Apple to End iTunes Music Store Uniform Pricing Model?

[balamw]

Traditional CDs and DVDs work the exact same way -- new releases and more popular items are more expensive than older, less popular CDs and DVDs. Hence, the bin of $ 5.99 CDs/DVDs at the store.

Where do you live/shop?

My experience over the past few years is quite the opposite. As others have posted, you can often find loss-leader prices on popular new releases at major retailers like Best Buy and Target which are significantly lower than the list/regular price. For example, I just bought Sublime's "Gold" 44 track 2 CD compilation last night for $12.99 (down from $19.99 list, $24.99 at iTMS) at Best Buy. Their "Greatest Hits" CD was quite meager as was the "20th Century Masters", but I'm not enough of a fan to buy all of their albums spearately as this comp does a good job of sampling their oeuvre.

I also disagree with your comment about the bargain bin, in traditional CDs and DVDs, older less popular titles are the ones that are only available at full price and these tend to go out of print and become no longer legally available from the label at any price. Of course there's always the used market, but that doesn't benefit the artists or record companies in any way. The titles you usually find in bargain bins are titles that once were popular, but are no longer in demand, or titles that are so inexpensive to start off with (e.g. Eastern european classical recordings, etc...)

Legal digital distribution like iTMS offers the labels a huge potential to exploit their back catalog on a daily basis and potentially turn those items that would otherwise be unavailable (out of print) into a revenue stream. A huge "bargain bin", if they price it right and make the items available.

Over a period of 10 years or so 1989-1999 I purchased over 600 CDs, that's about 5 a month on average. in 2000-2004 my yearly music consumption dropped to ~1/month on average, even though I was making a lot more money at the time. Why? Not P2P or downloads. Mainly that I no longer perceived that I was getting a good value buying CDs. I bought the majority of the CDs in my collection for $10.88 or less from Newbury Comics around Boston. Now it seems hard to find many CDs I want to listen to for less than $15. Since I got my 4G iPod in late 2004, I have started buying more music in general, and am probably averaging close to 4 albums and a few single tracks on average per month. I just bout two yesterday, and I bought an album off iTMS last week and I am expecting my monthly selection form yourmusic.com real soon now.

If they really want to charge me $1.99 for a new release track, where I might ultimately want the album, I'll probably just wait for the CD to become available on yourmusic.com for $5.99 shipped. At $0.99 it's still an impulse buy.

B

 

[lolex]

But it gets circular really fast. The only reason there are record labels now is that most artists aren't business people (very few people are good at both). What will keep any replacement for record labels from looking pretty much the same as what is there today?

I'm not saying it can't be done, only that the "how" part always goes unanswered. The do-it-yourself distributors don't do promotion (and the ones who say they do, don't really do it). That still costs money, and the effective promotion is all about contacts. How might one bypass the system without becoming a part of it?

Actually, i believe you don't quite need a serious promotion, the audiene will look for it, like we 'regoogling now, some platforms like podcasting will evolve to help, so you need some audition videos to put on.

When you gain enough celebrity, the Station will pay you up on their shows.

Of cause, it won't be esay, completiton will be crazy, but there 're always winners and losers 😉

 

[generik]

Fantastic, greed of the music industry finally won Apple over... 😡

What's going to happen from now on? Sales on iTMS will take a hit, music executives will step in and claim it is due to "piracy", petition congress to pass more legislation.

Soon we will be prisoners in our own country! Maybe pay a monthly "culture tax" for the indunation of "culture" and "intellectual property" that we occasionally partake in during the normal course of our lives.

Saw the movie trailer? Hummed a tune that your mind was force fed with? Used a catch phase that came about in a TV series? All these value do not come for free, you will have to pay for them as part of the culture tax!

 

[VanNess]

BTW, when you write music, you own it. The only reason the record companies get the publishing is because the artists voluntarily give it to them in exchange for the production, marketing and distribution services the majors bring to the table.
What I'm looking forward to is the ability of independent artists to sell their DRM-protected music via iTMS. And then the artists can market themselves and keep their publishing. Some will go it along and some will partner with the biggies (just like now). And they'll both lose when you steal their music (just like now).

These days, most, if not all, artists own the publishing rights to songs they write, usually setting up their own publishing company. The record companies, however, own the master recordings and have rights to those, even if the artist decides to switch to another label. In that case, the artist will continue to earn publishing royalties for the songs (and copyright ownership) for songs recorded with the former label, but the master recordings remain the property of the former label.

