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Apple to End iTunes Music Store Uniform Pricing Model?

The beginning of the end...

Is this the beginning of the end of music as a product? Isn't the inevitable conclusion to this madness that people will once again share music freely?

That is, in much the same way as musicians used to before the record industry existed and turned music into a tightly controlled product?

It's a very interesting time - the MUSIC industry is in better shape than ever. There are more ways to profit from music than ever before, its just the RECORD industry that's suffering now. They're desperate, so expect more such nonsense over the next few years.

I give it 10 years - once all these wireless networks kick off and everyone has iPods that allow you to listen to whatever you want, whenever you want without actually having your own copy of the tune, this will all be over.

We can all subscribe to iTunes 9 for $29.95 a month and listen to whatever so we're happy. We'll need content to listen to, so the musicians get paid and they're happy (well mostly - there's not much we can do about coldplay...)

In fact, the only people to lose out are the cartels that have told us for so many years how much we should pay and what we should listen to.

Or sumfink. 🙂
 
projectle said:
Am I really the only one thinking WTF are you all talking about???

Supply and Demand Echonomics only works when SUPPLY is limited.

In this case, supply is infinite, as no physical exchange of product ever happens.

Additionally, is there ANY justification why a CD of music should be anywhere near comparably priced to a movie???

Consider the following... a typical movie is 2 Hours and retails for $15 on DVD.
A Typical CD is $12-$20, and lasts between 35 Minutes and an Hour.

So, let me call BS on the recording industry. It takes approximately $5000 to produce a CD, the rest is all marketing to get it aired on the radio, duplication, distribution, etc.

In a truly electronic distribution system, duplication costs are nothing.
Click to expand...

Way to make assumptions. ROFLMAO, a $5000 CD, lol. Even without all the marketing (which is necessary), the rental costs, technicians, and a lot of other hidden costs def. add up to way more then $5000. Maybe it's $5000 for every 5 seconds of music without including marketing?
 
with the advent of filesharing, recorded music is finding its natural place in supply and demand

every other person wants to supply music
every person wants music.

the recorded music market will not be fair until we TRULY purchase the right to play a piece of music where ever and when ever. if I am truly just purchasing the right of my own ears to hear a piece, sony should replace my cds, upgrade all my cassette tapes and rip all my discs to MP3 for me. untill then its just not fair.

-matt
 
Supply and Demand

There is an unlimited supply of music out there.... and it is free. I pay $.99 because it is fair and out of respect for the artist(s)... go ahead and get greedy and I will save some money. Bastards.
 
wow. So all the ****** music that is popular is going to be INCREASED?! Meh. Thank god I don't listen to crappy overrated, over the radio tunes. AKA- Music that's pumped out by major record labels.
 
EMI Representative

Unless I missed it, people aren't really discussing the source: a music company CEO. Of course the CEO of a music company is predicting this; it's his own wishful thinking. I'm not saying that Apple won't move to tiered pricing, but I think this comment is more contractual posturing than inside knowledge.

I think that the real reason behind this raise in prices is not to increase profits of singles sold on iTunes, but to protect the idea of album sales. If the price of a single rises and the price of an album (probably still the physical CD) stays the same, more people might be willing to shell out for the whole album (which provides lower profits per song but greater aggregate profits because they sell 10-15 songs at a time). This price negotiation is more about breaking Apple's perceived power than it is about profits. The record companies are thinking that while Apple is a small part of the music business now, it could be a major threat in the future. If the record companies drive people back to CDs then they gain back their control; at least that's what they hope.

I think it's all in vain anyway. I see musicians moving toward giving away their music at iTMS quality (128kbs AAC or similar) on the internet then earning their money through touring and sales of full-quality CDs at their shows or through their websites. As mentioned earlier, most musicians (and performers) on big labels don't pay back the record companies' expenses (both real and inflated) through album sales and therefore don't really make money off of their albums anyway. While you can copy a song from the internet, you can't replace the live experience--people will continue to pay for concerts.
 
i am in the music industry.


it is totally ****ed up, i don't yet know what the new model will be.


people on this thread seem to have no ****ing clue as to how expensive it is to make a cd. studios, production, distribution, it's endless. it's very expensive, even for small indie labels. which aren't making it anymore. and the big labels aren't doing as well as you'd think. factor in the idea that major releases need videos now and those damn things cost more than some of the releases did in the first place. i'm just saying the economics of actually producing real music are a lot more complicated. and don't give me any ********* about internet only self recorded stuff. believe me, this stuff isn't getting cut on a soundblaster and a radio shack mic for a reason.

stealing music via p2p and otherwise doesn't just get the "man". it gets every band, small label, small record store, etc. too.

if you are stealing music you are no more a music fan than a carjacker is an auto enthusiast. there is not charm or vindication in stealing music. tiered pricing may end up getting us music we like at a better price. that's a huge possibility. we'll have to see.

i do think the music industry needs an entirely new model with less video's and less payola. more real music, and artists that they hang on to for more than a single cd. but it takes folks actually buying real music in the meantime. if you want to protest tiered pricing, don't buy the expensive new singles from titney or 50 cent. buy a cheaper catalog song from a good but underplayed artist who could really use your support. or buy from artists directly at places like cdbaby. (although my actual cd is at cdbaby, you could get my music on itunes. supporting my music isn't supporting a big nameless faceless corporation. and many independent artists are on itunes)
 
Remember the Steve Jobs Keynote?

