Music Exec Fires Back At Apple CEO 610
geniusj writes "Warner Music Group CEO, Edgar Bronfman Jr., has fired back at Steve Jobs in response to the Apple CEO's claim that having variable pricing for iTunes music would be 'greedy.' From the article: 'To have only one price point is not fair to our artists, and I dare say not appropriate to consumers. The market should decide, not a single retailer ... Some songs should be $0.99 and some songs should be more. I don't want to give anyone the impression that $0.99 is a thing of the past ... We are selling our songs through iPod, but we don't have a share of iPod's revenue ... We want to share in those revenue streams. We have to get out of the mindset that our content has promotional value only.' Perhaps iPods combined with iPods are selling music as well, and it's not just a one-way street?"
iPods combined with... iPods?! (Score:1, Insightful)
kill the goose (Score:5, Insightful)
Wow. A walk down contradictory lane! (Score:5, Insightful)
So yeah. It will never be cheaper than 99 cents. We don't want to give people that 99 cents is a thing of the past, but we want a piece of the pie, and 99 cents isn't doing it.
Real bright there guy. You suck.
Tell you what. Let's go variable then. Songs older than 5 yrs are 50 cents. More recent non-top 100 tunes are 99 cents, and top 100 are $1.50.
Of course that will never happen.
Market decide.. don't make me laugh (Score:5, Insightful)
Let the market decide? Oh give me a freaking break. There is no market, not in the free market economics sense of the word anyway. I can buy petrol, gas, cars, PCs, coal, condoms or even a blowjob from any number of suppliers. This competition drives down prices and forces companies to compete on quality and price. Copyright guarentees as monopoly on your product. If I want to buy the latest white-stripes album I can only buy it from one label: V2 Records. Sure I can go to different stores to try and hunt down a lower prices but V2 set the price. The consumer only has one choice: buy it, or don't buy it. In a real free market economy the consumer has a third, more powerful option, to find a cheaper supplier.
This is terrible for the consumer and almost always leads to disproportionate prices. Rather than supply and demand setting the price of the music, V2 can simply mandate it and then it will be so. The market becomes distorted and everybody loses except the labels. There's this idea that the artist somehow needs to be compensated for his work and that's fine but why not do it off ticket sales for concerts? I don't see why we need these artists need these government granted monopolies to make money!
Simon
Price Fixing (Score:5, Insightful)
Generally, that is considered illegal.
But hey, who am I to talk, I haven't been convicted of price fixing, so how should I know?
Oh wait, they have.
More? (Score:5, Insightful)
How about some songs should be $0.99 and some should be less?
Why this is wrong (Score:3, Insightful)
We all have seen the many publisher provided services for purchasing E-books, E-Music, and Software Downloads.
These services try to limit your options and choices or even to remove them from you totally. With many of these services you must agree that you do not even own that which you wish to purchase in order to buy it. Instead they license you right to use their private property.
We see the prices on the virtual which rival that of the physical. We instinctively know that the production cost of a E-book, Downloaded software, or MP3s is so much less than the cost of a compact disc or a printed book both of which require paper, ink, artwork, packaging and so much more that is totally lacking from the ethereal versions.
Their sales decline. "Stop the thieves" they cry out into the night! Make more and harsher laws to protect that which is already protected they demand of our governments. Protect our property and damn their rights is their idea of an ideal. I am a honest person is my vehement reply. So why attempt punish me for the crimes of others.
They attempt to smother new technology on the premise that it may possibly be used for illegal activity.
While it is not my intention to justify the misappropriation of their material I must point out it's their own fault really. I blame their lack of foresight and their lack of anything resembling common sense. They do not exploit the markets available for them or if they do it's a halfhearted attempt. In the real world people are not buying what you sale one common step generally taken is to consider lowering your prices until your sales pick up. This also applies on the Internet.
In a concise conclusion I state that I personally prefer to compensate the authors and composers of the material that I so enjoy in my daily life. Currently I do so off-line. So Publishing and recording industries I say make it worth my while and convenient to do so and I will be one of the first in line online.
