U.S. Investigating Online Music Pricing 213
An anonymous reader writes "Times Online has a story about the U.S. Federal Government investigating whether the music labels are fixing prices for online music sales. 'The antitrust division is looking at the possibility of anti-competitive practices in the music download industry ... Mr Jobs suggested such a move would drive owners of Apple's iPod, the hugely popular digital music player, to piracy, a problem that has cost the music industry billions in revenues in recent years.'"
clarify this paragraph: (Score:5, Interesting)
From the fine article:
I wonder, does Mr. Jobs actually believe this, or is this casual conjecture/repetition by the author?
Regardless, I'm still curious about and waiting for the definitve and objective study that shows real correlation, because I still don't believe it.
The biggest "cost" to the music industry over the last five years has been and continues to be their disdain for the consumer (e.g., the SONY debacle, protected "CDs") and their insistance on charging similar fees for songs even while the business model dramatically evolves (e.g., hugely cheaper distrubution channels).
Heck, if the music companies were found to be colluding by charging $15+ per CD years back (they were), what are the chances they are doing the same now when the per-tune cost remains the same as distribution costs drop?
My biggest fear though is the music industry gets "caught" and settles in similar fashion to their previous settlement, à la "giving away" free downloads (by the truckload) to local libraries, but restricting the downloads to non-selling tracks. Sigh.
Re:clarify this paragraph: (Score:2, Insightful)
Re:clarify this paragraph: (Score:2)
Worst quote ever (Score:5, Informative)
In fact Jobs is complaining about the behavior being investigated, I.E., Jobs is objecting to price fixing.
Jobs has been vocal for a long time against attempts by the labels to try to forcibly raise online music sales.
Get the Message? (Score:5, Interesting)
The music industry tried to get greedy by forcing Jobs' to raise prices on music. He pushed back and told them it would kill iTunes. The music companies banded together and tried to force his hand. Now, suddenly, the justice department is interested in allegations of price fixing. Coincidence? I think not.
Re:Get the Message? (Score:2, Funny)
George W. Bush owns an iPod Shuffle. Coincidence? I think not.
Comment removed (Score:4, Funny)
Taxpayers (Score:2)
Just be happy that iTunes is easy to use- could you imagine how many hours (and how much less would get done around here) if Bush had to download torrents in order to get the latest bee-bop hit?
-M
Because Jobs has such pull with the Federal gov't? (Score:3, Insightful)
Coincidence? I think not.
Given the fact that Apple lost its lawsuit against MS, the DoJ abruptly dropped its case against MS when Bush came in on his first term, and Al Gore is on Apple's board [apple.com], I find it unlikely that Jobs has much pull with the federal government. That said, Apple is a major force in the tech economy right now, so the feds might be willing to give Jobs more of an ear than usual simply because he runs a high-impact, successful company.
Re:Because Jobs has such pull with the Federal gov (Score:2)
Apple really seems to be above the fray of politics. You mention Al Gore on the board of Apple, but Rush Limbaugh has talked about hi Powerbook on the air before and podcasts his show. Up thread from this message its noted that Bush has an Ipod.
So heres what I think. Jobs' reality distortion field doesn't care what your political persuasion is. And back on topic, for those of us under the influcence of the field, we know iTunes = good, Record Companies = bad.
Re:Get the Message? (Score:2)
I'm curious if he tried something more capitalistic, how it would work. Sell all the music for 99 cents, but give better placement to companies that agree to a smaller cut of the 99 cents, and drop any comapany that wanted more then 95 cents (or whatever they determine their minimum price is). Of course, I'm sure they are already selling the placements, you just have to tie it to compliance elsewhere.
They are all playing hardball, Jobs controls the bigg
To really play hardball ... (Score:3, Insightful)
That would get the message across really fast.
Re:Get the Message? (Score:2)
Re:clarify this paragraph: (Score:2, Interesting)
Jobs says they will pirate if prices are fixed, people believe it, the RIAA does it
Re:clarify this paragraph: (Score:3, Informative)
If I may clarify this......The labels were sued not for the price of CDs, but for their minimum advertised price policy. Basically, when Best-Buy and Wal-Mart were using CDs as loss-leaders to bring consumers into the door, the labels tried to slow this with a MAP policy. The labels didn't t
Re: (Score:3)
I Smell The RIAA... (Score:3, Insightful)
At what point does what the RIAA is doing constitute breaking some kind of law? Anti-trust maybe? Anyone have some insight into this?
