Apple iTunes to End Flat Fee Pricing? 556
MdntToker writes "According the Forbes, EMI has an understanding with Apple that flat fee pricing will end within the next 12 months, and more popular songs will be priced higher than 99c, while lesser known acts will be priced lower than 99c." From the article: "Label executives have made multiple arguments for flexible pricing. They argue, for instance, that almost all retail businesses have different price points for different products. But they are particularly interested in boosting their revenue from digital music sales, which aided by the sale of mobile phone ringtones, are increasing but not quickly enough to replace the continuing drops in compact disc sales. EMI said today that digital sales, made up 4.9% of the company's sales in the last six months, up from 2.1% a year ago." We've previously reported on this story.
The "Flexible" Elevator - Going Up? (Score:5, Insightful)
Re:The "Flexible" Elevator - Going Up? (Score:5, Insightful)
Re:The "Flexible" Elevator - Going Up? (Score:4, Interesting)
if they really understood, well, anything, let alone economics, they would not be giving their customers the middle finger on a daily basis.
what I want to know is, what the hell happened to Jobs calling them greedy and standing firm on the flat pricing scheme?
Re:The "Flexible" Elevator - Going Up? (Score:3, Insightful)
Lower prices doesn't always increase demand... (Score:3, Insightful)
You may be in the middle of a curve where decreasing prices will increase volume, but due to the finite nature of N, there may not be sufficient demand to recoup the difference.
In other words, you gave money away.
Re:Too bad the music companies don't think so (Score:3, Informative)
Re:The "Flexible" Elevator - Going Up? (Score:5, Insightful)
There is no problem with the theory. The theory applies in this case like this: If the record companies lowered the price of CD's to the $5 you propose, sales would increase. But they wouldn't increase enough to offset the loss of profit from the lower price.
By the same token, if they make more profit from adding draconian DRM to their CD's, then they will do so. Why is Sony removing the DRM from some of their CD's? Because it's negatively impacting their profit.
Why do CD's cost so much when they cost so little to produce? because people buy them. If you don't like a particular companies prices, or business practices, or ecological ideals, or whatever, don't buy their products. And it won't matter in the least. If, however, enough customers stop buying their products, the company will make whatever changes necessary to increase their profits (changing the price, changing the business practice, moving their factories to cheaper offshore companies, etc). I'd suggest two things: Take a basic microeconomics class, and watch the documentary, "The Corporation".
You're only proving his point (Score:3, Insightful)
Basic econ (Score:4, Insightful)
OK, so assume that RIAA member company Three Initial Recording (TIR) have a lock-in recording contract with the hottest band around, the Hong Kong Cavaliers [imdb.com]. TIR makes a fistful of buckaroos from every one of HKC CDs they sell. But music from iTunes is a really close substitute, if not a superior replacement; changes in prices of one will affect the sales of the other pretty easily. Raising prices so as not to undercut sales makes sense to TIR.
The problem is, there are other substitutable choices besides CD and iTunes. TIR considers DRM-Rootkitted music disks: consumers don't like those much, but most are easily confused sheep, so the substitutibility is fairly good until ingenious [eastoftheweb.com] folk at Sysinternals [sysinternals.com] notice. Maybe they try it, maybe not.
There's live concert performances... but that's not a good substitute for most working stiffs who want to listen to the band at any given time of day, and the HKC can only do so many concerts; TIR can live with that.
There's music from other bands; although some folk feel there is no alternative to the HKC's unique sound, others are just as happy listening to Electric Mayhem, who are signed with another RIAA member. Well, it's within the cartel. But the band Disaster Area tends to have a wide overlap in the fan base, and they've not only working with an independent studio, they took pot shots with a sniper rifle at the last TIR contract rep who tried to persuade them to join up. Hmm...