Remember when Steve Jobs said and later proved that people are willing to buy music if the price was right? ...man- Apple had a whole marketing campaign promoting the .99 cent price... we as consumers thought of Steve as our leader and universal voice for this movement... and we have now all become accustomed to this new way of getting music and paying for it at this price. We as consumers have the choice now to pick and choose which songs we want ... not forced a bunch of garbage on a CD to get 1 or 2 hits.

In my opinion, I see a MASSIVE backlash that will happen in the industry, which will be much greater than when Napster hit the market if there is a price hike.

I said it before... instead of Itunes being forced to change..... LABELS NEED TO CHANGE THEIR OLD BUSINESS MODEL!

(I hope that Steve reads some of these posts... man - I really hope)
 
So, let me call BS on the recording industry. It takes approximately $5000 to produce a CD, the rest is all marketing to get it aired on the radio, duplication, distribution, etc.
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I can clear this up, since I'm a musician and I've recorded in quite a few different studios.

In NYC, the good studios that record labels use are around $300/hour. Because the kids that play/sing in these bands are untrained and unprofessional, they find a way to spend 5 days in the studio recording; 8 hours per day. 5x8x300 = $12,000.

Because many pop musicians don't write their own music, and don't have a clear concept of what they should be doing, they hire a producer, and I wouldn't know how much one costs - I'm sure the prices vary quite a bit, but let's guess that they cost $5,000 for the whole thing.

I trust that I'm not blowing anybody's mind when I say that these albums are heavily edited. Mixing costs $150 an hour, and again, it's normal (for popular bands) to spend 5 days in the studio correcting missed notes and messing with levels. 5x8x150 = $6,000.

Mastering costs an extra grand.

That leaves us with a subtotal of $23,000, and I didn't even mention the costs of hiring studio musicians and hiring "famous" engineers, if you don't want to use the house guys (silly really, because the house engineers at such expensive studios are almost always quite good).

I would estimate that plenty of pop albums reach the $50,000 mark before marketing.

On the other hand, jazz albums (which is all I've done) are as a rule recorded in 2 days, and mixed in 2 days, at studios with prices a lot closer to $100/hr. Should our albums cost less to purchase because we spent less money making them? I obviously can't answer that in an unbiased way, but I can say in defense of myself and other jazz musicians, that we tend to work our ass off all year long in a way that pop musicians wouldn't even understand. I don't want to get into a bragging/pissing contest about how hard I study on a daily basis, but let me just point out that pop bands are almost always young attractive people. It costs a lot of $$$ to turn random good looking people into polished sounding musicians, and it's a lot cheaper to just bring real professionals into the studio in the first place.


I'm almost finished with my first album as a leader, and I planned all along to sell the digital version through itunes. I hope they don't tell me that I can't sell for .99 anymore, because I had to go into debt to record the thing, and it'd be nice to start clawing my way out quicker than 20 cents a pop, or whatever low amount I'd get after a price reduction.
 
projectle said:
Am I really the only one thinking WTF are you all talking about???

Supply and Demand Echonomics only works when SUPPLY is limited.

In this case, supply is infinite, as no physical exchange of product ever happens.
Click to expand...

That's a good point. Or wait.... no, it's not a good point. Supply is never actually infinite since it is ultimately determined by the supplier. Supply at the iTMS is variable with incremental increases whenever a purchase is made. But you're right, limits on supply do not dictate price in this case. Limits on demand do, however. Even with a potentially infinite supply, the priciples of price elasticity still apply. The fact that supply is infinite has no relevance. Or.... not as much relevance as you think anyway.

Here's an example: A kid who sells lemonade on the street. Is he limited by his supply of lemonade, or by the speed which he can vend the beverage to customers? Well... perhaps if the day was particularly hot and the street was particularly busy with pedestrians, but lets just assume he has an infinite supply of lemonade (which he gets for free from his parents) and he can service however many people want to buy from him. The main factors a kid selling lemonade considers are 1) how many people want lemonade, and 2) how much they are willing to pay. With uniform unit elasticity of demand, those questions wouldn't matter since the kid could theoretically sell twice as much lemonade by cutting the price in half (thus yielding the same revenue). Doubling the price also has no effect on revenue since he just sells half as many glasses. In this scenario, the best thing for the public is for the kid to keep slashing his price for lemonade until it approaches zero. That way everyone in the world can have cheap lemonade and the kid still makes his $50 or whatever.

