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Media (Apple) Media The Almighty Buck

Digital Music Stock Market? 475

tommertron writes "Adam L. Penenberg has a column on Slate about about the pricing of digital music, specifically, iTunes' 99-cent-a-song model. Basically, he suggests that song prices be determined by market forces, just like stock and commodities markets. The more a song gets downloaded, the more it would cost. Song by big-name bands would cost more, and lesser-known acts would cost less (with a minimum of 25 cents.)" From the article: "Steve Jobs, who has been willing to take a few pennies per download so long as he sells bushels of iPods, calls tiered pricing 'greedy.' That view is shared by millions of consumers who believe the record companies have been gouging them for years. From the buyer's perspective, however, Apple's 99-cents-for-everything model isn't perfect. Isn't 99 cents too much to pay for music that appeals to just a few people?"
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Digital Music Stock Market?

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  • Oh, for God's sake (Score:5, Insightful)

    by Daniel Dvorkin ( 106857 ) * on Tuesday December 06, 2005 @04:08PM (#14196298) Homepage Journal
    "Isn't 99 cents too much to pay for music that appeals to just a few people?"

    No, apparently it's not.

    This is a striking example of how dumb the "popular=good" meme is. When I buy music, or anything else, I don't care what it's worth to other people; I care what it's worth to me, whether I'm one of a hundred, a thousand, a million, or a billion.

    Aaargh. Why the hell are people trying to fix something that's not broken? (Well, okay, I know why the RIAA is trying; what's this guy's excuse?) Tiered pricing, supply-and-demand pricing (hey economist guy: the supply is unlimited!) or any other fancy pricing scheme that requires people to pay more than 99 cents per song doesn't work. 99 cents per song, OTOH, does work. That's what online music buyers have decided, en masse, they'll pay for legal music downloads. Charge more and piracy looks a lot more appealing that paying for it. That's the reality.

    Not to mention that it just makes sense: buy one song, pay x, where x is some reasonable amount (say ... oh ... just for example ... 99 cents); buy two songs, pay 2x, etc. People want their music, they don't want to have to solve an accounting problem to figure out how much they'll pay for it. "Ten songs, ten bucks, plus I save a dime. Cool." That's how people want to buy music, and that's why iTunes has succeeded while every other pay-for-download system has pretty much crashed.

    Stock market pricing is one of the stupidest ideas I've ever heard WRT the music industry ... and you know, given the long sad history of stupidity in the music industry, that's saying a lot.
    • more than 99 cents per song doesn't work. 99 cents per song, OTOH, does work

      This reminds me of "There's Something About Mary", when the Hitchhiker was telling Ted that his 7-Minute Abs will be more popular than the 8-Minute Abs.
    • by Anonymous Coward on Tuesday December 06, 2005 @04:16PM (#14196409)
      I didn't read the article but the entire idea is flawed for one reason: Price elasticity is different for every song and artist. To use one demand-driven criteria for every song and artist would be stupid. To determine individual price elasticities for each song & artists would be impossible, at best a guessing game.

      Demand only determines price when coupled with price elasticity.
      • by Marillion ( 33728 )
        I agree with the elasticity problem. To tweak you remark a little, in a classic stock market, there are only so many shares of any one stock out there. The more people who want a certain issue will drive up the price of that issue. With downloadable music, there is no scarcity of the resource. The supply side of the law of Supply and Demand is, in effect, infinite. Thus the pricing of music has to be based upon some factor other than supply.

        Revenue experts like Robert G. Cross [] espouse partitioning pro

      • by dgatwood ( 11270 ) on Tuesday December 06, 2005 @06:15PM (#14197659) Homepage Journal
        More than that, the suggestion of charging more for more popular titles is exactly the opposite of what happens in most computer-based markets. Software that is only important to a few people costs hundreds of dollars, while consumer-oriented products are cheaper.

        In fact, this is fairly consistent across all industries where supply is not constrained. Only through artificially or naturally constrained supply does higher demand result in higher prices. When supply is not constrained, higher demand results in lower prices because the incremental cost of most products is small compared to the up-front R&D costs.

        So in order to convince me that prices should be higher for more popular songs and lower for less popular songs, you would have to convince me that supply of music is naturally or should be artificially constrained. Good luck. I know the record companies would like it to be that way, but Steve is right; artificially constraining supply to drive up price is greed, pure and simple.

        • by JulesLt ( 909417 ) on Tuesday December 06, 2005 @06:50PM (#14197915)
          Having read the article it makes the same classic mistake of ignoring the production cost, and concentrating purely on the physical item/distribution costs - which is as you say the same in software markets - the more something sells, the lower the production cost per unit - which is really what you'd expect with music - the more ubiquitous the cheaper it gets, niche art music costing more (like bespoke tailoring or software costing more than mass produced).

          What's also daft is the idea that someone logs on, sees Eminem is $5 so then decides they'll buy Coltrane for 25c instead - like people do that now.
    • by capt.Hij ( 318203 )

      When I buy music, or anything else, I don't care what it's worth to other people; I care what it's worth to me,

      The problem is that the price that the supplier wants to sell matters just as much as the buyer's price.

      Stock market pricing is one of the stupidest ideas I've ever heard WRT the music industry

      I seriously doubt that the recording companies would use a stock market price scheme. Instead they would more likely choose a market driven scheme. They would charge more for music that only sells a

      • by ZachPruckowski ( 918562 ) <> on Tuesday December 06, 2005 @04:26PM (#14196559)
        The problem is that the price that the supplier wants to sell matters just as much as the buyer's price.

        Except for two basic facts:

        1) People don't need this. It isn't vital and required for life, it's music they can live without. If you charged me $5 a song and that was the only choice, I wouldn't buy it. I'd just listen to the radio or something.

        2) There is still a music piracy underground, and it's pretty big. Whatever anyone's feelings on the issue, we have to accept that stamping it out through force isn't looking too possible right now, or anytime in the foreseeable future, since there are thousands (at least) of tech savvy people to create new networks and forms of filesharing, and they can move faster than the music industry. Therefore, the way to beat piracy is to make the "official" files that cost money worth more than what is available over bittorrent or LimeWire or whatever.
    • by PepeGSay ( 847429 ) on Tuesday December 06, 2005 @04:23PM (#14196513)
      supply-and-demand pricing (hey economist guy: the supply is unlimited!)