And really, any form of entertainment might be a substitute; cheap, safe, designer hallucinogens might leave everyone just sitting around giggling at their fingers, but the War on Drugs makes most people stay away. Movies are another alternative, but the MPAA has enough overlap and common interest that they're not likely to be a deliberate threat. Books... well, nobody reads those any more. Video games are a growing problem, but they look to be gelling into a cartel pretty soon.
But that leaves the big one: there's pirate copies of the music, in all of their many forms. Recorded live in concert while in the audience. Sketchy dealers on NY sidewalks selling counterfeit CDs. Music ripped to MP3/Ogg/FOO format and traveling over the internet by FTP, HTTP, NNTP, KaZaa, BitTorrent, and the six surviving Gopher sites. Yes, it's illegal... but cheaper, all the way down to free. The extra costs are only to the pirate's self respect (which there's less to lose of each time they give in) and if they get caught. And almost EVERYBODY is doing it.
Some flexibility in pricing might help both Apple and the RIAA, especially if they put more of the long tail [slashdot.org] up on iTunes (which would probably be the best way to grow revenue), with opportunities for having sales, and making a litte more on the megahits. (Yeah, bands with gold albums probably ought to be going for $1.25 IMHO). But my back-of-the-hand guess is that if the average price (weighted by number of sales) of iTunes song starts rising, there will be more "sales" really lost to piracy, as opposed to the RIAA claimed losses. And with those short-term real losses come longer term erosion to the foundation social mores (EG: piracy=theft=bad) that the music industry is reliant on. And that is something TIR and the other RIAA members aren't factoring in on their economics.
Re:The "Flexible" Elevator - Going Up? (Score:2, Interesting)
Going down (Score:4, Interesting)
What I see happening is the EMI song sales on ITMS start dropping substantially.
What I would do if I were Apple is tell EMI they would be happy to drop thier music altogether. Apple can only do that to a certain extent of course as ITMS wouldn't hold up well with no major label support (or, perhaps it will would with indie stuff? Hard to say) but record companies are getting a fair amount of money out of ITMS and I think being cut out cold might have a few exec heads rolling at the loss of many milllions in recurring revenue, and probably some arsists chafing to drop the label. Record labels can only afford so much heat and if new acts wont sign with you because you're not on ITMS then it could affect the bottom line substantially.
Here's the thinking (Score:3, Interesting)
So then AllofMP3.com is basically outright piracy (which is why I do not use it now). However it is a form of piracy that:
1) Cannot get you the size of fines that use of P2P gets you (making for a relativley risk-free form of civil disobedence), and more importantly
2) Provides a monetary and numerical record of demand for cheap online music. The discrepancy between AllOfMP3 sales and sales
The "Possible" Elevator - Going Nowhere? (Score:5, Insightful)
Yeah, but is anything really going to happen?
From what TFA says, this is based on what one music industry exec thinks Steve Jobs might do. Now, if it was something the exec had heard that Jobs was going to do, that might be something.
This looks to me like nothing more than wishful thinking. And Slashdot jumps in with a sensationalist headline proclaiming certitude, never one to let a little thing like reality (or sanity) get in the way of a nice flamewar...
Dan Aris
Re:Mod the fuck up. (Score:3, Funny)
Re:The "Flexible" Elevator - Going Up? (Score:2)
Never Mind (Score:5, Informative)
"Today 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."
So one guy says with no control over the situation tells Forbes magazine that he thinks Jobs will make this happen, and it gets reported on Slashdot as fact.
For fuck's sake, not even the various Mac rumor sites have run with this one yet. When did MacSlash become MacWildGossip?
Re:Never Mind (Score:5, Informative)
The labels can pretty much dictate WHATEVER pricing they want, and Apple will not have any say over it (unless they want to lose revenue). It would be one thing if they had a marketshare of say, Walmart. But digital sale is still pretty small percentage of the overall revenue for the labels.
The labels have been offering their goods at "introductory" pricing to see how quickly they can get legit digital distribution to grow.