Its called price fixing (Score:3, Insightful)
Imagine if Intel and AMD got together and agreed to not sell CPUs for less than $500. Suddenly you would have to pay much more for a computer, and Intel and AMD would get much higher profit margins. As long as they keep to this agreement, people who want to run an x86 computer, don't have a choice but pay the extra.
The reason the prices are so low for most CPUs at the moment is because of the competition between those two manufacturers.
The suggestion is that
Re:Its called price fixing (Score:2)
Wait...
Tim
Re:Its called price fixing (Score:2)
Wait...
I guess you made that part up.
I was implying that some level of price fixing had already been done, in much the same way that the anti-competitive practice of bundling the OS had already been done. BTW, if you're wanting to insult someone, at least use a barb that hasn't been tossed at me lately, such as:
- You, sir, are a T1 line of pure stupid.
- You, sir, must be a brain transplant donor.
- You, sir, have a boot ROM with a bad chec
Re:Its called price fixing (Score:2)
Then IBM would resurrect its line of x86 CPUs and sell them for $3-400. The trick with price fixing is to make sure that your price is something the market will bear (if only just), and sufficiently low that you keep the barrier to entry in your market sufficiently high. 99p/track is very low from the perspective of a small-scale band. If you are only selling a few hundred tracks, it is difficult to break even (not cou
Re:Its called an OLIGOPOLY (Score:3, Informative)
Actually all you need is a barrier to entry: copyright gives the RIAA the barrier that ensures that no one else sells "their" songs. As long as the RIAA retains copyright, they can retain control of artist's access to the fans, and they w
Re:I Smell The RIAA... (Score:2)
At what point does what the RIAA is doing constitute breaking some kind of law? Anti-trust maybe? Anyone have some insight into this?"
Steve Jobs says all songs are worth $0.99, and it's the record labels that are being investigated for price fixing? I think we already know which monopoly is setting the price.
Re:I Smell The RIAA... (Score:4, Insightful)
What on Earth are you talking about? iTunes is one company with a set price - they set the price there because it's affordable for consumers. Price fixing usually happens at level outside of the common view. In this case: Sony, Virgin, Arista (whatever other shitty labels) are being investigated because there is speculation they are meeting to set the base price of their product in order to make more money.
iTunes might have an agreement with Sony for $0.25 per song, while Virgin iTunes has to pay $0.28 per song (Yes, numbers I'm pulling out of my ass). iTunes still sells each for $0.99 . The idea here is that the labels are potentially meeting to rise the price up to an agreed upon price (say $0.60 per song - another number straight from my ass) to increase their bottom-line and force iTunes to raise their end-user price as well. This would give more viability for consumers to go back to buying CDs at the artificially high prices and not be able to save money when buying online.
Re:I Smell The RIAA... (Score:2)
Re:I Smell The RIAA... (Score:2)
Re:I Smell The RIAA... (Score:2)
Re:your sig (Score:2)
The problem isn't pricing the problem is copyright (Score:3, Insightful)
It always amazes me to see all these people who are in-dignified about this when it's their own belief system in copyrights that pre-destined this to begin with.
Re:The problem isn't pricing the problem is copyri (Score:2)
The problem (among others) is high price. By demanding high prices in the face of easy alterna
Re:The problem isn't pricing the problem is copyri (Score:2)
I dunno... If copyrights disapeared tomorrow, people would still make movies, play music, and write books.
In fact it might improve the industry by getting people out who are doing nothing but writing and producing crap just to
Re:The problem isn't pricing the problem is copyri (Score:2)
Re:The problem really is copyright (Score:2)
Actually copyright creates a monopoly situation which by definition increases the price and decreases the supply. Copyright is unnecessary for creators - it is necessary for middlemen (who contribute nothing to creativity) and for companies/people who want to stop creating (but keep collecting checks). It's the middlemen and the lazy that argue for more and
Re:MOD PARENT DOWN. - come on folks! (Score:2)
There are 2:
1: RIAA (and MPAA, for that matter) are busy buying legislation effectively giving them veto power over the electronics industry. The most likely consequence will be to further push the electonics industry off of US soil. Maybe I don't have to buy their stuff, but if they get this veto power, it endangers my job.