      Thats the rub, the *music industry* as the prejorative term is usually referring to the distributors and "record companies". They exist as a means of distribution and marketing. Without the distribution portion, they are hurting. $13 for a CD... you gotta be kidding me.

      They are trying to figure out where they fit in and create a purpose for themselves. Maybe they want to reinvent themselves as the stockmarket of music, what a dumb idea. The stock market idea is rooted in the idea that a company actually needs capital to continue growing. The really high quality bands cannot turn money into new songs, because it is a creative endeavor. However, the music industry *can* create more marketing generated pop bands with money... ugggh

      Anything you see the record companies do in regards to online sales at this point, in my opinion, is a self preserving act. Word of mouth can do marketing, web sites can do marketing, but the record companies have been the ones who can put up the money to create the CDs that are released. With that gone, the record companies become largely anachronistic and will be eaten up by other more nimble companies that can provide the softer services. Until then we get beaten to death in our wallets by their death throws.
    • by sp0rk173 ( 609022 )
      This is a thinly veil attempt to drive people to search out "better", less popular music. As more people download a new pop song, its price increases, and people will be (hopefully) less willing to pay the inflated price and move onto another, less expensive, song/artist. This will give independent artists more exposure on itunes, and give the fans of their music a bit of a price break. Since most of the music I like isn't even on itunes, i don't really give a crap. I think this *Could* lead to more div
    • "Tiered pricing, supply-and-demand pricing (hey economist guy: the supply is unlimited!)"

      So what if supply is constant, or unlimited? That just removes one of the conditions for ideal pricing.

      Pricing based on demand is not invalidated at all.
    • Game Theory (Score:2, Interesting)

      by boldtbanan ( 905468 )
      Actually, this is a good idea. The optimum pricing for any product creates a balance between how much you charge and how much you sell. You are trying to maximize your profit using the equation: [cost] * [sales] = [profit] The optimum solution is the Nash equilibrium point (The A Beautiful Mind guy...not Russel Crowe). If you sell 10 items at $.50, you make 5 times the profit you would selling 1 object at $1. The point of decreasing the price is that you generate more sales...would you buy the new [in
    • One word: KISS. If you want to keep your customers happy, keep it simple, stupid! But we all know the RIAA is there to make their customers as unhappy as possible, so indeed, they are trying to fix what is not broken. If this goes through I think it will backfire big time.
    • "Isn't 99 cents too much to pay for music that appeals to just a few people?"

      Holy shit, this part made my chin hit the floor. It's clear that stupid just got a new champion. Every song, pretty much no matter how bad it is, is going to appeal to someone out there to the point where they're willing to fork over 99 cents! It's a perfectly resonable price.

      I would consider it a Christmas miracle if iTunes, for no apparent reason, produced a penis-shaped sound wave through this guy's iPod that would unclog the
    • by jimbolauski ( 882977 ) on Tuesday December 06, 2005 @04:44PM (#14196777) Journal
      I like the idea of stock market songs I could be one of the first to purchase the song for $.99 and then could sell it back for $1.25. I'm sure I could write a simple script that would purchase new songs by popular artists at since price would be based on sales and make a fortune. By the way I am patiening the idea of creating a script or a program to purchase online music and then resell it at the ceiling price.
      • by joel8x ( 324102 ) on Tuesday December 06, 2005 @07:04PM (#14197990) Homepage
        You know, you inadvertently bring up a really valid point. Why can't we sell our DRM'ed music?? If I buy a CD and decide I'm sick of it, I can sell it on eBay, or to the local used record shop. Shouldn't I be allowed to do this with my purchased online music. Can we as "netizens" rally together to make these online services offer a way to transfer ownership to another user? Think about it - I invalidate my own drm so I can no longer play the song, and give it to a willing buyer at whatever price I set and the service takes a small percentage of the sale (say 10%).
    • That's what online music buyers have decided, en masse, they'll pay for legal music downloads.

      I, personally, don't find $0.99/song to be a reasonable price. If I wanted to buy an entire album, we're still talking largely the same cost as had I gone to the store to buy it, and they can't claim retail markup, or cost of CD production or cases or inserts or any of that is driving the cost up.

      Why should I pay the same cost for digital media that I pay for a better-quality physical disc with protective cas

    • It's not that bad idea when you think of it like this: If it behaves like the stock market, prices of popular musi,c like britney spears, would skyrocket making it unaffordable, thus, killing the genre.
  • by jmp_nyc ( 895404 ) * on Tuesday December 06, 2005 @04:10PM (#14196314)
    Commodity pricing is based on the idea that supplies are limited. Likewise with stocks, as there are a finite number of shares of any given company in circulation. Even if every person with a computer on planet Earth bought a copy of the same song, it would not be in short supply.

    That's not to say that there isn't value in a variable pricing scheme, but it wouldn't really be commodity pricing, or a "digital music stock market."
    • > Commodity pricing is based on the idea that supplies are limited.

      Exactly. Which is why comparisons to a stock market, supply and demand, etc are all daft. Listen up people, copyright is all about providing the producer of a work an explicit MONOPOLY on reproducing (and public performance, not at issue here) the work. So anything other than seeking the absolute maximum return by picking a pricepoint to generate maximum profits is doomed longterm.

      That IS the market functioning correctly as it is curre
    • Commodity pricing is based on the idea that supplies are limited. Likewise with stocks, as there are a finite number of shares of any given company in circulation. Even if every person with a computer on planet Earth bought a copy of the same song, it would not be in short supply.

      The problem with your (and the dozen other posters) assertion, is that supply != number of copies possible, supply also includes availability!
      If there are limited outlets which can make something available for use, then supply is
    • Even if every person with a computer on planet Earth bought a copy of the same song, it would not be in short supply.

      This was my first reaction to the article as well. However after thinking about it, maybe "supply" isn't physical supply. Perhaps the model works if supply is related to percieved quality. For instance songs I really like are in short supply.

      Anyways, just playing devil's advocate against my own and your thoughts.
  • limits (Score:5, Insightful)

    by Rudisaurus ( 675580 ) on Tuesday December 06, 2005 @04:11PM (#14196330)
    If you're going to set a floor price, you'd better be prepared to set a ceiling price as well. Otherwise the model is both unfair and unstable because it's subject to unlimited inflation, which is just as unfair to consumers as unbounded deflation is to the artists and vendors. Either take both the upside and downside risk or ameliorate both.
  • by spacedx ( 458227 ) on Tuesday December 06, 2005 @04:11PM (#14196334)
    This is great -- as long as the maximum price is 99 cents.
  • However... (Score:2, Insightful)

    by jnadke ( 907188 )
    Such a model cannot be accurately applied to the digital media market.