Re:Notice what he didn't say... (Score:2, Insightful)
Suddenly they have a problem with a fixed price for a song?
good point (Score:4, Insightful)
I'd like to see a DRM technology that allowed music buyers to resell the music on eBay... By allowing the owner to set the price, you allow reselling and variable pricing... the studio (original owner) could get a piece of every transaction...
A Cut of iPod Sales? (Score:3, Insightful)
Do software developers get a cut of computer sales?
Do game developers get a cut of console sales?
[Insert countless other examples]
Ummm... No.
Anyone notice how (Score:5, Insightful)
Sometimes, the best thing to do with a certain type of person is sit back, keep your mouth shut, and let them bury themselves.
Re:Wow. A walk down contradictory lane! (Score:5, Insightful)
songs 20 years old should be 12 cents.
songs 40 years old should be 1 cent.
and the RIAA/MPAA should be burning in hell.
should is a wonderful word. let's show some respect for it.
Variable Pricing (Score:3, Insightful)
Article Summary (Score:5, Insightful)
Apple: "You guys are greedy."
RIAA goons like Bronfman: "We're not greedy. We just want all that money Apple is making. We don't want to do any extra work or promotion. Just send us more cash."
Re:Do they get a share of the sale of CD players? (Score:3, Insightful)
I think he honestly believes they deserve a cut of the hardware sales that run the music. It's like a game maker telling Dell they deserve a cut of their profits from gaming machines.
And also... (Score:2, Insightful)
Supply of any given song in digital form is effectively infinite, with effectively zero incremental cost. Demand is finite. By standard economic theory, this should mean that the price is zero. Somehow I don't think that was what this guy was suggesting though...
Re:wow ?! (Score:5, Insightful)
Re:Taking this to its logical conclusion (Score:2, Insightful)
info on canada's and usa's excise taxes and other 'extra' hidden fees: http://en.wikipedia.org/wiki/Blank_media_tax [wikipedia.org]
Re:Notice what he didn't say... (Score:5, Insightful)
Re:A Cut of iPod Sales? (Score:3, Insightful)
Re:Price Fixing (Score:2, Insightful)
Since there are distribution agreements.
Try to find iPods siginficantly below Apple's MSRP...
If an item is in demand - or perceived to be in demand - distributors are willing to enter into a distribution agreement that may set selling price. This is not collusion or illegal, it is *one* way to minimize risk in a fickle market place (such as the music or consumer electronics industry).
That said, is it good for the consumer?
On the one hand no, since there is no "cheaper" source, on the other hand yes, since it makes it possible for smaller distributors to have some business and not loose it to their huge competition (think local store vs. WalMart). This keeps everyone honest. The real problem I see with the music industry, however, is that its business shifted to where it now sells non-tangible goods (IP, essentially, since the medium is irrelevant), which may not be well served by traditional business models. The fact that they are clinging to to the "old ways" shows a lack of vision and, yes, greed.
$0.99 is perfectly fair. (Score:2, Insightful)
In fact it's perfectly fair. Due to the nature of online content, the song only has to be produced once, and it's possible to sell an arbitrary number of copies for virtually zero cost. Therefore, the better a song sells, the more revenue it produces. Therefore, even if a good song is sold for the same amount as a miserable song, it will produce more revenue. It just got much harder to sell crappy songs because consumers there's no more way to force consumers to buy them (e.g., by bundling them with good songs). So, the $0.99 is only bad for the music industry if the majority of their songs are crap. Since that is currently the case, they want to change the pricing model.
Re:Market decide.. don't make me laugh (Score:3, Insightful)
The same thing that happens to the rest of us when we get sick, or don't want to do our jobs any more.
Re:Variable Pricing (Score:2, Insightful)
At higher prices, you might as well buy the single from a CD store - you'll get a couple more tracks thrown in as well.
I don't mind concepts like (values are pulled from thin air):
Buy One Song: $1.39
Buy Two Songs: $1.19 each
Buy Three Songs: 99 each
Buy Ten+ Songs: 79 each
because that gives a logical discount for bulk purchases, which isn't a bad idea in my mind - especially if purchases are cumulative over a month.
They want Apple to license the iPOD, not sell it (Score:3, Insightful)
Warner Music Group CEO, Edgar Bronfman Jr... (Score:3, Insightful)
There is no reason at all that the artists need a middle man taking his cut and doing nothing but reduce their income by being stupid.