Well, thanks to iTunes, they are growing fine, and now the labels want to make (more) money off of it. Which is a lot easier if they can apply flexible pricing model.
When the exec says he believe iTunes will offer multiple price points is because the labels have already announced to the digital music wholesalers that in 2006, they will be introducing mulitple wholesale price points.
Unless Jobs wants to lose even more money than he is losing now on iTunes (yes, they make money on iPod but iTunes is still not operating even yet), he WILL offer multiple pricing points on retail as well.
Re:Never Mind (Score:3, Insightful)
First of all, I don't think wholesale prices have anything to do with it here, because IIRC Apple has a contract with the music companies (which no doubt offers guarantees against price changes). Apple can say no to th
Re:Never Mind (Score:4, Interesting)
Also, in reply to like the great-grandparent, I do believe iTMS is profitable these days. I think they are making a nice little profit, actually (nothing compared to the iPod sales, but nothing to sneeze at either).
Andrew
Re:Never Mind (Score:3, Informative)
Re:The "Flexible" Elevator - Going Up? (Score:2, Informative)
Got a nano as a gift. It's full of my own MP3's. iTunes doesn't even have my Ornette Coleman or Rasahn Roland Kirk stuff. There's a bunch of old releases by the Move and Traffic I can't get here either.
Guess I'm just not a sizeable market. Cry me a river!
Re:The "Flexible" Elevator - Going Up? (Score:3, Informative)
Re:The "Flexible" Elevator - Going Up? (Score:2, Insightful)
Re:The "Flexible" Elevator - Going Up? (Score:5, Insightful)
That being said, I think prices will drop because artists will find that it is more lucrative to sell songs for
Re:The "Flexible" Elevator - Going Up? (Score:5, Insightful)
Name three rock bands who were never signed by labels and make a living that way sufficient to quit their day jobs.
Imagine if the music version of slashdot existed (it may already, I don't know). Bands could post links to their new releases, users can comment on the songs / bands, and the best bands will gain the largest following.
Dozens of such sites exist. Hardly anybody goes to them. A few hard-core people do so they can pat themselves on the back for supporting indie bands, but most people fall in love with some fractin of the crap they hear on the radio. Even psuedo-indie acts like Death Cab for Cutie are in the position they are in only because a record label pimped them like crazy.
If you will pardon me for briefly playing the Devil's Advocate...
One could easilly make the case that the work done by a record label is more important to the financial success of a music act than the work done by the band itself. When you look at it in that light (and realize that the labels take the brunt of most of the financial risk), it really isn't so eeeevil that they take a bigger slice of the pie.
I mean, David Gibbon just sat in front of a microphone and crooned for a few hours. Behind every album his band has made, there was an army of promotors, engineers, event planners, office staff, and several layers of management, all putting in 40-hour work weeks to make sure that you and as many of your friends as possible buy the album. They all worked just as hard as he did, and for considerably less money. Yet people consider it this horrible injustice when this ONE EMPLOYEE of the record company, who happened to have the most fun job of anybody involved, doesn't get to hog a majority of the profit for themselves.
So yea, if you are a singer and think that's unfair, go out and try to do the work of all those people by yourself. You will probably end up with a much larger slice of a vastly smaller pie, unless you are just as good at music promotion as you are at being a musician.
Re:The "Flexible" Elevator - Going Up? (Score:3, Interesting)
I call BS. There are a huge number of small performers who are unknown beyond their local state but still make a perfectly livable wage, including my dad. He quit his job as a producer ten years ago to do what he loved, playing music and performing. He initially signed up with a temp agency to fill the gaps in his schedule.
In ten years, he only went in once.
Now, almost no one outside of Ohio has probably ever heard of Bob Ford the guitar player, but he definitely made eno
Name three? Easy... (Score:3, Interesting)
Easy:
Your turn... give me three examples of RIAA members who have stopped taking their customers to court.