2: The Constitution identified patents and copyrights with an eye to the common good, with the inten
copyrights and economics (Score:3, Insightful)
What are you talking about. Just because people can use substitute goods and can't get any price they want, doesn't mean that there isn't price fixing and anti-trust behavior.
If the RIAA manage to extract $20 for a CD or $.99 a song from your neighbor despite the fact that you can put your own music for free or for $.10c on the net then MORE POWER TO THE RIAA. It's called MARKET POWER. It means that they have invested the time and effort to make their product worth what the market is willing to pay. You
Re:copyrights and economics (Score:2)
The "natural supply of food to people around the world" is restricted. If you don't believe me, try walking into a supermarket and taking some food without paying fo
Re:MOD PARENT DOWN. - come on folks! (Score:2)
Economics 102: If you have a monopoly you can charge more and/or offer less than if you were in a competative environment.
Maybe not the whole orchard - certainly a good chunk of it. More importantly they have a virtual lock on marketing (ra
Re:MOD PARENT DOWN. - come on folks! (Score:2)
I will summarize boldrine and levine for you in the following statement (if i remember their nonsense correctly - I remember laughing my ass off reading their crap while I was completing my PhD):
"We have a great new idea that will make traditional Intellectual Property mechanisms obsolete! It's called 'doctrine of first sale.' The way that it works is >>> SOUND AND FURY SIGNIFYING N
Not Trolling? Prove it... (Score:2)
well ... I have read it. And it certainly doesn't seem like fucking clownshoes to me. While I admit I'm not an economist, I think they make some very strong points. Their use of concrete examples doesn't look like hand-waving to me. I saw little jargon (hell, I could follow it, and I'm no economist) nor did I see problems of incompleteness. If anything, they were fair and balanced, pointing out the differences between systems that included and didn't include
Re:MOD PARENT DOWN. - come on folks! (Score:2)
Ah. So because there is a practical upper limit to what a monopoly can charge, monopolies aren't really a problem. Is that what you're arguing? That anything short of infinite gouging potential is just fine?
Hmm.. maybe that's not what you meant at all (though it certainly sounded like it). If not, then
Re:MOD PARENT DOWN. - come on folks! (Score:2)
Put in absolute terms (for simple argumentation): A monopoly/oligopoly only has "relevance" if it controls something that has no substitutes.
Put in more intelligent terms: The fewer legitimate substitutes there are for a given good, the (socially) "worse" a monopolistic/ologopolistic supplier of that good is.
Therefore: a monopolist who controls the worlds oxygen supply would be far worse than one that controls the world's pineapple supply.
I dont think any r
Obviously (Score:5, Funny)
Easily... (Score:2)
Re:Easily... (Score:2)
Re:Obviously (Score:2)
Re:Obviously (Score:2)
And don't forget the cost of having several members of Congress on your side ... lobbying, bribery, overseas travel, etc.
Re:Obviously (Score:2)
It's sad that the people who watch Love Monkey have a better understanding of the music industry than most people on
Welcome to the future: Now RIAA-free (Score:2)
Not anymore [tunecore.com] :-)
That's alot of free downloads... (Score:3, Insightful)
Re:That's alot of free downloads... (Score:2)
Fair practices require obligatory licensing. (Score:4, Interesting)
Download services should have the right to sell any digital recording now, and compensate artists afterwards. There should be nothing "exlusively on iTunes" (or eMusic for that matter).
Opening competition prevents unfair business practices (to some extent, anyway, worth a shot!).
Re:Fair practices require obligatory licensing. (Score:2)
If you want to stop anti-competitive practices, digital distribution needs to adopt the rules of radio: Download services should have the right to sell any digital recording now, and compensate artists afterwards.
Well, that might help with fair use if the RIAA can't specify what DRM is used, but I doubt that will ever fly. Also, this doesn't really address the abuse at hand, price collusion. What does it matter if Apple or Apple and 15 other places sell the song if the price of the song at all these pla
Re:Fair practices require obligatory licensing. (Score:2)
Re:Fair practices require obligatory licensing. (Score:2)
Interestingly, that's the law in Russia. As a result, Russian paid-download sites do a booming business, and the customer sometimes even gets to pick the encoding format.