Re:The Obligatory Remix (Score:5, Insightful)
Sure, let the market decide (Score:3, Insightful)
Like hell you do! (Score:3, Insightful)
The rebuttal from the industry shows how ignorant they are of the new economy structure that has been in place, for how long? 6 years.
My God people.. Wake up! It's the 21st century and you are employing your goons and torpedos in old-fashioned payola tactics and strong-arming old women for the sake of a few bucks instead of embracing the new economy.
Re:Do they get a share of the sale of CD players? (Score:2, Insightful)
Actually (Score:3, Insightful)
Part of this is because real economics isn't as simple as the little supply and demand curves we were shown in ECON 202. For anything that's an entertainment product, it does not ever exist in a complete monopoly situation. Even if you have a complete stranglehold on one kind of entertainment, people can and will substitute other forms.
That's one of the reasons the media industry is taking a hit, more people are playing video games than ever before. Well, unless you are a trust fund kid and have tons of money and no work to do, we all have limits to the amount of time and money we can and will spend on entertainment. So the more we spend on one form, the less we'll spend on another.
So, in a way, the market IS deciding, and they are deciding on less music, more videogames and price is a part of that. Raising the price is sure as hell not going to help things.
Re:Sure, let the market decide (Score:2, Insightful)
Re:Do they get a share of the sale of CD players? (Score:1, Insightful)
Executive word play.
Think along these lines.
We are selling our songs through iPod.
Okay, they're selling the music through iTunes. Let's say they have decided the music's "cost" is $.50. It's probably not, but we're guessing here. They are selling something that doesn't actually cost anything to manufacture, a digital copy. The cost of producing a song will only be put up at the production of the song and profit will only come after X number of songs are sold. Anything beyond that point is just a continued revenue stream. Keeping that in mind, after they sell so many copies of the song they're getting some profit, though the concept of "enough" is subjective.
but we don't have a share of iPod's revenue
If he means iTunes, which many suspect he does because he's a moron, then this statement is true. Apple keeps the iTunes Music Store Profits. The music industry made their money selling the song. The store makes it's money being a legitimate outlet and handling the transaction.
What it sounds like to me is that this guy is saying he thinks the music industry should make money twice. Once up front at the sale of the a song, and once again at the end of the day by cutting into the iTunes Music Store profit margin. By wording his statement in the way that he has, it makes the general public feel as if the music industry is losing out on this deal, when what he's really saying is that they're just not walking away with as much of a cut as they would like.
So let me run his statement through my nifty little PR translator.
"We want to make as much profit as possible by taking as much of the revenue generated and claiming our rights to preferably all of it. iTunes doesn't deserve any profit, because they wouldn't have a store if we didn't produce the content. Oh, and by the way, you may only listen to our content on our terms, so keep paying, chump."
Re:Do they get a share of the sale of CD players? (Score:5, Insightful)
The reason you don't charge a different price for a more expensive movie is that the cost per showing is exactly the same regardless of the cost to create it (e.g. cost of wear and tear on the print, cost to the theater for projector maintenance, etc). You get more money back from a $200 million movie than for a $2 million movie because the more expensive movie is better. Supposedly. Being better, more people will go see it. Supposedly.
If it isn't better, that's the fault of the producers, not the consumers. You still have a market effect, its that stupid producers who produce excessively expensive movies that aren't worth it go out of business.
Same thing for the popular hit music - you'll get more money because you sell more, not because you charge more.
Re:Wow. A walk down contradictory lane! (Score:5, Insightful)
Re:Do they get a share of the sale of CD players? (Score:2, Insightful)
Are you saying bandwidth is free?
Re:Do they get a share of the sale of CD players? (Score:5, Insightful)
Higher and LOWER prices... (Score:3, Insightful)
People, read the news!
"That's not to say we want to raise prices across the board or that we don't believe in a 99-cent price point for most music," he said. "But there are some songs for which consumers would be willing to pay more. And some we'd be willing to sell for less."
I think the $0.99 model for any song is stupid, because it doesn't reflect the value of the song. Some songs should sell for $0.01 and some should sell for $10.00.