    Busiesses are trying to offer products with a variable pricing scheme with a commodity that has infinite supply. It doesn't make any sense.

    It barely costs them any more to sell 20,000 albums than 200.
  • by ivan256 ( 17499 ) * on Tuesday December 06, 2005 @04:12PM (#14196358)
    The record industry should hire a few economists. This is a great idea, but they've got the pricing completely backwards. The more popular songs shold get cheaper and the less popular more expensive. Why? That's easy.

    The stock market works the way it does because supply is fixed and demand is the only variable. With digital music, the supply is infinite, and the demand is variable. Theoretically, that should mean that the songs could be free, except that the creation of the media has fixed up-front costs. That means that after a fixed amount of revenue is generated by a song, all additional revenue is going to be 100% profit. In order to make the maximum amount of money off any particular song, you want to increase it's appeal as much as you can through price lowering, while at the same time making sure you charge enough to recoup your costs before you break even, and as much as you can without pushing away customers after you break even. If there is a lot of demand for a song, you're going to make a profit on it, but you could potentially make even more money by lowering the price, because the drop in price could attract more than enough customers to make up for the loss in revenue. For songs without a wide acceptance, it doesn't work that way. You probably don't have many people out there who like the song but have price holding them back from a purchase, and the people that are buying the song are probably the ones that really like it and would be willing to pay a bit extra to have access to music that would otherwise be unprofitable to publish.

    The only way charging more for popular songs is a good idea is if your goal is to punish your customers for being mainstream music listners, or if you have a complete lack of understanding of supply and demand. If the goal is to actually make money, they've got this plan completely backwards.
    • by SeanDuggan ( 732224 ) on Tuesday December 06, 2005 @04:18PM (#14196433) Homepage Journal
      Not to mention that the idea of having songs go down in price as demand goes up will appeal well to peoples' egos. There will be people who will buy the early copies of a song for $2.50 each (I'm considering that an upper limit because I saw it as a proposed upper price somewhere) and consider themselves to be the "trendsetting elite." There will be those who will buy obscure songs that don't sell well for $2.50 each and feel it inflates their indy cred. People like me will hang around and see what seems good, then buy it for $0.99 or whatever the lower price is, and feel good about being thrifty in our patience. The music industry gets its extra money and most of the smart people will still be paying the low prices for their music.
    • ...if your goal is to punish your customers for being mainstream music listners... (sic)

      Hey - now you're on to something!
    • The above comment needs to be modded up. The profit a company earns is the product of profit per item sold and the number sold. Increasing price increases profit and decreases sales. The goal is to find the price that maximizes the product of these numbers. But determining that maximum is a non-trivial task and depends on the relative rates of change of the sales and profit as a function of price. Without other information we cannot tell, a priori, whether 99c is above or below the optimum. There are some r
      • But determining that maximum is a non-trivial task and depends on the relative rates of change of the sales and profit as a function of price. Without other information we cannot tell, a priori, whether 99c is above or below the optimum. There are some rules of thumb as the poster above suggests. But in practice the way to find out is to try varying your price either way and assessing the market's response.

        These are exactly the types of things that dynamic digital sales software should excel at. Small varia
        • by Rich0 ( 548339 )
          Amazon actually tried out something like this. The price database would contain info about cost and current selling price. The system would then offer shoppers a price within so many standard deviations of the mean price. Then, as items sold or didn't sell at a given price, the system would adjust the mean price dynamically.

          The problem was that somebody happened to browse the site with two different PCs at the same time and got two different prices. A little research uncovered the new system, and it was
    • But is charging your customers more to be early adopters really what they want to do? The way songs become widely accepted is that many people listen to them and play them for their friends, or recommend them to their friends like that (and also through distribution channels like TV and the radio, where the song is basically played for the listeners for free). Would it really be to their advantage to construct a initial barrier to widestream acceptance?
    • Demand in dollars (Score:5, Insightful)

      by jfengel ( 409917 ) on Tuesday December 06, 2005 @04:37PM (#14196698) Homepage Journal
      I agree with much of your reasoning, but I think you're leaving out a factor. There are two different things that make a song worth more:

      1. Many people want it
      2. Few people want it, but they want it a lot.

      That's why you'll end up with a U-shaped curve: very popular music will sell for a lot because so many people want it that you can raise the price until listeners squeal. And some unpopular songs will have higher prices because they appeal to a market with few people willing to spend a lot of money (say, "rare" jazz recordings or concert bootlegs).

      In other words, "demand" is measured in terms of dollars, not in terms of people. The low price is for stuff in the middle, where some people want it but there isn't massive demand, either in terms of people or in terms of dollars.

      By "rare" above I mean that they can try to artificially keep rare things rare with DRM. If they decide that DRM really, truly, genuinely doesn't work and everything sells a single copy and is instantly available for free, then everything changes. (I'm not taking a position for or against it, just talking about the economics of it and explaining a technical assumption.) This artificial scarcity corresponds to a completely flexible market, where they can make as many copies as are necessary but will make only as many copies as necessary.

      The price to produce sets a floor on how much they can charge (and that price incorporates a company's total expenses, including overhead and the expense of producing records that flop), but that only affects how low the price can go before the company just goes out of business. It doesn't set the top of anything, and there's no economic reason for them to charge less just because they don't need the extra profit.

      And for the unpopular stuff there's no particular need to take the floor into account because any sale is worth more than no sale; the expenses are sunk costs. The only floor is the management overhead needed to keep it on the web site, and in fact that may be so low as to be zero compared to the sex appeal of being able to make EVERYTHING available.
    • Except, there are fixed AND variable costs to the songs sold online - variable costs in the form of royalties for each song.
    • Theoretically, that should mean that the songs could be free, except that the creation of the media has fixed up-front costs. That means that after a fixed amount of revenue is generated by a song, all additional revenue is going to be 100% profit.

      Not to nitpick, but this isn't exactly true. There are many costs associated with a service like ITMS that you probably don't think about. Hosting, bandwidth, marketing, maintenance/labor, electronic security, lawyers, accountants, credit card processing fees, e
    • Err, umm, how about Apple just lets music companies set their own pricing schedules? Apple can charge the music companies the distribution costs (bandwidth, storage space, etc.) plus whatever percentage they feel like, and the music companies who want more money for their tracks can set the prices at whatever *their* marketing gurus think the market will bear.

