I completely agree in that, by all moral standards, that CD should cost about $2.00, however you're forgetting the ultimate "rule" of free-market economics: charge as high a price as people are willing to pay, not what's really fair. It's all about profit maximization!
Honestly, since it's the record labels' job to make as much money as possible (the entire point in a capitalist economy like that of the United States), I'm glad that they do all the things they do to try to make money. I do NOT agree with them on a moral level and I despise their lack of fairness, however I do understand why they do it.
Since the record industry is doing its job, and music is still horribly overpriced, despite competition, that leaves only one possibility: the US Government isn't doing its job - looking out for US consumers and the economy as a whole, by cracking down on abuses like this.
If this investigation does force royalties that labels charge to go down, I think their next stop should be a possible antitrust case against Apple. As much as I like Apple (and believe me, that's a lot!), I really have to question the wisdom of allowing the iTunes music store to be compatible only with the iPod and vice versa (as far as I know), especially given its popularity. The fact is that with royalties being as high as they are (I'd guess that the majority of the cost we pay for that $0.99 song is royalty fees - at least half anyway), and the closed nature of the iPod and iTunes technologies, it would be very difficult - if not impossible - for a real competitor to enter into the marketplace with real force and drive those prices down. A competitor, I might add, that will still be around in a few years.
That's just my two cents!
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I completely agree in that, by all moral standards, that CD should cost about $2.00, however you're forgetting the ultimate "rule" of free-market economics: charge as high a price as people are willing to pay, not what's really fair. It's all about profit maximization! Honestly, since it's the record labels' job to make as much money as possible (the entire point in a capitalist economy like that of the United States), I'm glad that they do all the things they do to try to make money. I do NOT agree with them on a moral level and I despise their lack of fairness, however I do understand why they do it. Since the record industry is doing its job, and music is still horribly overpriced, despite competition, that leaves only one possibility: the US Government isn't doing its job - looking out for US consumers and the economy as a whole, by cracking down on abuses like this. If this investigation does force royalties that labels charge to go down, I think their next stop should be a possible antitrust case against Apple. As much as I like Apple (and believe me, that's a lot!), I really have to question the wisdom of allowing the iTunes music store to be compatible only with the iPod and vice versa (as far as I know), especially given its popularity. The fact is that with royalties being as high as they are (I'd guess that the majority of the cost we pay for that $0.99 song is royalty fees - at least half anyway), and the closed nature of the iPod and iTunes technologies, it would be very difficult - if not impossible - for a real competitor to enter into the marketplace with real force and drive those prices down. A competitor, I might add, that will still be around in a few years. That's just my two cents!