Re:Fair practices require obligatory licensing. (Score:2)
"
No, if you want to stop anti-competitve practices, force Apple to license fairplay. Problem solved.
Yeah, right... (Score:4, Insightful)
Personally I think this is just that, an investigation, with little backbone or political will to see it come to court. It would detract from their "war on terrorism" and listening in on all their warrentless wiretaps.
The free market is injured right now. (Score:2)
While the free market is a truly remarkable beast, it at times does fail. Even the most diehard libertarian recognizes that fact, and accepts that sometimes extramarket forces are needed to correct such failures.
Corporations are often considered a free market aberration. They allow for monopolistic and oligopolistic situations to arise, and such situations are of
Re:The free market is injured right now. (Score:2)
Well, not quite all of them... [wikipedia.org]
Re:Yeah, right... (Score:2)
Oh please. (Score:5, Insightful)
"piracy, a problem that has cost the music industry billions in revenues in recent years"
Please, lets not jump to conclusions like this, ok?
Not fixed low (Score:3, Insightful)
Re:Not fixed low (Score:3, Insightful)
Piracy isn't an option for me. It's illegal, and it keeps the major labels in power by keeping their music popular and gives them a leg to stand on in court.
Re:Not fixed low (Score:2)
Re:Not fixed low (Score:2)
Re:Not fixed low (Score:2)
If I pay a buck a license I want them to record that license for the rest of my life and let me redownload the song for free once a year to whatever media I'm using at that time.
Re:Not fixed low (Score:2, Funny)
Billions you say? (Score:5, Interesting)
I don't buy it one bit. I always find comments/stats like this to be funny. How does that go again, 76.34% of stats are made up?
Whos to say that Redneck Billy Bob would really have paid for that Britney Spears album that had the song that he pirated? Or that your great aunt Ethal, really would had bought that Iron Maiden album from that song she pirated?
I think these numbers are grossly exaggerated and most likely, just made up. How are you to statically calculate a loss of a non-material product that you are "assuming" someone "would have" purchased legally?
The RIAA and MPAA need to get knocked off their little soap box and stop preaching their bullshit. It isn't like they aren't making enough money as it is, those fat cats pockets just keep getting bigger. Not to mention, established artists are not hurting either. The people that are getting hurt buy this are the struggling artists, that the music industry is already raping as it is. But do you hear these stuggling artists bitching, no, most of them are not. Most of them realize the more people that can hear the music, the more fans they are going to get. True fans that will buy their albums and support them.
Re:Billions you say? (Score:2)
Software companies have been making the wild-ass claims as to software loss value forever starting with Bill Gates and his famous tirade in the 70's.
In order to upset the illigimate numbers that the RIAA are using you need to show that the software industry has been "full of shit" for the past 30 years as well.
You and I know this as fact, but remember lawyers, government officials, and other rich people have been hearing this for s
new lower pricing model (Score:5, Insightful)
No, and here is my suggestion:
0.20 cents for each 128 kbps song
0.40 cents for each 256 kbps song
0.60 cents for each 320 kbps song
0.80 cents for each lossless song
The better the audio quality, the higher the price.
Re:new lower pricing model (Score:2)
So if a lossless song is 5x bigger than a 128kbps song, shouldn't it be approximately 5x more expensive?
The lossless song should, at your rate, bet at least $0.99
My own take is, after making my own DVDs and selling for a smattering of profit:
$0.50 128kbps
$0.75 256kbps
$0.99 320kbps
$2.99 lossless
This doesn't follow that 5x pattern because I've included profit margins in each price category.
Re:new lower pricing model (Score:2)
Re:new lower pricing model (Score:2)
Re:new lower pricing model (Score:2)
Re:new lower pricing model (Score:2)
Not on eMusic.com. I signed up in November because I discovered they don't use DRM. Of course, the downside is that the big record labels won't deal with them, but there's more than enough stuff on there to keep me on a $20/month subscription which gives you 90 songs.