      Maybe the next big predicted hit goes on sale and prices are set high for the first week to catch the gotta-have-it-now crowd, and maybe they come do
  • by Tyger ( 126248 ) on Tuesday December 06, 2005 @04:13PM (#14196376)
    I don't see a problem with flat rate pricing. Why should what the song is worth to other people matter to how much it's worth to you? If I like a song, it's worth the same to me no matter how popular it is.
  • Basing your price on other people's taste makes it seem like you're buying the music for someone else.

    If YOU like a song enough, it's worth $0.99. Just because other people don't like it doesn't mean it's not worth $0.99 to you.
  • by hafree ( 307412 ) on Tuesday December 06, 2005 @04:14PM (#14196388) Homepage
    "Isn't 99 cents too much to pay for music that appeals to just a few people?"

    I don't think so - as long as the music appeals to YOU, why should you expect to pay any different?

    That view is shared by millions of consumers who believe the record companies have been gouging them for years

    Records cost $6, tapes were $8, CDs which cost even less to produce cost $15, and now an 18-song album will cost you $18 to download. How come the less it costs to produce the media, physical or virtual, the more it costs? If anything, music shoulc cost less, not more. It's not like the artists will actually see any extra revenue anyway...
    • The increase is partly due to inflation.
      At a average of 3%/yr (rough approximation), money doubles in 23 years (1.03^23=1.97). It's actually a litttle quicker than that, IIRC, so 20 years is a good value for 'money doubles.'

      That AC/DC cassette you bought for $8 in 1985 is equivalent in real monetary value to a $16 Nickelback CD today, yet so much cooler and more retro.

      Remember, the physical product was always pennies on the dollar, and that's made up by Apple's cut for running iTMS and providing Steve with
    • Actually, that 18-song album will cost $10 to download. The only albums that cost more than $10 have a very large number of songs (30+, say) and would be even more expensive multi-disk sets on CD.
  • 1) The stocks offered to public by a company are limited.

    2) These can also be traded again in the stock market.

    3) You cannot get free stocks from a P2P stock market.

    Hence the mathematics and economics for stock isn't applicable to songs

  • Isn't 99 cents too much to pay for music that appeals to just a few people?

    Uhhh, no.. That's what market forces are all about. It's about what it's worth to the people wanting to buy it. In fact, if it only appeals to a few people, it would stand to reason that it should cost MORE, not less. Granted, the more popular songs need to pay for things like bribes to Clear Channel, err, uhhh, I mean "promotional considerations", since payola is a thing of the past. Even so, the more niche something is, either the
  • I pay 11.99 for some popular cd at Best Buy when it comes out, because they know they will sell millions of them. I pay 18.99 or more for the obscure stuff that only a few of us want.
  • ECON 111! (Score:5, Interesting)

    by Inoshiro ( 71693 ) on Tuesday December 06, 2005 @04:15PM (#14196407) Homepage
    " Isn't 99 cents too much to pay for music that appeals to just a few people?"

    No, it's too little. If you put demand and supply as 2 linear equations on a graph, you'll see they're related.

    Let's go through a simple situation: demand is x, and supply is y. Now since we have infinite supply (since this is a digital work), we're going to say that y is not supply, but rather money supply (since the money is the only limited part as far as the markets are concerened). As demand goes up, price goes down. If we were at the far-right, with maximum demand, price would tend to zero. If we were at the far-left, with only 1 person wanting the work in question, the price would tend to the total production cost! For 0, infinity (which is why if no one wants it, it won't get made).

    You're not going to get a perfect relation due to effects outside the market's control (such as non-market copying), but you'll see that 99 cents is too little for something this is in low demand, and 25 cents is too much for something that is in high demand.
  • I say there should be an upper cap as well. I mean, how many times will someone download an old Indigo Swing album (besides me). So, that would be lowered.

    Then, you have the throngs of "OMGIHAVETOBEPOPULAR" nausiating teeny boppers who will gladly part with her 1.50 for the latest BritneySync album. Let 'em. They will allow me to re-buy the Beatles Catalogue for cheap.

    Of course, the only way that there will be trust in this is if Apple would open up the statistics/usages. That way there wouldn't be an
  • by lpangelrob ( 714473 ) on Tuesday December 06, 2005 @04:16PM (#14196411)
    Sheesh. The way music execs get their tights in a wad over $0.99 pricing, you'd think that those extra dollars would be doing something for the bottom line.

    Make Apple tie their prices to inflation or something. At least then you'd have a reasonable excuse to raise prices, as opposed to what you have now, which is... nothing.

  • Isn't 99 cents too much to pay for music that appeals to just a few people?

    It's probably the wrong way around. People are smarter than that. They know about marginal cost and that less commercial artists still have to eat. £2.00+ is the going rate for high bitrate mp3s from DJ download sites such as XpressBeats [] and DJ Download [].
  • Winner-take-all (Score:3, Insightful)

    by yardbird ( 165009 ) * on Tuesday December 06, 2005 @04:18PM (#14196434) Homepage
    One problem with this idea is that it increases the winner-take-all effect. That is, it encourages producers to chase big hits while ignoring niches (the "long tail" [] mentioned in the article). It used to be selling a million was worth 100 times as much as selling ten thousand. Now it will be worth 400 times as much or more.

    But that's a sociological objection. From a technical standpoint, I think it's neat!

    Another weird line from the article:

    But each obscure indie rock or klezmer song that gets sold for a quarter is almost pure profit...

    How is that true? Seems like the profit margin would be much lower for these tracks.
    • But each obscure indie rock or klezmer song that gets sold for a quarter is almost pure profit...

      How is that true? Seems like the profit margin would be much lower for these tracks

      Presumably because the cost of generating the original content would be so low.
    • Re:Winner-take-all (Score:3, Insightful)

      by ucblockhead ( 63650 )
      You have to take into account the fact that the marketting nimrods spend millions to promote the "popular" stuff and don't spend a dime on obscure indie albums. Which leads to an interesting chicken and egg question.

      Their entire marketting model is based on taking a few acts and spending millions to convince teenagers to buy their albums. They tend to pick the young and inexperienced to promote because they can get better contracts and thus earn more profit.
    • I think it's pretty clear that the author has no clue as to what he's talking about. He has his assumptions ass-backward: the more popular songs should cost LESS, since the profit can be made up for in volume.