Re:The "Flexible" Elevator - Going Up? (Score:3)
He didn't sign with a label because he bought one.
Furthermore, most of his fortune came after His label fell under the umbrella of Priority Records, and Priority Records cut a distribution deal with EMI.
Sorry to ruin your ghetto fantasy, but Master P is, and always was, Part Of The Machine.
Re:The "Flexible" Elevator - Going Up? (Score:3)
On his own label (not without a label... he got backers and started one): "Feel My Power" sold 60,000 copies. This is considered a "jackpot" in the indie music scene, even though it's not enough to sustain a comfortable lifestyle. Think about it... after taking out expenses to pay off the handful of employees involved in promoting the record, and taking out an even bigger chunk to pay off those who backed it, he still had to split the remaining money two ways with
End Result? (Score:5, Funny)
Re: (Score:3, Interesting)
Great idea! (Score:3, Funny)
As the Ferengi say (Score:2, Insightful)
Re:As the Ferengi say (Score:5, Insightful)
The funny thing is that the usual arguers on both sides of this issue will think you're talking about the other side. People who produce and distribute the product are eternally interested in remaining profitable as the do so, and the people who want popular music seem to eternally want their entertainment for free. At the intersection is (supposed to be) a market economy. But a lot of people on the consuming end seem to have lost touch with the general notion of "the person selling it is asking more than I want to pay, so I'll buy something cheaper, instead" and have shifted to "so I'll rip it off, instead" without any sense whatsover of causality (when it comes to the consequences).
Re:As the Ferengi say (Score:3, Interesting)
You contradict yourself. If the consumer feels 'the person selling it is asking more than I want to pay', they are likely not to purchase the item anyhow (if it is a luxury item). The industry l
So the model becomes ever more like... (Score:5, Insightful)
Only way more expensive...
And encumbered with DRM...
No thanks!
Re:So the model becomes ever more like... (Score:2)
"Sum ergo Cogito" -getting Descartes before de horse...
Re:So the model becomes ever more like... (Score:3, Interesting)
Re:So the model becomes ever more like... (Score:5, Insightful)
Re:yeah, like that only legal in th eUS (Score:4, Interesting)
Of course, the real issue isn't really legality-- it's whether the record company will sue. If it's illegal and they sue, you're screwed, and if it's legal and they don't sue, you're fine. However, if it's legal and they sue, you're still screwed, and if it's illegal and they don't sue, you're still fine.
To date, I have no knowledge of anyone being sued for copyright infringement for simply having mp3s on their computers. It's always the sharing that gets you, partially because it's easier to find you if you're sharing, but also because it's easier to demonstrate you did something illegal-- copyrights were intended to deal with unauthorized distribution, not unauthorized viewing/reading/listening.
Ok, all that to say, it's not that clear. You pay your money, you take your chances.
Their merchandise, their prices (Score:4, Interesting)
Happy Posting.
Re:Their merchandise, their prices (Score:2)
Why not? It is certainly their right to price it higher, but it doesn't make it moral/ethical. Of course we can complain!
Feedback is beneficial for all. (Score:5, Insightful)
If enough people voice their opposition, then perhaps Apple will realize that it is not in their best interests to switch to such a scheme. Thus everyone is potentially better off if Apple listens and responds accordingly. Customers can then continue to purchase the songs they want, rather than to boycott. Apple can continue to receive revenue from such customers, rather than having the customers go elsewhere.
Notice that the same thing happened recently with regards to Novell/SuSE and their switch from KDE to GNOME. They announced the switch, and many customers complained. The customers let them know that KDE was still wanted. And what did Novell do? They agreed to keep offering KDE.
It's better to work out such problems before involving money.
Re:Feedback is beneficial for all. (Score:2, Insightful)
I could be wrong, but the way i've been reading this, it's not Apple that's pushing this change... it's the copyright holder, and since they own the rights to what Apple is selling, they don't have much choice in the matter.