I don't agree that the act of downloading a song is de facto proof of "stealing" as it has never been shown, even in the worst instances of file sharing, that every recipient would have otherwise purchased the song. As a matter of speculation, it's certainly possible, but it's just as possible that the song would have ended up in the trash bin after it's "audition."

More than that, it's just plain human nature to share. Insofar as music is concerned, music has been shared since humans learned how to whistle. In the present day, it's more than likely that some songs will be copied and be shared amongst friends. But that doesn't rise to the true, real-world meaning of "piracy" because giving your girlfriend a copy of a song that reminds you of her has no measurable, direct impact on the record companies song sales. Folks have "shared" music long before the internet, ever since tape recorders found their way into consumer's hands. In fact, some of those folks are the record companies artists themselves, who inevitably swap music from their musical influences amongst themselves while honing their own sound. When the Beatles "shared" Bob Dylan songs amongst themselves, was it "stealing" or was it a part of the written history of music?

I think most people are honest. If someone hears a song that really grabs them, their first instinct is to go buy it. If you're hooked up to the net, iTunes makes it practically irresistible. It's convenient, immediate, simple, and the .99 price is perfectly set so the consumer won't have pause to think about whether it's really worth it or not. And as long as the consumer experience remains postive, song piracy, such that it is, will eventually give way.

 

[Fukui]

This is not good if true. The big artitsts will still get more money anyway.

Also Apple should not sell any songs above $0.99.

Its intersting, the most common post on iTunes Japan is basically "This song is good but not worth 200 yen!"
One of the reasons I think iTunes does so well there is BECAUSE its price is lower than everyone else and doesn't have soviet -er- sony-style licensing restrictions...

I think more the music industry struggles to maintain controll and manipulate, they dig their own graves.

 

[generik]

I think more the music industry struggles to maintain controll and manipulate, they dig their own graves.

Not really, if they are lucky they can probably label us all as criminals and get us all arrested.

I do download tunes from time to time, but I also buy CDs containing tracks I like. The music industry can call it piracy, I call it "visiting the music store from home".

 

[Will_reed]

I hope the greedy bastards choke.

 

[Hattig]

Only if the price for older or less popular music drops, and there is no realtime pricing system (price increases if song gets popular).

Also the per-track price for popular artists shouldn't increase much either. I.e., $1.49 per track will not work when you can buy the single for $2.99 with two or three tracks on it, and the physical media. I think that $1.25 is the limit.

Volume discounts - buy 5 $1.25 tracks for $5.

Bundle deals - buy New Song and get Old Song By Same Artist for 1/2 price

Here in the UK a single track costs £0.79, and the typical single costs £1.49 on iTunes (two tracks). I certainly wouldn't buy from iTunes if the single track itself cost £0.99 and the single version cost £1.89, when I can buy the physical CD in a store for £1.99, hell, even if it was a £2.99 single. Better to have the original uncompressed version with no DRM and real physical ownership. Even for a single.

If they want to put the price up, then they should offer VBR averaging 192kbps AAC songs, not 128kbps AAC at the very least.

Oh, and by the time this happens, iTMS will have been selling songs for 4 years. Assuming 3% inflation per year the price by then should be $1.08 anyway. Of course bandwidth costs go down, as do other costs, so Apple could maintain the $0.99 price, even though even now it is costing you 5 or 6 cents less in real terms.

 

[amateurmacfreak]

that's so screwy... my parent's are songwriters w/ a lot of old songs, and if the price got dropped on those it would suck... why would they do that?? it's so greedy and idiotic... and i bet it'd just drive a bunch of people to limewire that are sick of that sort of crap.

 

[amateurmacfreak]

Good reason to find even more great unknown 'uncommercial' tunes and boycot manufactured crap!!! What's the bets illegal downloads will be up?

yeah, i think the illegal download rate will definatly go up if this happens....

 

[SPUY767]

<----Sony BMG CEO Anderw Lack

What Music Company Exec has Mac Er on his/her payroll. . . One can only speculate. I can, however, assure you, Mac Er, that this is not the place to fly that flag. Demi God or not.

 

[Uragon]

Let's hope that this variable doesn't push through as some record companies (hope not one) disagrees with it. 🙂

 

[gekko513]

There's that honesty I was looking for. Succinct, honest and deplorable.

BTW, is this magical $.99 price point indexed for inflation? 🙄

Why were you looking for such honesty, and I why would I care if you find it deplorable?

 

[Gasu E.]