But demand elasticity is rarely uniform. The above example was pretty rediculous, but actually translates pretty well to the iTMS. Supply can pretty much be considered infinite, and additional cost per unit is pretty close to zero. But demand elasticity is certainly not uniform. For some tracks, doubling the price will not cut sales in half. Thus the music industry can expect to make higher profits by raising the price on some tracks (and lower profits by lowering the price) or even make higher profits by lowering the price on certain other tracks (and vice versa).

If demand at the iTMS were uniformly elastic, it wouldn't matter to the record companies what Apple set the price at. Indeed it would benefit the whole world if Apple sold songs for a penny (or groups of songs for a penny) so the entire free world could listen to all the music they want. But that's just not the way it is.

Now I'm not a fan of tiered pricing at iTMS, and I generally think it's a bad idea. I suspect the current rate of $.99 per track is a little below the profit maximization point, so if a tiered system goes into effect, prices will as a whole rise. It should produce higher profits for the music industry, but it will also take music away from some people, or at least turn them back into criminals when they return to downloading it illegally. My viewpoint is purely an ethical one where I place a high value on getting music in the hands of as many people possible (legally). The music industry already makes enough money. They need to remember they are serving a vital social function by serving as an instrument to get enjoyable music to the masses.
 
It wouldn't be fair if independent labels / lesser known acts were cheaper. They're the ones who need the money and sales more. It also wouldn't be fair if the big name acts were cheaper, that would just make their sales skyrocket.

What's the solution? The iPod shuffle did really well on the whole concept of random. So why not have the prices be random on iTMS? You click "buy" on any given song, from a well-known act or an unknown, and it might be 49¢, or it might be $1.29, or it might be 99¢, who knows? Try your luck!

"Life is random, so are our music prices!" 😛
 
I don't ever see it happening...

Considering iTMS is the largest online music store in the world, can't they do kinda whatever they want? And Apple knows it is in their best interest to keep the pricing the way it is now. - Apple wouldn't make any more money out of the deal (it would all go to the record labels).

It's a shame how greedy artists/record labels are these days
 
You click "buy" on any given song, from a well-known act or an unknown, and it might be 49¢, or it might be $1.29, or it might be 99¢, who knows?
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this board doesn't seem to have the rolling laughter icon, but imagine it here in place of this text.
 
NO, prices do NOT go up when something becomes popular, the opposite is true.

Case in point, mini dv vcrs cost all over $1000 when all it does it play and record while a mini dvd camera does all that PLUS its a camera and you can buy one for 1/3 the price..why...because a ton of people buy cameras and no one buys mini dv vcrs....


this is PURE greed and profiteering and does not follow any true economic model
 
I've spent $600 on iTunes downloads this year alone. I probably spent $300 in CD's in the previous 5 years. If they go to a variable pricing model I will definitely seek out limewire or some like alternative.

For me 99 cents seems like a good cost/value sweet spot. I don't care who the artist is - I simply won't pay more than 99. 😡
 
I don't care if they make Britney Spears more expensive. They just better not tell me that as an independant artist, I have to sell my music for .75.
 
If this should come to pass and If you want make your point heard that you don't like it, don't just pirate and boycott iTunes. Instead, just don't buy anything priced over $0.99, and I mean anything!!!

There can be no clearer signal to them what about what is an acceptable price than if they sell lots of songs at 99 cents and under and there is a *dramatic* drop off of sales at over $0.99, they will be forced to drop the price (and a probable corresponding rise in piracy of *just* the more expensive songs).

Other options for reactions to variable pricing structure:

1)Boycotting all iTMS music = excuse to say people don't want downloadable services anymore and there is no market for them

2)Buying as usual = support greed and outdated model, record companies have no reason to reverse pricing back to earlier structure

My biggest concern about variable pricing is that this then builds in a mechanism for them to slowly inch up the prices on all songs w/o much notice.

Variable pricing also doesn't make sense for this medium. This is music-on-demand publishing. There are no overhead costs that make mass production of few tracks cheaper than mini production of many tracks and when there is no "supply" constraint, then supply and demand doesn't hold water either.

3)Don't buy the "variable priced" songs = see first paragraph


In addition to any of these policies, people should also send feedback to both apple and the record labels that they do not want this structure and will not buy the more expensive songs.
 
There is a common understanding that we will have to come to a variable pricing structure. The issue is when. There is a case for superstars to have a higher price.
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Why you think of the superstar should has a higher price and not " the new artist would sell less songs on this price? "

You're basically GREEDY just in term of your statement !!! 😱
 
This is such a joke. Maybe someone else has said this already, but what they are saying it - "If we like your music, we'll sell your songs for more money, but if we think your music sucks, we'll sell you for less. Now....let get greedy and charge some more money! YAH!!!!!!"😱
 
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