      It's as stupid as saying that a ticket to "Titanic" or "Harry Potter" should cost more than one for "Sideways," another tiered pricing scheme that destroys the so-called democracy of the marketplace. If a movie studio/record company spends umpteen millions on a movie/record and they can't get the publ
  • It's applying supply-demand economics... Except the writer forgets that there's INFINITE SUPPLY! You can "create" as many copies of the song from the supply song as much as you like via download. I suppose the only limiting thing is bandwidth but that's far, far less than 99 cents per 5 Mb.
  • Is why pay anything for music at all when you can get unlimited amounts for a fixed price each month using Play for Sure.

    And even if you don't want to pay for that and not rent the music, you can get songs at a variable price for the competitors at $0.79 or less. They just don't work with the Ipod - which really blows. Going off on a rant, it is so vastly inferior to other players like the DJ it is simply on the strength of it's design that people must like it. CAn't use it with gloves or cold hands. Hard

  • Popularity != Value (Score:3, Interesting)

    by 99BottlesOfBeerInMyF ( 813746 ) on Tuesday December 06, 2005 @04:20PM (#14196461)

    Basically, he suggests that song prices be determined by market forces, just like stock and commodities markets.

    While an interesting idea, I think this premise is flawed. Gold is not priced based upon how many people have bought it over the years, or even in a given year, but by how much people are willing to pay for it. Here's an extreme example. Suppose some very fringe singer produces a song called, "If you're not rich you're a stupid pussy" that appeals to to very wealthy elite and basically no one else. Perhaps this song names a dozen particular wealthy people and extolls their virtues. Say the total market for this song consists of about 500 people, but among those 500 people are individuals who would be willing to pay upwards of a thousand dollars a copy for the song and may buy a copies for relatives, friends, and even enemies they wish to taunt. According to a free market we could estimate the value of the market as 500 times and average of two copies per person times an average price of say $500. That gives us half a million dollars on a truly free market. Now consider the same market valued based solely on popularity and you get a song that is so unpopular the market is only worth a few dollars.

    This same principal applies to the opposite end of the spectrum as well. What is someone makes a funny, six second long song that billions would like to own, but no one wants to pay more than a quarter for. The market price may be 25 cents for optimal sales, but based on popularity would price this song at $10, which no one would want to pay, especially as the price would continually rise.

    I just don't think this is workable or desirable.

  • How about since the cost of distribution is nil, songs cost .25 max and crappy music costs .10?. That seems fair and logical to me. Especially since they are insuring that I can't resell my music once it's in digital form.

    See you get all of these people supporting the idea of tiered pricing and now we'll see every song on the next Green Day album going for 2.00. Meanwhile the "cheap" price will now be .99.

    I honestly like tooling around the Itunes store and listening to samples. But .99 let alone 2.00 for a
  • by thebdj ( 768618 ) on Tuesday December 06, 2005 @04:20PM (#14196472) Journal
    The reason prices rice and fall on the stock market is because people buy and sell certain stocks causing the prices to either rise or fall respectively. If a stock is not bought or sold it could maintain its price point (though this doesn't happen too often since people are almost always buying and selling listed stocks). Without a "sell" model, how would you lower the price on music? You would have to implement a sort of timed decline in pricing, which would have to lower prices not on some hard constant but at a good variable rate to maintain interest before the one hit wonder becomes worthless, again.

    There are also cases of insider trading which occur on Wall Street. In order to regulate this the SEC monitors the trades and activities of stocks. This means that someone at Apple would have to do a similar job on a model based like this. If no one was monitoring the purchases properly then I am sure you would see big labels paying individuals to purchase songs in order to raise the price. If a song were popular enough they could quickly drive up the price forcing people to pay $1.59 a song instead of getting the lucky starting price of $0.99 a song, or whatever it might be.

    Let us not forget that the industry is already fairly well dependent on a supply and demand style. Obviously some people are willing to pay $0.99 for less popular songs, while others might be willing to pay more. The true magic here is that Apple found the perfect price point to appeal to both side, which keeps the pricing and market simple for the users to follow.

    Tiered pricing schemes make a bit more sense because they would not be affected by spikes in song purchases or by the temporary decline of a song or by the aforementioned conspiracy. However, they also have their own set of problems. You would quite effectively remove some purchases by raising the songs price. Fewer people would be willing to pay $1.49 or more for the song they were willing to pay $0.99 for. At the same time you might find a few people who are more willing to pay $0.79 or $0.49 for a song then they were to pay $0.99, but I highly doubt the $1.49 songs could outpace the $0.79 or $0.49 songs.

    Let us trust Steve's decision for now. I am sure the folks at Apple had enough sense to ask some economists to look at the system and analyze the effects that a tiered system would have. Going on this assumption, it would be safe to say that $0.99 songs are here to stay (so long as the RIAA continues to play nice).
  • If such a model were applied to Operating Systems, Windows would cost $200 and Linux would be free... Oh wait, it is. And like the music distribution model, the higher priced stuff is crap.
  • Sure, I'm all for this. A minimum of 25 cents per song. A maximum of, what, 99 cents? Yeap, that would work for me.

    They didn't mention the maximum price they were planning to charge but I assume this is just an oversight.
  • Since millions of tunes sit on servers waiting to be downloaded, the vast majority of them quite obscure, sellers would benefit because it would create increased demand for music that would otherwise sit unpurchased. If a single climbed to $5, consumers couldn't complain that it costs too much, since they would be the ones driving up the price.

    Consumers couldn't complain? Why, because they have no choice but to download 'unpopular' music?

    Also, what if a company was able to figure out a way to artif
  • by stonedonkey ( 416096 ) on Tuesday December 06, 2005 @04:23PM (#14196509)
    The more a song gets downloaded, the more it would cost.

    Right, because supply and demand dictates that... oh, but this is digital media. There will never be a physical shortage of that song.

    From the buyer's perspective, however, Apple's 99-cents-for-everything model isn't perfect. Isn't 99 cents too much to pay for music that appeals to just a few people?

    Right, because rarity typically dictates that something should cost more, so... oh, but this is digital media. There will never be a shortage of that song.

    Yes, you have to pay for the bandwidth, the infrastructure, the yadda yadda and et cetera. It costs money to provide the media. Granted. And I personally think that $1 for a copy-protected, sampled audio file in a proprietary file format is ridiculous, but that's another can of worms. The point is that pricing by popularity when supply is not an issue reeks of greed, just as Jobs says.
  • Redundancy (Score:2, Funny)

    by Anonymous Coward
    Wow every single post here is redundant except one!