Comment removed (Score:5, Insightful)
Re:Do they get a share of the sale of CD players? (Score:2, Insightful)
Compulsory licensing (Score:2, Insightful)
$0.99 per song is an average price, and comprehends both Top 40 and Bottom 100,000. The music industry simply wants to get this average price in addition to a premium on the Top 40 stuff that's already rolled into the average. If they want to re-negotiate the average price, that would be "reasonable" (in music industry terms, anyway), but this is blatant double-dipping.
Jobs is right: they're being greedy.
Re:Do they get a share of the sale of CD players? (Score:5, Insightful)
Because it's just an excuse to raise prices across the board. Every label is going to want their songs at the highest price point. Apple realizes that the iTMS drives iPod sales, and they don't want to alienate their potential customer base by raising prices.
Re:Do they get a share of the sale of CD players? (Score:2, Insightful)
Yeah, they crash right down.
Wait! What's that you say? The prices are set artificially by monopolistic practices? It's not set by supply and demand?
You don't have to buy the over-priced crap, but sadly enough, enough people do buy the crap that the prices don't drop, and stores would develop supply issues if they did discount their non-selling junk without music industry approval.
You could say it's still being set by supply and demand. Sort of. With a lot of market manipulation thrown in.
But what you won't get online is a fairy tale of good practices.
Apple is aiming to keep the sale rules simple. It's harder to hide market manipulations when the market rules are simple.
The record companies are just trying to muddy the waters in every way they can. At the same time they'll press on every front, and hope they win battles to keep their market.
The market has decided (Score:5, Insightful)
I think the music industry's problem is that the market has decided, and it's decided it doesn't like the music industry's standard terms. The music industry doesn't like that decision and is trying everything they can including whining like a spoiled brat to get it changed. Unfortunately for them, the market isn't buying it (in several senses).
Re:Do they get a share of the sale of CD players? (Score:2, Insightful)
Prices don't drop because the record companies set the price. iTunes doesn't grow because the prices are too high. RIAA muddies everything and blames Apple.
Nothing changes. What a great idea!
Wait, no, let's make it illegal to listen on a non-approved device and *license* the same music over and over instead of selling it!
Genius!
-------------
Last time I checked, the music industry isn't out to make the customers' market better.
Maybe keep a healthy level skepticism for advice and ideas coming out of a seller's mouth. It'll keep your ass from getting sore.
Re:Do they get a share of the sale of CD players? (Score:4, Insightful)
Exactly. And also, I find it interesting that the "industry representative" is stating that different songs have different intrinsic value--but never states that, for some songs, that value is less than 99c, sometimes approaching 0c, and that this music should also be charged appropriately.
Re:Do they get a share of the sale of CD players? (Score:5, Insightful)
Apple is being controlling, but they have a vested interest in keeping song costs low to keep selling iPods, thus they are more aligned with my interests--low and consistent song prices--and therefore have my vote. The market is strong, but it's because of Apple and their consistent model.
Now, on hardware, the day that all parties can agree on a standard not controlled by one party--say Mr. Softy--but by a consortium similar to Mp3 or the Bluetooth SIG. Otherwise, at least AAC with Fairplay can work on both Macs and PCs. WMA should never be the defining standard.
He forgot one point... (Score:3, Insightful)
He forgot "and some songs should be less". That is, if he really wants to let the market decide.
Jobs was right, the industry is greedy.
-Charles
Re:Do they get a share of the sale of CD players? (Score:3, Insightful)
Great in theory, but sucky in reality.
They wouldn't lower prices for small movies; they'd charge more for big ones.
On the other hand, I go to a movie every year or two, so I don't really give a shit.
Re:Do they get a share of the sale of CD players? (Score:4, Insightful)
The cost to actually produce a GOOD album is probably $50K. Last album I did tracks for, they were spending about $30K for 12 songs. Most of the time making an album is mixing. You can record 8 hours, and spend 4 times that amount mixing. So, if you are Maroon 5, and go record, say you plunk out $150K. Ok. And then you sell CDs at $16+ a piece. Ok. Then go look at DVD Movies. They spend MILLIONS, and they are right about the same price. And there is just as much work done there, if not more.
I am one of those who's gripe with the who CD thing is that they have been the SAME price since the 80s. It doesn't make sense.