Just like the consumer has the choice to pay more, or not buy, Apple has the choice to pay more or not sell...
Re:Their merchandise, their prices (Score:2)
Um, maybe because we installed iTunes based on a promise that it wouldn't work this way, because we've already bought music that only iTunes can play, and because it S-U-C-K-S.
If we didn't complain, they'd probably blame something else for their sudden lack of revenue. Like, oh, piracy or something.
Re:Their merchandise, their prices (Score:2)
The joke is on them, since I make MY OWN MUSIC!!!1!
For my own personal enjoyment, too!
Re:Their merchandise, their prices (Score:3, Insightful)
Re: (Score:3, Insightful)
Re:Their merchandise, their prices (Score:3, Insightful)
Good news (Score:5, Funny)
Re:Good news (Score:2, Funny)
Every song in the system will be ordered by the number of downloads it had last month. The rank will then be sorted in reverse. The position of the music on that list will be its price. Therefore, Britney Spears will cost only a penny, while Simon and Garfunkel will cost $300! See? Now you can get Britney Spears for cheaper! Aren't you HAPPY!
And so it begins.. (Score:5, Interesting)
Then again, there is no end to corporate greed so I'm expecting to see this in action.
Is this really a bad thing? (Score:5, Interesting)
Re:Is this really a bad thing? (Score:2)
People don't have to buy the entire album to get a single or two, so the instead of spending $16+ for two songs, they are spending $1.98.
They are used to screwing people over with crap, so they can't see why people are fighting this.
Re:Is this really a bad thing? (Score:3, Interesting)
I really don't see how you got modded up, since you seem to working with a world view that is fuzzy and warm and has absolutely no connection with how the labels work.
Shouldn't B-sides actually be cheaper than the hits?
Maybe. Since supply is effectively infinite, it may also be that the hits should be cheaper. And who is to decide what is a B-side these days? You think a record exec is really going to walk away from money should something initially considered B hits big?
New material more exp
Guys, this is a strange story (Score:5, Insightful)
It's a story if you have someone say that he "knows" Mr Jobs will do something, or - better yet - if Mr Jobs actually says he's doing something.
But if a record company executive says it, and he has a vested interest in having it happen, and perhaps almost a desperate need for it to happen, well, I don't think his word or judgement is necessarily good.
Record company executives have, from what I've noticed, little reputation for integrity. Until I hear this from Mr Jobs' mouth, or a slick press release and video from Apple about its inevitability, I'm not going to believe it.
D
Re:Guys, this is a strange story (Score:2)
Apple employees say no (Score:3, Funny)
"According to EMI" (Score:5, Funny)
Take your time (Score:2)
If there were a major backlash, I wouldn't be surprised if they back off the decision.
conjecture? (Score:4, Insightful)
Just to make sure... (Score:5, Insightful)
Good. (Score:4, Insightful)
Apple often seems to be on the side of the RIAA over our side, but that's because our side is OUR side and that makes any compromise be less than what we want. I really would welcome price changes in both directions; independant artists being more competitive, and big fat companies ripping off diehard fans more than usual. Go Apple.
The RIAA Strikes Back (Score:3, Funny)
Crap (Score:3, Insightful)
Within that framework though, I don't see any reason not to have flexible pricing. Most of the music I listen to is older, less popular stuff anyway, so I'd probably benefit (if I actually used iTunes in the first place). I hope Krokus, Vixen, White Sister, Rough Cutt, Faster Pussycat, etc. songs go down to about a quarter each... I might actually start buying online then.
Paying more for popular songs (Score:2)
Sensible capitalism (Score:5, Interesting)
It makes sense to me that the one good song on an album would go for more than the rest. The record companies are ticked that they're losing revenue that they used to get; it used to be you had to buy an entire $12-$16 album to get the one non-sucky song. Perhaps $.99 is too low for that song, if people are willing to pay more, as evidenced by the fact that they used to spend MUCH more.