  • As long as they allow everyone who has ever purchased the song to sell back to the market I am ok with this idea.

    It shouldn't be limited to iTunes being able to sell. Since I purchased my copy, I should also be able to sell it back, or to anyone that would want to buy it.

    Buy low, sell high.

    What about option contracts? Damn.. this can get out of hand.

  • by Millard Fillmore ( 197731 ) on Tuesday December 06, 2005 @04:25PM (#14196535) Homepage Journal
    Not only is there no scarcity in this model, as several comments have already made clear, but there is also no way for a consumer to enter the market as a seller. If it were a true, market driven exchange, I would be able to take the track I bought for 25 cents when I liked Indie Band X, and sell it on the exchange for $3.00 when it becomes popular. I could then compete with the recording studio, who might be offering the track at $3.25.

    But this won't work, again because of the fact that there is NO REASON for the price to go up as demand increases.

    So, to review, we have a market for a commodity that isn't scarce, with a single seller, artificially fixing prices based on volume alone. Where's the market force in this?
    • by 31415926535897 ( 702314 ) on Tuesday December 06, 2005 @04:54PM (#14196879) Journal
      Now this is an interesting idea that you bring up.

      Right now, I think the studio execs know that they're sitting on a profit curve, and they probably think that in general, they're on the lower end of that curve. What I mean by this is that if you priced a song at $0.01, you would sell a million copies (netting $10,000), if you price a song at $1.00, you sell 50,000 copies (netting $50,000) and if you price it at $5.00, you sell 2,000 copies (netting $10,000). Of course these examples are contrived, but I think the general premise holds. I think the execs want to sell at what they perceive as a 'sweet spot' (say, $1.49 per song, if it's popular, selling 40,000 for a profit of $59,600).

      That's what they call stock market/commodity pricing, maximizing their profit curve. But I like what you mentioned. What if you, as an iTunes buyer were allowed to sell your copy of a song you purchased on an iTunes auction market. It's DRMed, so if you did go through the iTunes marketplace, Apple should be able to enforce the proper rights on the song and transfer them to the new owner (please ignore the burning to CD loophole for a second, this is merely an academic exercise). This could have several potential benefits. If you bought a song for $0.99 and you discover that you hate it, you can sell it on the marketplace (probably for a slight loss of a few cents in most cases). If you happened to buy a song, as you said, that was a bit obscure for $0.99 but then it became a classic hit worth $3.50, you could then sell it for a profit. You could have a speculative market!

      I think if Apple gave in to the execs and went with 'market prices', then it would only work well if people were allowed to sell their songs back. That way the studio is kept in check from raising their prices too high, because if it gets rediculous, the allure of a nice profit will keep supply high (and therefore lower market prices).

      I'm sure everyone will point out tons of flaws (like the fact that a studio will probably only start songs at high prices and slowly lower them, thus defeating any potential profit for speculators, or as I mentioned before, the DRM loophole), but regardless, I still think it's a very interesting idea.

    • So, to review, we have a market for a commodity that isn't scarce, with a single seller, artificially fixing prices based on volume alone. Where's the market force in this?

      It's 100% demand driven market, essentially the way monopolies work. The supply line is vertical, so as demand increases prices increase.
  • The stock market is based on the idea that one item is worth more to someone than it is to someone else. But the only reason the price fluctuates is because there's a scarcity of the item. If everyone could buy as many shares of Google that they wanted, without having to require someone else to have lost that share, then the whole system would fall apart. So I don't think the stock market model can apply to a commodity that is essentially of unlimited number. Plus, the value of an item is equal to all owner
  • "Isn't 99 cents too much to pay for music that appeals to just a few people?"

    No. Especially if you're one of those few people.

    If you don't think it's worth $0.99, then don't buy it. No one is forcing you to accept the terms of sale.

    Who loses? The seller, by not pricing the good at the ideal price to maximize profits.

    Sure, you could argue that fans of the music lose, since they don't have the option of buying it at a lower price... but that's how the market works. Someone offers a price, and peo
  • by SomeoneGotMyNick ( 200685 ) on Tuesday December 06, 2005 @04:26PM (#14196547) Journal
    Isn't 99 cents too much to pay for music that appeals to just a few people?

    I like listening to classic Yes. It appeals to a few people. Due to the average Yes track length, at 99 cents a track, whole albums only cost me about $2 or $3 each.

  • Could we create two markets and arbitrage between them? It seems a bit crass, but this is what would be. Perhaps we can purchase / sell options on various songs. "I would like to purchase a "put" on the latest CD by so and so, I know it will flop."
  • It's obvious that market forces just don't apply, no scarcity, blah blah blah. I'm not likely to pay 99 cents for the latest Britney Spears single, and I'm sure as hell not going to buy it if it's 5 bucks just because it's popular. On the other hand, it might help out lesser-known bands. I'm more likely to buy a 25 cent song from an unknown than a 99 cent song from the same unknown. In fact, since the music I like is not that popular, I'd stand to save a metric fuckton of money, that is, if I were incli
  • by Shads ( 4567 )
    > Isn't 99 cents too much to pay for music that appeals to just a few people?

    Not to those "few people".

    Yes, to the "mainstream" who it doesn't appeal to... .99 is to much... so would 15c or 1c. If you don't like it.. it's not a deal at any price.
  • With stocks, you have a finite number of shares. A lot of people want to buy a stock, they have to buy at a price that corresponds with the price that a seller finds agreeable. If I buy a million copies of Weird Al Yankovic's latest hit on a "digital music stock market", there are still an infinite more copies left to sell.

    What I'd be inclined to do, if a digital music stock market were to exist, is to buy a copy of a song and distribute it free (aka "pirate it") to others. By creating an "alternative di
  • The problem with this idea is that it's completely backwards. The more popular a track is, the more people buy it, the less the artist needs to be compensated.

    Flip it around 180 degrees, and you have something that is quite sensible - early buyers who simply must have it spend the most, and once a lot of people have bought it (and, therefore, the artist has been fairly compensated), the price drops to the cost of delivery.

    Of course, a scheme such as this assumes that the idea is to fairly compensate

  • Economics 101 (Score:5, Interesting)

    by Elias Ross ( 1260 ) on Tuesday December 06, 2005 @04:38PM (#14196714) Homepage
    I read the article but the author doesn't really understand basic economic theory very well.