This could be good for me personally. I tend to spend my money on jazz, world, and backfilling my classic rock collection. My kids go for obscure indie music. So I'm hopeful that this will allow us to acquire more music at our current expenditure level. I feel bad for those who will pay more for very popular top 40 stuff; but the economics of this kind of product should be different from less popular music, as the demand is mainly marketing-driven.

 

[otter-boy]

Change is inevitable

There is a catch in here, and that catch is the reason why we aren't seeing many successes with that model.

To the artists, a major contract isn't a source of income by itself. It is, however, access to national or international promotion. It gets them on TV and radio, gets their albums reviewed in publications with high circulation. It gets them distribution to the vast majority of the population who still don't have iPods or buy much stuff over the Internet.

That exposure is the difference between playing in a small bar or a decent sized theatre, between splitting a small share of cover charges or selling real tickets. Putting up a Web page doesn't accomplish that, and someone still has to pay for the hosting. How do they get people, in decent numbers, to go look at that page?

Someone needs to come up with a successful way to replace the traditional marketing machinery. Until then, things aren't likely to change much.

I agree. I didn't mean that bands would merely put up websites and then tour. I think that there will be outlets that music-lovers can go to and find bands that they like. I'm not the biggest fan of MySpace since it is hard to navigate and find new stuff, but I think that it may be one direction that bands will go (it's already been successful for a few). There might be other sites where people can nominate and vote for music they like. And online music magazines could also recommend albums. I can see recommendations coming both from a bottom-up direction (fans recommended) and top-down direction (expert recommended).

I think there will be more avenues to get to know bands and more opportunities to hear them before you ever make a purchase. I think with the advent of digital music that there is no other choice than to make songs widely available for little or no money on the internet. If bands don't then other people will. Who knows, maybe labels will catch on and become concert promotion agencies, using free music and advertising as one more way to sell tickets to shows.

 

[ioinc]

This isn't about a fair pricing structure where old/less popular music costs less. You better believe that they will not charge less than $0.99 (US) for even the least popular song in the catalogue. This is about charging exhorbitant rates for Top 50 songs, and anything that begins to sell well.

I can't believe the music industry doesn't believe we understand this.

I think the music industry does understand this.
What I don't understand, is why a large portion of people on this board don't understand "supply and demand."

This is an example of demand. If the demand is high they get to charge more.

Nobody is coming down hard on Apple because of what they charge for iPods, and they are making tons of money.

Nobody calls apple..."just plain greedy"

Newsflash... Apple could sell iPods for less and still make money, they don't because they can make more money by selling at the higher price point. This is not greed, this is business.

This is how it should work in almost all industries... to include the music industry.

It is their job to make as much money as they can. That's their goal. Its your job (as a consumer) to get the best product for as little as you can.

 

[xejn]

Let then try it first on another service!

I say, if they are so sure it will work, then try it first on another service. If revenue go down, then it don't work. If it goes up, then they have a case to make with Steve.

That way they get to test out their theory and not poison the goose laying those golden eggs.

If you ask me, they should try to use the old business models they used pre-CD's in the digital market. That means putting out more music by more acts and getting more air play on the radio for those acts to promote them.

 

[pounce]

pricing model aside, why is it greedy when the bands/labels/studios/distributors/etc. want to be paid for the music they have created, but it's not greedy when a bunch of internet geeks get on some wankfest like this about how they are all gonna steal their music. nobody is stealing music to teach the labels or make some grand point. people steal music because they are selfish and greedy and unwilling to support the artists who they want to hear. there is no noble construct here. so when you do it you are the thief. it makes the morally superior tone in this thread seem ironic and sad. so now the labels are thieves, the music stealers are also thieves, and the only one not getting any money on the deal are the bands that actually made the damn music.

 

[artifex]

The funny thing is when Job's "explains" the pricing change we will all feel good and wonder why it had not happened sooner, be that the truth or not! 😱

I really wonder why we never hear boos at these announcements. Maybe now we will.

 

[lolex]

pricing model aside, why is it greedy when the bands/labels/studios/distributors/etc. want to be paid for the music they have created, but it's not greedy when a bunch of internet geeks get on some wankfest like this about how they are all gonna steal their music. .

you work, and you get paid is a solid statement.🙄

To pay how much is an arguable statement, a doctor's salary in US may over $20,000 , but a doctor in Russian get only $20 a month. There 's nothing wrong
if somebody wants to pay higher premises to hire you, however, if you want to have a higher salary and nobody wants to pay, you got to find the reason and do something achieve that goal. The market will judge. 😛

 

[scottsalbo]

Moronic if true...