Heck, 3/4 of what I buy isn't carried by services like iTunes or Napster anyway (although that's starting to change). eMusic is like a library (at least for me)... yo
Re:new lower pricing model (Score:2)
It literally costs less to buy a CD because the bandwidth of a FedEx truck is in the thousands of terabytes, while the bandwidth of the average online store is probably only in the hundreds of gigabytes.
If you literally want lossless, you need to pay for it somehow. That either means driving 10 miles to a store (at 20mpg, $2.50 a gallon, 10 miles is $1.25), plus the actual CD for $14 including tax... or you stay at
Re:new lower pricing model (Score:2)
Re:new lower pricing model (Score:2)
Re:new lower pricing model (Score:2)
The problem is, your plan is a microscopic change in delivery and a huge slash in prices, given how many are willing to
Re:Can anyone actually hear the difference? (Score:2)
Try comparing the bitrates with MP3. If you want to *really* hear the difference, find something which uses one of MP3s weak points (I think white noise is the main one, so something with flute for example would work quite well for this).
Irony (Score:4, Interesting)
1. Fix your price at a point higher than what the market wants.
2. Find comsumers who priate your music because they dont want to pay set price.
3. Extort said persons for more than they would ever spend in a year for music.
4. ???
5. Profit
They got it pretty good, they make money of those who acutally buy thier songs and make money of those who dont.
Re:Irony (Score:2)
I think the missing 4. ??? is really:
4. Get everyone else who even think of pirating the music to agree that pirating (and getting sued) is less costly than buying overpriced music... and cash in on huge numbers of music listeners' fear.
variable pricing can be a good thing (Score:5, Insightful)
Could the labels actually be right?
Ipod_although it's tempting to assume that the evil record labels are once again trying to gouge us, there's some sense in their latest efforts to get Apple to abandon it's one-size-fits-all pricing model. A New York Times article over the weekend reported on the ongoing struggle between the labels and Apple over its fixed $0.99 price point. The labels would like to sell most new music for more--$1.49/track?-- while older or more obscure tracks could go for less.
There's plenty to like about variable pricing. For starters, it's almost always the most efficient way to maximize markets of disparate goods and customers. As Barry Ritholtz puts it:
It's a basic rule of economics: goods that have elastic demand (i..e, non essential) are highly price sensitive. Further, any item easily available for free (albeit illegally) will have an even bigger response to price increases.
Apple has argued that single-price simplicity was necessary in the early days of the service, when people were just getting used to paying to download music. But now, after 500m tracks have been sold, we're clearly past the early adopter phase. So what's the right pricing model going forward?
Most accounts of the dispute between Apple and the labels have focused on the industry's efforts to raise prices, which are undeniably a big part of their plan. No surprise there. The research we've been doing for the book shows that within the bulk of the online music business--the top 100,000 downloads--only 3.5 tracks on the average CD sell. So the record labels are getting less than $3 in revenue (wholesale) from albums when the music is sold by the track. That's less than half the wholesale price of a CD (although with none of the physical costs of making and distributing a CD). The shift from an album model to a track model is indeed an alarming thing for the labels, and it's easy to see why they'd want to raise retail prices online as a result.
But there's more to the story that that. The labels may be evil, but they're not (all) stupid. They--to say nothing of many of their artists--also see the virtues of dropping the price for lots of their music, too. For decades they've been playing with CD pricing models that range from cut-price classics to top-dollar boxed sets, and when freed of the overheads of traditional retail, they're likely to experiment more, not less. Although some of the more vocal commentators have encouraged Apple to hold the line at $0.99, there's a strong argument that introducing variable pricing might ultimately lead to a more consumer-friendly outcome.
The reason is simple Long Tail math: there's a lot more music in the Tail than there is in the Head, and labels are generally more willing to experiment with discount pricing outside of the top 1,000 than they are with their hits. Those niches represents most of the music available today, measured by number of titles, and because they're only modest sellers individually they're less likely to create channel conflict with CD retailers, who tend to only stock the hits.
Imagine, for starters, that Apple introduces a three-tiered band of pricing: $1.49, $.99 and $.79 (that would no doubt soon expand to include $.49, but below that the transaction costs of credit card processing and the like start to loom large). Tiered pricing--gold, silver, bronze--is still pretty simple for consumers to understand, yet it introduces a valuable new dimension of demand creation.