    The general thrust is 99 cents is not the right price for all music to maximize profit. This we can all agree upon. But the formula of "less popular" + "cheaper price" = "more profit" is not correct.

    Yes, if you price things lower, you do get more buyers. But this does not mean that pricing unpopular music means you make more money. It's possible that music that fits a certain "niche" such as, say JPop tunes, the optimal profit point is $2.50 per song not $.99. (Plug: [] )

    In addition, companies need to consider strategicly in deciding optimal pricing -- meaning, if all pre-1990s Jazz music is priced low, it impacts the profits made in new Jazz release. People may not buy any new Jazz music, and instead collect only older Jazz music. In some respects, it affects all music purchased, regardless of genre.

    What record companies want to do is price older music fairly high to encourage the purchase of newer music. Which is why old music then is priced similarly to new music, though the demand is apparently much lower. (This is also one reason why retaining effectively indefinite copyright is in the interests of record companies. A large public domain does remove incentive to buy new work.)
  • Scarcity is the key factor in demand-based pricing. The marginal cost of producing a copy of a piece of music is near zero, which makes demand-based pricing usless.

    Back in the day, you had to have expensive equipment to duplicate records or even tapes at a high quality level. That limited to supply of music to what the music industry decided to manufacture.

    That's the point of DRM -- to create "virtual scarcity" by making it impossible to transfer a license or make usable copies.
  • Disclaimer: IANAE (I am not an economist)

    Music, like everything else in a capitalist economy, can and probably will be sold for as much as the desired number of people are willing to pay for it. Logic dictates that maximum revenue will be generated at the point where number of buyeres multiplied by price is at its highest value. Furthermore, number of buyers is probably rougly inversely proportional to price, to a point (as there will only by a finite number of buyers interested in any given product in the
  • I actually posted a comment about this concept over a year ago ( c id=6978433 []). Basically, the RIAA, Apple, Sony, or whoever could leverage a private currency (think of it as a complex application of gift certificates) in order to offer sub-one cent pricing for independant, emerging, or otherwise distribution-challenged artists.

    This is an excellent opportunity to meet the market demand for lower cost songs. I may be willing to pay less than 99 for a b-
  • This idea is nothing like a real market, stock or otherwise. Whoever claimed it was is an idiot. Take an Econ course.

    That said, the idea of lowering prices for less popular music isn't a bad one. You don't need a pages-long essay to explain why: at lower prices, consumers will be more willing to give unknowns a shot. If an obscure band finds fame due to budget-priced songs online, it could potentially become a big hit and grow the industry as a whole. This benefits pretty much everyone.

    If, for whatev
  • As others have pointed out, the reasoning in this article is mostly wrong. More popular stuff should cost less because of economies of scale, but they're suggesting the opposite.

    However, having said that, most mass-market music is total crap, and most of the really good music is not very popular. Yes, there are exceptions, but on average this pricing scheme would probably reduce the price of worthwhile stuff and increase the price of the total crap "music" that the marketing machines spit out.

    So, I

  • The more a song gets downloaded, the more it would cost. Song by big-name bands would cost more, and lesser-known acts would cost less (with a minimum of 25 cents.)"

    Okay, and why not 99 cents at a maximum, since there is a minimum. Because 25 cents per track might be expensive if you figure I can get a good range of used cds from $1-3.

    Truly, if you are for market forces, putting an artificial minimum on it is contradicting your own argument. Also, the whole argument of supply and demand which this argumen

  • A la carte cable (Score:4, Insightful)

    by AlpineR ( 32307 ) <> on Tuesday December 06, 2005 @04:50PM (#14196830) Homepage
    This reminds me of the current talk of a la carte cable pricing. Some consumer groups are arguing that cable bills would be lower if subscribers could buy specific channels rather than entire packages. I think there's a flaw in that logic:

    Right now, the channel producers charge the cable operators $0.50 per package subscriber for each channel (for example). I receive both Comedy Central and SciFi, but I only ever watch Comedy Central. So could I save $0.50 on my cable bill by subscribing specifically to that and cutting SciFi? Well all the people who watch SciFi but not Comedy Central would try to do the same thing. Then Comedy Central would say to the cable operator: "You're claiming that you have half as many subscribers as a year ago so we should charge you half the total. But that $0.50 rate was based on the knowledge that only half of your subscribers were watching our channel. Now we know that *all* of the subscribers want our channel, so we're raising the price to $1.00." Since extra channels cost nothing to deliver, an a la carte model just creates overhead that can only add expense.

    I agree that cable prices are high and I'd like to see some downward pressure through competition. My Comcast bill is $80/month whereas my DSL (which provides comparable entertainment and utility) is $20/month. I live in an apartment building, so satellite TV is not an option. But if I could get TV through my phone line (like shows on iTunes) then maybe there'd be hope.

    If you think you'll get music for less than $0.99 per song, you're dreaming. And if your scheme makes some of the songs I want cost more than $0.99 than you're giving me nightmares.


  • by Shivetya ( 243324 ) on Tuesday December 06, 2005 @04:52PM (#14196855) Homepage Journal
    Seems to me that the balloon is being floated from many directions, getting more so each coming month.

    I still think that the studios will get a third party to write software to put DRM songs on iPods without requiring iTunes. They will then market songs to iPod users that Apple no longer carries or is allowed to carry. In fact they may just seek to portray Apple as "the problem".

    Remember, the buying public isn't filled with millions of the brightest people. Many believe that big portions of their dollars go to the artist. So its not beyond reason to see the studios do and end-run or attempt one to force Apple to comply.
  • Optimal pricing... (Score:3, Insightful)

    by mjrmjr ( 936676 ) on Tuesday December 06, 2005 @05:08PM (#14197034)
    I really wish I had a microeconomics textbook in front of me, but I think I can say a few correct things from memory.

    Regarding "supply and demand", the thing that makes this situation somewhat unique, as others have pointed out, is that the supply is virtually unlimited. To put this is economic terms, the marginal cost to the supplier of providing one additional unit is effectively zero. The only thing that really matters is demand.

    Specifically, what's known in economics as demand elasticity. This is a measure of how responsive consumers are(in terms of quantity purchased) to a change in the price of an item. Simply put, how much of a change in quantity sold will there be in response to a change in price? This is what a seller needs to know when he is thinking about chaning the price of something. Gasoline is the classic example of an inelastic good. Remember when Katrina hit and gas prices spiked? You probably still had to get to work, school, etc, and probably bought about the same amount of gas as before. Plasma/lcd televisions are an example of a good with elastic demand. Not many people have them now but when the price falls by half you'll start to see a lot more people buying them.