It's beyond belief how greedy the recording industry is. They tried to kill cassette tapes back in the day, too. Same argument. They claimed that the classic Who album; "Who's Next" took 10 years to go platinum because of all the copying. Fact is, it's not reallly the artists who are suffering, since they make more money on tour than they ever recieve in royalties in any given year.

As that great artist David Grohl said during a Continental Arena show I attended:

"If I was at a party and didn't have any weed, and someone was passing around a joint, I wouldn't be thining about the dealers pocket, I'd take a free hit."

I've purchased over 700 songs from iTunes over the past 18 months. I'll never pay a cent more than .99 for a song. There'll always be a way to get it free. Jobs and Rec Execs, be warned. that 99 cent price point better be the premium price, not the starting point.

 

[pounce]

the recording industry should be aware that this is as much as folks really want to pay for audio tracks. i really agree. i think the current itunes model is exactly right. i sure don't want prices to go up.

however, there is one little point to pick from the above two posts. doctors wages aside, they at least expect to get paid for their services. and in the market where the doctor made less, the cost of living is also less so we shouldn't necessarily look at his salary against our cost of living, we should look at that in comparison to his cost of living if it were to be a fair comparison.

for the point about joint at a party, the dealer had already been paid by the person who bought the week and there would be no point in worrying about the dealer. the person who bought the weed was -offering it up for free-. not all bands are giving away their audio for free. this is because it's also true that music studios, distributors, etc. aren't free and so there are costs associated with producing the music in the first place. hey, if it were no costs in making music well then i'd suggest it ought to be free. but like in your weed example, someone is paying for it.

 

[lolex]

doctors wages aside, they at least expect to get paid for their services. and in the market where the doctor made less, the cost of living is also less so we shouldn't necessarily look at his salary against our cost of living, we should look at that in comparison to his cost of living if it were to be a fair comparison.

this is because it's also true that music studios, distributors, etc. aren't free and so there are costs associated with producing the music in the first place. hey, if it were no costs in making music well then i'd suggest it ought to be free. but like in your weed example, someone is paying for it.

Simply speaking, all connect to money is materialism, as a customer, I choose just base on how many choices I could compare to in the market, I don't bother how much it cost you to produce, if you're being costed high to produce , you may mark price higher and I will judge whether to buy.😉

Personally, I don't believe money can help you produce good music, only talent will do, talent is not enough , you need enough practice to make it perfect.Good music is not that money can buy.

Better equipments could help you play good sounds but not playing good music, I think whoever doing music now should dig deeper into the nature of music and sort out which direction to go, otherwise , will be eliminated.😛

 

[VanNess]

I think the music industry does understand this.
What I don't understand, is why a large portion of people on this board don't understand "supply and demand."

This is an example of demand. If the demand is high they get to charge more.

Nobody is coming down hard on Apple because of what they charge for iPods, and they are making tons of money.

Nobody calls apple..."just plain greedy"

Newsflash... Apple could sell iPods for less and still make money, they don't because they can make more money by selling at the higher price point. This is not greed, this is business.

This is how it should work in almost all industries... to include the music industry.

It is their job to make as much money as they can. That's their goal. Its your job (as a consumer) to get the best product for as little as you can.

Neither supply or demand are at issue when the record companies (the so-called "big four" EMI, Sony-BMG, Universal Music, and Warner whom account for 95 percent of worldwide CD sales) become monopolists and act collectively as a price-fixing cartel, which is exactly what they have done in the past and what they are effectively proposing to do now. That's not exemplarily or typical of the "way it works in most industries."

And Apple does make a ton of money on iPods, but they haven't done so by suddenly shifting the existing, established price of the latest, hottest selling iPod upward just to simply cash in on a new wave of consumer interest. When Apple does raise the price of an iPod, it's due to the inclusion of enhanced capacity and/or new, better features. The price then obviously reflects the product's added value, (although Apple often includes additional features at the same price point or less when the product line is refreshed) and the price is never arbitrarily increased over the product life cycle.

But your right, Apple does make a lot of money on iPods, and in that sense they seem to know something the record companies don't.

 

[-hh]

There's that honesty I was looking for. Succinct, honest and deplorable. 🙄

My reaction is currently undecided, between:

a) Not buy anything new anymore. Used CD's only.

b) Spend $50 to buy an FM tuner for my PC, since I can *legally* grab an analog copy for personal use off the airwaves.


-hh