econ 101 says that they should raise the price on these ultra-popular movies. As long as the movie is sold out, why not jack up the price and make more money?
Similarly, when stinkers like Lesbian Gangster Yoga with Ben Affleck come out, the movie theatre is going to be pretty much empty anyway
And indeed this is what the recording industry is telling you that they want to do on iTunes. But they don't do it in movie theaters. Why not?
The answer is that pricing sends a signal. People have come to believe that "you get what you pay for." If you lowered the price of a movie, people would immediately infer from the low price that it's a crappy movie and they wouldn't go see it. If you had different prices for movies, the $4 movies would have a lot less customers than they get anyway. The entertainment industry has to maintain a straight face and tell you that Gigli or Battlefield Earth are every bit as valuable as Wedding Crashers or Star Wars or nobody will go see them.
Now, the reason the music recording industry wants different prices has nothing to do with making a premium on the best songs. What they really want is a system they can manipulate to send signals about what songs are worth, and thus what songs you should buy. I assure you that when really bad songs come out, as long as they're new and the recording industry wants to promote those songs, they'll charge the full $2.49 or whatever it is to send a fake signal that the songs are better than they really are. It's the same reason we've had to put up with crappy radio for the last few decades: the music industry promotes what they want to promote, whether it's good or bad, and the main reason they want to promote something is because that's a bargaining chip they can use in their negotiations with artists.
Here's the dream world for the EMI Group, Sony/BMG, etc.: there are two prices for songs on iTunes, say, $2.49 and $0.99. All the new releases come out at $2.49. Some classic rock (Sweet Home Alabama) is at $2.49. Unwanted, old, crap, like, say, Brandy (You're A Fine Girl) -- the crap we only know because it was pushed on us in the 70s by paid-off disk jockeys -- would be deliberately priced at $0.99 to send a clear message that $0.99 = crap.
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.
And Apple? Apple wants the signaling to come from what they promote on the front page of the iTunes Music Store. In the battle between Apple and the recording industry over who gets to manipulate what songs you buy, Apple (like movie theaters) is going to be in f