    Count on the fact that as we speak, there are economists being paid six figure sums by the record labels to do *nothing else* but try to analyze and predict demand elasticity for online music purchases. There's nothing magical about the number 99(cents). I'm not up on current popular music, but when Kanye West's latest album came out, if iTunes had charged $1.00 per track I doubt if they would have sold significantly less copies. Conversely, is there any artist who would sell a lot *more* songs at 98 cents? Probably not. But is there an artist who could sell a lot more songs at 75 cents? Would the increased sales make up for the reduction in price? The answer to both questions might be yes. Is there an artist who might sell less songs at $1.25, but the increased revenue per sale would offset the lost sales vs. a $1.00 price? Quite possibly yes.

    Simply put, there's an optimal price for any good. If demand elasticity is known(I explained it conceptually above, but it's something that can be numerically quantified for the purpose of performing calculations) then one can use calculus to easily determine the optimal price for a good. The optimal price is the price which yields the highest revenue. Anyone who's taken even basic calculus has probably done problems like this. You're given the formula, you make the calculation, and then put the result on a graph. Vertical axis is revenue, horizontal axis is price, and your result looks like a parabola in the shape of an upside down U, indicating there is an optimal price to sell the good at. Price it too high and you lose revnue, price it too low and you lose revenue.

    Fairness doesn't matter, there's nothing special about the number 99. It's all about how to maximize revenue. My own gut feeling is that some songs are underpriced and others overpriced at 99 cents.

  • Ebay *evil grin* (Score:4, Interesting)

    by Hercynium ( 237328 ) <Hercynium@gm[ ].com ['ail' in gap]> on Tuesday December 06, 2005 @05:18PM (#14197149) Homepage Journal
    Bah. Just auction off each song ebay-style.

    First day available, only allow 10,000 downloads, priced based on bids.
    Two days later, release another 10,000.

    A month later, release another 10,000 of an album-rejected REMIX!!!

    Yes, I'm trolling. I just think the whole idea's stupid.

    It's like why I make my own coffee now. Dunkin' Donuts used to charge a dollar for a medium. Sure, it was cheaper to brew at home, but a dollar was *so* convenient and simple. (actually, it was .95+ tax or something like that)

    I surrendered my money *every damn morning* without thinking!

    Well, now... coffee's between 1.70 and 1.95 depending on where I go. I always think about stopping... but I don't anymore. The coffee in the office tastes just as good and it's free.

    And one more thing to wrap up my point: Let's hypothesize that DD ups the price to $3... and the coffee at work becomes $2 a cup... and the coffee at home is, um, poisoned. Guess what I'll do?

    I'll stop drinking coffee.

    Assuming mountain dew remains affordable.
    • Yes, I'm trolling. (Score:3, Insightful)

      by Simonetta ( 207550 )
      No, You're on to something important. Ebay auctions is the best way to sell entertainment products. However it is impossible to get the market controllers to think in that way (possibly because people who make their living in the entertainment industry rarely have to actually buy entertainment products, they always get comp'ed).

      Consider movies. Theaters are full on Friday and Saturday nights and empty every other night. But the admission price is exactly the same. Suppose a theater owner
  • by DrSbaitso ( 93553 ) on Tuesday December 06, 2005 @05:37PM (#14197322)
    There have been a lot of economic-related comments already; I have my own, but want to break new ground. I also disagree with the "popular->expensive, not popular->cheap" strategy, but for different reasons than I've seen listed.

    Generally, much of "low volume" music can be thought of as filling a particular niche. There might not be a lot of people who like The Decemberists (well, there used to not...), but those who like them tend to really like them. If I'm a Decemberists fan, I'm going to buy their new album when it comes out; there won't be a lot of folks like me, but there are some. Us Decemberist fans are relatively insensitive to price (in economic terms, we have low price elasticity of demand). Therefore, it makes sense to charge more for music like this - few listeners, inelastic demand.

    On the other hand, popular music is very fad-driven. The "new" song is only new for a little while. Some folks who have to have every new song they here on the radio will pay four bucks for the new 50 Cent single, but I imagine that most people would be turned off at that price. The "hits" are more price sensitive.

    I imagine that price elasticity of demand in the music business is hard to measure, because each "firm" is a monopoly - only 50 Cent sells 50 Cent records, e.g. As a monopolist of "iTunes Downloads" with essentially zero marginal production costs, Apple should charge prices such that price * quantity is maximized for every song. How to find those prices? Demographic listener data, maybe? Try messing with the price charged and see how quantity demanded changes as a result?
  • by sielwolf ( 246764 ) on Tuesday December 06, 2005 @05:42PM (#14197380) Homepage Journal
    Isn't 99 cents too much to pay for music that appeals to just a few people?

    Actually I pay 0.99 GBP (or ~$1.72) for a lot of music online. Why? Because I get it off of Warp Records' [] website where I can find extremely rare tracks and the money is mostly going right to the artist. And while most of Bleep's big stuff (Boards of Canada, AFX) can be found in many places, none of these artists are cracking out gold records. The fact you can find out of print Detroit electro vinyl (say Dataphysix stuff) is a real boon.

    Why would I pay this? Because I've paid $50 bucks for an album that I can now find on there for $15. Sure, for connoisseurs half the fun is the hunt for new albums but in the end you just want to have it sooner so you can listen to it more. So $1.72 per track is a great deal.

    What I can't understand is have some sort of adaptive cost. The cost of a single track could fluctuate every day and they could track to see what affect it has on sales. Sales drop: reduce price. Sales rise: increase it. As with simulated annealing have the delta decrease with time. Why does there need to be a static price? A six cent song that sells a million copies is just as good as a sixty cent song that sells 100k.
  • What a load of $&(@! (Score:3, Interesting)

    by Transcendent ( 204992 ) on Tuesday December 06, 2005 @06:36PM (#14197821)
    The more a song gets downloaded, the more it would cost.

    Why? What market force drives the price up? Is there a limited supply of this song that can't meet the current demand? What extra cost is there to the company that isn't covered by 99 cents per song?

    There's no reason. There are a theoretically infinite number of copies of that song. Charging more for a song that is in higher demand is a direct money making ploy by the companies to take advantage of people. Why should I pay more for a song because a few other thousand morons downloaded it to?

(null cookie; hope that's ok)