There will be the inevitable replies to this about how you can get it all for free on P2P, but Apple has demonstrated that people will pay for music if it's convenient. Now they get to fine-tune the pricing model.
Personally, I look forward to it. If the latest top 40 goes up, and the older and obscure stuff that I want goes down, I win, at the expense of the rubes paying $2.49 for whatever is hot today.
Dynamic prices = higher costs (Score:2)
Infinite supply = $0.00 price! (Score:3, Interesting)
I like it. (Score:2)
Misleading (Score:2)
Labels can't see past their own greed. (Score:2)
Jobs was absolutely right to publicly go on record saying this behaviour is "greedy". The arrogant fat cats who run the music industry will, in the end, price themselves into extinction.
There is value in a unified pricing model that consumers find attractive. I believe the increased volume would make up for the
just another way of saying 'we are raising price' (Score:2)
Read between the lines.
Somebody CAN'T read!!! (Score:5, Informative)
"Today 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."
This does not say that "...EMI has an understanding with Apple that flat fee pricing will end within the next 12 months..." as the story claims.
Why was this story allowed to be posted this way?
The actual Forbes story is talking about how the labels want to take advantage of the consumers while Steve Jobs does not want to change the pricing structure. He's fought against it from the beginning and there has been nothing reported to support that the labels have won the fight yet.
If teh Steeve had teh Ballz.... (Score:2, Interesting)
Meh.
Who cares? (Score:2)
ATTN:RIAA (Score:2)
1. Stop producing crap artists with guaranteed star power and invest long-term in less popular but more qualified artists that you are currently rejecting
2. Divorce yourself from the ClearChannel monopoly in the United States. It's not helping matters since they aren't exactly a hotbed of diversity in programming
3. Continue to offer your music on CD as well as non-DRMed cross-platform media files and watch your profits soar higher than you e
Sounds good to me (Score:5, Insightful)
some bad, some presumed good (Score:2)
now I have to check the price of every song before I buy it to make sure it's not been deemed "worth" $2.99 or whatever.
the presumed good:
much of the music I'm interested in will drop to $0.79 because it is far from "popular".
yeah right.
This will not increase revenue. (Score:2)
That makes sense (Score:2)
Oh, wait ...
Simple solution (Score:2)
If nobody has the self-discipline to set a limit, then the music companies truly deserves more money because people are willi
Um.. ATI anyone? (Score:2, Interesting)
officials were unavailable for comment (Score:2)
Sgt. Pepper's Lonely Hearts Club Band (Soundtrack) - Bee Gees and other Various Artists
The Endless Dream - Yanni & John Tesh
Osmond Family Christmas Album - The Osmonds
Lord of the Dance - Ronan Hardiman & Michael Flatley
All or Nothing - Milli Vanilli
Middle of Nowhere - Hanson
see: http://listsofbests.com/list/64/ [listsofbests.com]
i had no problem buying from itunes before (Score:2)
The truth of the matter... (Score:2)
Another thing to bare in mind... (Score:2, Insightful)
Who decides what is popular? (Score:4, Interesting)
From the article: "Label executives have made multiple arguments for flexible pricing. They argue, for instance, that almost all retail businesses have different price points for different products." Who decides the price points, however? Who decides which albums/songs are popular vs. less popular? Would Apple decide, or the music companies? Is it "according to traffic on iTunes" -- e.g. when more people buy it, the price goes up, like a stock -- or "measured by radio play or CD sales or Billboard ranking", or "what the record companies are declaring as popular"? What's the reference???
Why the heck doesn't Apple: (Score:5, Interesting)
2) File a lawsuit on behalf of the artists...that said artists only negotiated "analog" recording distribution rights. That none of the old contracts covered digital distribution. And that all of the artists retain the rights to their digital distribution, including the right to negotiate a digital distribution contract.