Of course GAS prices don't make sense either. Why we out here in California get dinged with really high prices after these hurricanes? They always say that our prices are because of the lack of refineries in California, and that they cannot ship gas in from out of state. Yet now when these two hurricanes go through, our prices jump up like $.20.
Oil/Gas and RIAA are price gouging. Plain and simple.
Re:Do they get a share of the sale of CD players? (Score:2, Insightful)
Apple isn't interested in making money with the iTMS. They're interested in promoting the iTMS as an iPod feature. It's meant to attract and encourage the sale of iPods, not songs. If the price of a song goes up, the number of songs sold in a period will decrease. This is the last thing Apple wants.
You might call Apple foolish for not raising prices and making more form the iTMS, but then you'd be an idiot.
"The market should decide"? (Score:3, Insightful)
Just sayin...
Re:Do they get a share of the sale of CD players? (Score:3, Insightful)
First, the marginal cost difference of 3 CDs vs 1 CD is minimal, but could justify a few dollars difference in price. Second, software is FUNCTIONAL - the pricing model on something functional is going to be different from something that is entertainment. Software also has a more limited lifetime, it becomes obsolete much more quickly than entertainment products, thus creation costs have to be recovered earlier. Even given all that, the price of software is not closely tied to the cost of creating it.
It might be reasonable to make the pricing of entertainment based on size (e.g. number of pages in a book, length of a song or a movie), but that would tend to make creators try to pad their work to make it longer.
Re:Do they get a share of the sale of CD players? (Score:5, Insightful)
I fear you are both correct and mistaken. From the article:
Mr. Bronfman said the music industry should not have to use its content to promote the sale of digital music devices for Apple or anyone else, and not truly share in the profits. "We are selling our songs through iPod, but we don't have a share of iPod's revenue," he said. "We want to share in those revenue streams. We have to get out of the mindset that our content has promotional value only.
When he said that they were selling their songs through iPod he should have said iTunes but he didn't mean iTunes, he meant iPod. He thinks that the record industry is helping Apple sell hardware and that they should get a share of the profits on the hardware.
Here's something that I stole from a site that stole it from the Wall Street Journal:
Consider the economics of the iTunes store. Apple charges 99 cents per song that is downloaded by a consumer. Of that 99 cents, Apple pays the record label about 65 cents for licensing rights to the song, estimates Charlie Wolf, an analyst at brokerage firm Needham & Co. Other analysts come up with similar figures. In addition, Apple incurs costs such as credit-card fees, which typically amount to 25 cents a transaction (which can include several songs), plus 2% to 3% of the amount charged. The result: On average, Apple earns less than a dime for each song it sells from the store.
So here's what's going on. If you buy one song and use your credit card (assuming that your credit card company and Apple will let you use your credit card for a 99 cent purchase) the credit card company gets 25 cents plus another 2 or 3 cents and the record company gets about 65 cents. That leaves Apple with 6 or 7 cents. If you buy more than one song at a time the credit card company doesn't get the 25 cents on the second through infinity dollars but they get that 2 or 3 cents on every dollar and that 25 cents on every customer. So the best Apple can do is 32 cents per song minus 25 cents per customer, and that money has to cover all of their expenses--bandwidth, advertising, payroll, electric bill, water bill, telephone bill, building maintenance, lawyers to keep the record companies from getting any more than they already do, and anything else that they wouldn't have to pay if they weren't running iTunes.
The record companies, who don't have to pay much of anything they didn't already cover getting those songs ready to go onto a phonograph record, cassette, 8-track, or CD (except for the lawyers to try to screw Apple), know that Apple's not about to give them a bigger cut out of that 99 cents, so the only way they are going to get even more "money for nothing" is to either convince Apple that the record companies deserve a cut of the profits on the hardware (which would go over about as well as Microsoft saying they deserve a cut of Mac sales because Office for the Mac drives Mac sales) or getting the price per song above 99 cents.
You'll notice that although he said that the market should decide the price and not a single retailer, he didn't say anything about any songs selling for less than 99 cents, so before long that will be the "fair market price" for songs so low in demand that no one will pay more, and everything else will be higher in price and before long you'll be paying as much for downloads as for a physical CD, at which point they will no doubt declare physical CDs underpriced.