Rhapsody, for instance, saw demand triple last year when it cut prices in half, to $0.49. And the average usage per customer in the all-you-ca
Re:variable pricing ... people will just wait. (Score:3, Interesting)
The problem with this variable pricing, based on the product's age, is that many (most?) people will simply wait until the price of the item drops to purchase it. Just like DVDs.
How many people now skip seeing a movie in the theater and buy the DVD? How many of those wait 6 months after the DVD release for the price to come down?
The movie industry still mainly counts only the opening box of
Re:variable pricing ... people will just wait. (Score:2)
Like me, for example. I won't pay more than $12 for a CD. I wait for CDs to drop below that price on half.com or whatever.
Now, how is this a problem for the music industry? Are you suggesting it would be better if I just didn't buy the CD at all, or pirated a copy?
Re:variable pricing can be a good thing (Score:5, Insightful)
The article was about a government investigation into possible monopolistic price-fixing in the online music industry. Your point seems to be that variable prices are a good thing assuming market forces are at work and there is no monopolistic price-fixing.
The music industry in America is controlled by a monopoly called the RIAA (Recording Industry Association of America). Their monopolistic power has been increased by obscenely repeated extensions to the duration of copyright protection handed down by our corporate owned Congress.
Are you claiming that despite this obvious monopoly and despite all of their monopolistic practices in the past, there has been some magic wand passed over the Internet so their monopolistic power won't be used there? Or are you claiming that since market forces are magically at work on the Internet, there is no need for this government investigation? Or are you making the circular argument that market forces are working because you've assumed that market forces are working?
Even if we ignore assumptions about market forces, some of the particulars of your argument are not well thought out. Here is an example: you say:
If someone were to offer to sell me legal, good quality music at say $.10/per track, I'd be willing to give them a small deposit (say $5 or $10) so that they only have to charge my credit card after every 50 or 100 downloads. This solutions actually cuts down the credit card overhead by a factor of 5 or 10. I find it hard to accept you as a credible proponent of "long tail math" when your recommended price points ignore such obvious and simple solutions.I agree in theory that variable prices in a free market could be a good thing. But I strongly disagree with your (perhaps unstated) assumption that our current system is a free market. The obscene copyright laws and the RIAA's iron-fisted monopolistic control make it anything but.
what are you smoking? (Score:2)
No. If they make songs cheaper, Apple still sells them for $0.99, and Apple makes more money. Do I need to dig up quotes for you where Steve Jobs says all music should cost $0.99.
The prices must be fixed! (Score:2, Insightful)
No more cd container costs.
No more printed liner costs.
No shipping costs.
Drastically reduced distribution costs.
And it ends up costing me more than ever to download a wrapped physical CD worth of music that has been shipped to a retail location.
Something is not right here.
If they are going to investigate music pricing.. (Score:2)
umm (Score:2)
Unfortunately, it was worth every penny.
DOH EXCUSE ME??? (Score:2)
OK let me fix that for you.
Mr Jobs suggested such a move is a problem that has cost the music industry billions in revenues in recent years.
THERE!
Wholesale vs retail. (Score:2)
Bad edit! (Score:2)
Peanuts? (Score:2)
ITMS just passed 1 billion downloads after being in business a few years. That's barely $1B to Apple - as revenues. The major labels' cut can't be bigger than ~ $100M each. That's for online sales for a few years. Contrast that with Billion-dollar CD sales, merchandising, etc, per annum for any given major label.
Sounds like they're either fighting over peanuts or they're playing the long view & hoping this will ramp up to some real numbers years down the road.
Re:all I know.. (Score:2)
The real question is: between golf and income tax, how can people stay so damn honest?
Re:Don't (Score:3, Funny)
Re:Don't (Score:3, Funny)
Re:...Wait a Damned Minute... (Score:2)
The RIAA has no inherent legislative power, it has to buy legislation.
Re:A system that understands... (Score:2)
Ah, but the pirate networks are full of incomplete, low-quality, low-bitrate, wrongly labelled, or downright fake files. Plus viruses everywhere. Meanwhile allofmp3.com provides unencumbered, technically legal, high-quality files at a very low cost. It's worth it to save the hassle.
Re:A system that understands... (Score:2)
Re:Terrible for Emerging Artists (Score:2)