(Think about it, a) the common people would support it as I would buy a lot more music at $0.99/song if I knew the artists actually benefited. b) think of how many artists would support such a move? big names too like "Paul McCartney"... As many artists were screwed over big time. Even big name artists saw very small percentages of their songs. This would allow Paul McCartney to regain ownership of his music (for digital distribution only). RIAA would still retain the analog rights (but we all know that's a dying medium). And with RIAA pushing so much legislation distinguishing the difference between Analog and Digital (DMCA) there may in deed be enough cause for a court to decide in Apple's favor especially if 90% of the artists and consumers are in favor of it as well.
RIAA would find themselves the owner of an extinct business model. Left with a rotting carcass...
- The Saj
Re:Why the heck doesn't Apple: (Score:5, Interesting)
From the linked article:
More popular = more expensive? (Score:4, Funny)
Not Apple's stance (Score:5, Insightful)
I for one welcome flexible pricing because I think there is some music I would buy for less than $0.99 that I have not bought because of its current price. Pay more an a dollar for a single? That would have to be some great music, I doubt I would do it. Everyone has their price. mine feels like a dollar.
Why must they always kill the goose... (Score:3, Insightful)
The iTMS achieved its status as the most popular online music store by being easy to understand: You get the same rights for every song, and every song is the same price. That's called being customer-friendly. Contrast that with the stores where songs are all different prices, and some can't be burned to CD, etc.-- they're all also-rans, killing each other for the small sliver of the market not controlled by the iTMS.
When the prices go up from 0.99 and that psychological barrier is broken by a nonzero digit left of the decimal point, sales will go down as people balk at song prices and go back to p2p for their music. And does anyone think the record companies will really lower the prices on anything people would actually buy? Haven't they demonstrated that they have no stomach for charging x when they could be charging x+1?
When will these jackals learn? <shaking head in disgust>
~Philly
Behind the curtain, the conversation, the deal. (Score:5, Insightful)
Execs: You need to allow a flexible pricing model where more popular stuff costs more so we can all make more money
Apple: No we don't
Execs: We don't care about the less popular stuff from the bands with actual talent, never did, those acts could drop off the face of the earth for all we care, charge whatever you want for that stuff, here is a list of the artists we care about and have the payola going to promote them even though we all know they suck, oh wait crap *sleep* When I snap my fingers you will akwake and not remember I ever mentioned anything about payola *snap*
Apple: huh, wa...oh yeah, no we are sticking with
Execs: We'll stop selling our stuff through iTunes, then where will you be?
Apple: Eh, whatever you'll be back...we control 85% of the market and sell the most popular player.
Execs: Oh yeah we wanted to talk to you about that we want a cut of the iPod hardware sales too, its only fair.
Apple: Na, You don't seem to understand you need us as I've pointed out we basically own this market yes you make the widget we are the only effective way of getting the widget to the customer
Execs: We'll take our toys and go home, without the music you have no store....
Apple: Without our STORE you have NO STORE
Execs: so there see we need each other so lets talk about that pricing
Apple: no really you don't seem to understand
Execs: (TO self) Oh shit they are on to us.
Apple: No really I think we are going to stick with
Execs: I think you don't understand, we really are going to take our ball and go home, ALL of us where will your store be if none of us provide the music to sell in it. NONE. Other stores will work with us on it, sure the players they support are not as good, the store isn't the best model, but hell they will charge whatever we tell them to charge just to get their hands on the product...
Apple: Well you don't have to go that far, maybe we can work "something" out.
Execs: Well thats more reasonable, perhaps we can work "Something" out.
Apple: (TO Self) umm humm you just keep thinking that, sure we'll agree to your "Flexible" pricing...BUT just wait until you see the terms, and when the sales slump on the first couple of releases under this plan, because TRUST me they will, we will make sure of it...
Execs: So we have a deal
Apple: Sure Sure we'll phase it in like the next year
Execs: Excellent!