Remember, Apple is doing almost all of the work and paying almost all of the expenses on iTunes while the record companies get 65 per cent not of the net or the profit, but 65 per cent of the gross and the record companies think that they're doing Apple a big favor and that they should get a cut out of each iPod sale as well. Tell me again who the pirates are?
Re:Uh... (Score:5, Insightful)
Someone with a wicked sense of humor. If I could moderate the moderation as funny, I would. I've got the points too.
Re:President? (Score:3, Insightful)
Re:Feedback loop (Score:1, Insightful)
I've done some indy music and sold a few songs through iPod, and I like the fact that my songs cost the same as anybody else's. It says that my music is as valuable as anybody's. If they charge more for popular music, I think it would be more likely to hurt my sales than the sales of popular artists, because subconsiously people will say "oh, that's cheap because it's low-quality." Impressions like that can carry over even after people hear it - the same way that people will swear that identical cereals from different-looking boxes taste different.
I'm happy to GIVE my music away if people will listen to it, because that's what I'm after - not money. But a price is, for most of us, a subtle clue to quality. All other things being equal, sometimes we WANT to pay more for something.
Re:Do they get a share of the sale of CD players? (Score:2, Insightful)
Not really. You don't charge a different price for different movies showing in the same theater at the same time because it is logistically impractical to segregate the theater and keep the morons buying $2.50 Bigalow tickets from skipping over to the $20 War of the Worlds screening. So, instead, you charge $10 for both and if a guy buys one ticket and sees a different show then all that's lost is book-keeping.
Think about it: it costs just as much to show the movie at 11:20 AM as it does at 7:30 at night. Why is one $6/ticket and the other full price? It also costs just as much to show a movie in a second-run theater (actually more, as the prints are more fragile at that point), yet they can run down towards $3.50/ticket hereabouts, and in other areas even still play at $1-2 per ticket.
Music is not the same thing, here, although the reason for wanting per-movie pricing (you can't very well maximize profits at a fixed per-unit cost) applies there as well, Jobs named it well: greed, and, worse, short-sighted greed. The "long-sighted" part here is the music companies wanting to keep the pie to themselves rather than Apple, but that's a far as they can do in thinking a few years out.
With per-unit music, people will buy a whole lot more if they don't have to "shop around" for the best price. $.99 per song, every single song, every single time, makes things very simple. $13.99 for the CD at Best Buy, and I like two songs and might like up to five of them, and I know for certain that $2-5 is all I need to spend to get that music. I don't have to worry about the record company having deemed the "good songs" worth $5 each, and the "crap songs" at $.50; I know what the price will be by simple math (although the full album price is another story).
Music is a unique market. It is a volume market, which is where the standardized pricing is a major asset. It is also an "art" market, where value is highly subjective. That having been said, the only argument for variable pricing is that the top-dollar acts, which we know will be Britney Spears and Michael Jackson's successors, are making too little money for their efforts and the low-end artists don't make enough. But, in this particular market, non-variable pricing has worked very well in creating a highly classed range of incomes (to the record companies; the artist nets are capricious but variable pricing would exacerbate that instead of fix it), from not-even-close-to-breaking-even all the way to paying-for-a-dozen-record-exec-ferrarris.
Re:Do they get a share of the sale of CD players? (Score:3, Insightful)
Is iTunes their largest online retail outlet? At a guess, I would have thought it was, say, Amazon...?
Re:Do they get a share of the sale of CD players? (Score:3, Insightful)
The 2nd-run theater (which have disappeared in many areas) is usually a run-down low-rent place. I also didn't reject time-based pricing, just cost-based pricing. The price going down works as long as people put a premium on seeing it now and in a good theater. It also makes sense to differentiate between time of showing - there's a fixed number of seats, so there's less demand for them at slack times of the day (even if the theater isn't sold out, there are limited seats that are "good", and there's pressure to not go if the theater is too crowded).
You make a good point that there is a logistic element to it as well. However, if that was the primary issue, they'd have as much problem with people watching two shows on one ticket. If it were important to charge more for the "better" films, they'd find a way to isolate people to the correct tier, it isn't that hard. Most people will be honest, and that's all that counts.