Kobushi said:
While I don't agree that the label execs should be gouging people on any level, populartiy would appear to be the only way to do it.
A popular song (a "hit") naturally benefits (and generates increased revenue) for record companies and their artists due to the number of units sold. The record companies haven't been clear regarding how they would specifically implement tiered pricing in the online store landscape except to say generally that popular songs would cost more and other (less popular) songs would cost less. Although it appears that nothing is too silly, too idiotic for these guys these days, I doubt if they are going to just sit there and monitor individual songs sales until it becomes apparent they have a hit - then press the price increase button. My guess is that all of presently established top artists on their rosters will roll out at the premium price, and for long established artists (Carey, Houston, Madonna, Springstein, Stones, Santana, and so on) God only knows if the premium price will to extend to older material in their catalogs, but its likely that it will (new fans of an established artists recent work are likely to be interested in the older catalog).
In any event, tiered pricing is nothing more than a wholly unnecessary popularity tax, and the sticker shock will become plainly and painfully obvious if or when it arrives. How customers will react is anyone's guess and I suspect some will just suck it up - which is just about the sum and total of the record companies reasoning behind it. I don't know what the demographics are specifically for the average online buyer at iTunes, but historically in the record industry, the lion's share of popular music is purchased by teenagers - who are typically impulse buyers when it comes to music. Whether that demographic (or the impulse buyer tendency) holds true for iTunes users is unknown, but I kind of doubt it. I think its far more likely that the introduction of a tiered pricing popularity tax in iTunes is going to cause a backlash and create a rocky road (good band name "rocky road" lol) in what has been up until now a bump-free ride.
If a backlash occurs (and I don't think the record companies can honestly say that the possibility doesn't exist) then it's not good for Apple, it's iTunes customers (both present and potential), the artists, and last but not least the record companies themselves. The bottom-line: if you don't want customers to file-share music (not paying for it) then give your customers a means and incentive to buy it (and increase sales), not a thinly disguised price gouging scam.
Detlev said:
Are you referring to the MAP suits? That was during the mid nineties. Funny thing is that other industries are using MAP now.
As for the revenue streams there are more aspects to this story than can possibly be explained in this forum and in my opinion the explanation is rather one sided.
I was referring to the MAP (minimum advertised price) suits. The record companies started MAP pricing in 1992 in response to discount retailers such as wal-mart. The suit alleged that the record companies initial MAP policies were legal, but starting around 1995 the MAP policies became illegal when the record companies "transformed their MAP programs into blunt and effective instruments for putting an end to price competition."
"In effect, the policies prohibited virtually all commercially practicable means of communicating discounted prices to consumers," the suit said, and "essentially ended retailers' ability to sell prerecorded music products at discounted prices." Prices for recorded music increased.
The FTC investigated and officially barred the music companies from the practice in 2000, but that resolution didn't involve consumer relief or fines. That led to the anti-trust suit which was filed in 2000 after the FTC decision and settled in 2002, IIRC