Apple: (To Self) Umm humm more like 2-3, never, perhaps a token release here or there for a higher price, actually you have played right into our hands, yeah we'll rasie the prices on a few things, but wait until you see the price drops on the back catalog...Volume, its all about Volume, and didn't you notice that clause in the agreement that says we always get the same wholesale cost and keep the same amount of the profits per purchase no matter what, when the price goes down to
Steve won't like this (Score:3, Insightful)
But what's most important to notice is this: a variable pricing scheme as described in TFA could seriously hurt Apple's sales. While I have no data to support this claim, I'm sure that Apple makes most of its money from popular songs. However, remember that when an album is new and popular, the retail price is usually lower to boost first-week sales. I doubt that this same policy would apply to the iTunes Music Store. Thus, if the price is higher at the iTunes Music Store, a full album could very well end up being more expensive than the retail CD.
We live in an impatient world, and this has at least two implications: people won't wait for the price to come down and will buy the CD at retail, or people will pay more for the instant gratification of the iTunes Music Store. I think the former is more likely, because in reality you would be getting more (a real CD) for less. People love a bargain.
So if you're the kind of person who buys popular music when it first comes out, which many if not most of the iTunes Music Store's customers are, chances are good that you will never have cause to buy an album from the iTunes Music Store again. Plus, suppose that when an album is no longer "new and hot" that Apple is permitted to lower the price. By that time, people have lost interest that Apple could lower the price substantially and they still wouldn't sell many copies -- everyone who wants it already has it.
There's also a psychology at work here. $.99 seems a lot smaller than $1.00, even though for all intents and purposes there's no real difference. That's why you rarely buy anything in a store that is an even dollar amount because $39.99 looks a lot smaller than $40.00. Suppose Apple starts selling at $1.19 for a popular track. That's only $.20 more and 20% higher than $.99, but gosh, $1.19 looks huge compared to $.99. That $1 mark makes a big difference in terms of the perceived cost of a song.
In the long run, I don't see how this can be anything but bad for Apple. And, the more the record labels try to screw people over with high prices, the more people are perfectly content to screw over the record label by downloading illegally. So it may even end up being worse for them. What it boils down to is this: one way or another, people will download music. Whether it happens legally or not is entirely in the hands of the record companies.
Bye Bye Itunes (Score:3, Interesting)
Bad move Apple. Steve Jobs must be calling the shots again.
Re:So How Much is that 80's Hair Band Music Worth (Score:2)
Heh, I'm hoping less. I could rack up on "hair band" music if the price drops to about $0.25 per track. Lots of it would be a steal even at $0.50 / track...
Personally, I relish the though of all the kids that must have the latest/greatest junk out of the studios paying buku dollars in order to subsidize me buying up older stuff I used to love in College
I hadn't really thought of it that way, but good point. Let the g
Re:Good job apple (Score:2)
It says that the CEO of EMI "believes that Apple will end flat fee pricing... Apple could not be reached for comment."
Jobs is on record as saying that he won't raise prices and that the people who want to are just greedy bastards.
But don't let reading the article stand in the way of your joke, of course.
Comment removed (Score:5, Insightful)
Re:But that's not how the stores work... (Score:4, Insightful)
Just imagine if all retail worked like this (your suggestion). You'd go to a clothing store, and instead of last year's stuff being marked down, it would actually increase in price.
Note that this is pretty much how DVD sales go. Seems to work for them. Video games too. New, popular stuff expensive, older items that don't sell well become cheaper. Eventually it's pennies on the dollar. Why does this work? Because by that time, the manufacturer/retailer has ALREADY MADE THEIR PROFIT. The rest is gravy.
Music is one of the only things that starts cheap, and gets more expensive as time goes on. It's weird, really. They can get away with it because of two factors:
1. Music is one of the only products that people will continue to buy decades after release.
2. Perpetual copyright.