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Apple Sets Tune for Pricing of Song Downloads 396

Posted by samzenpus from the pink-lady-serenade dept.
PygmySurfer writes "Apple Computer on Monday revealed it had renewed contracts with the four largest record companies to sell songs through its iTunes digital store at 99 cents each. The agreements came after months of bargaining, and were a defeat for music companies that had been pushing for a variable pricing model."
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Apple Sets Tune for Pricing of Song Downloads More

Apple Sets Tune for Pricing of Song Downloads

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  • It makes me feel all good inside... (Score:5, Funny)

    by crazyjeremy ( 857410 ) * on Monday May 01, 2006 @08:44PM (#15241894) Homepage Journal
    The music industry's big four - Universal, Warner Music, EMI and Sony BMG - were not immediately available to comment ... The issue has occasionally become acrimonious, with Mr Jobs last year publicly labelling the industry "greedy". However, several music executives privately acknowledge that they have little leverage over Mr Jobs.
    Heheheh... I dunno, but ANYTIME a big guy saves the little guy money, and greedy corporate america gets told to "stuff it" and HAS to listen... It just makes me feel all good inside.

    • Re:It makes me feel all good inside... (Score:5, Funny)

      by 0racle ( 667029 ) on Monday May 01, 2006 @08:53PM (#15241946)
      several music executives privately acknowledge that they have little leverage over Mr Jobs

      Perhaps someone should download the Imperial March from iTunes in honour of this.
    • "Greedy corporate America" is on both sides of this issue.

      Apple isn't looking out for you; Apple is looking out for Apple.

      In fact, if it wasn't for the RIAA, Apple probably *would* be implementing a variable pricing scheme all on their own. Each song has its own unique demand curve and variable pricing would certainly allow Apple to optimize it's profit. (note that isn't necessarily bad for the consumer... many songs would be optimally priced at less than $0.99)

      The only reason you see Apple on the ot

      • Apple doesn't pay any money to the RIAA when a song is sold on iTMS. They pay the record company that holds the rights to the song (the one they licensed distribution rights from). The RIAA is a trade organization not a corporation....

        • Metonymy (Score:3, Informative)

          by tepples ( 727027 )

          Apple doesn't pay any money to the RIAA when a song is sold on iTMS. They pay the record company

          "RIAA" is a metonym [wikipedia.org] for the major record labels and the largest minor record labels, all of which are members of RIAA.

      • Re:It makes me feel all good inside... (Score:4, Informative)

        by Firehed ( 942385 ) on Monday May 01, 2006 @09:42PM (#15242204) Homepage
        The only reason you see Apple on the other side of this issue is because RIAA is taking a peace of the pie. Apple also controls the ipod market which is complementary to the itunes market. But Apple gets 100% of the profit from the ipod market, and only part of the profit from itunes market (since they have to share with the RIAA). So they would naturally like to shift as much profit as possible to the ipod market, which means keeping lower prices in the itunes market.
        The RIAA takes more than a piece. They end up with something around 70 cents of every single one of the billion plus songs sold (about 4.5c goes to the artist, presumably the rest to Apple).

        Steve's a smart guy though. He knows 99c works. He's set a standard, and he probably wouldn't be able to charge more than that on anything, save the extremely popular supercrap that 12-year-old girls buy. He's taken a ton of would-be pirates and turned them into legal consumers. I think he's aware of the fact that selling less popular stuff at under 99c could boost sales (and yes, there would be a "correct" price point for every song, probably around the 50c range for most of the older or lesser-known stuff). But you can't take your business that's been touting "any song in the world, 99c" and say "well, except for x, y and z".

        Every item has an optimal price point. With inelastic items like gasoline, you can pretty much charge whatever the hell you want and people will still buy it (begrudgingly, but they still need to get from a to b). Music is quite the opposite, and digital music downloads even moreso. Charge $x for a CD, Y people will buy it. Figure in all of the associated costs and you've got your optimal price point. With downloads, costs are almost nonexistant. At the rates of my host, it would cost me about nine cents in bandwidth for a four-meg track, and you can bet your ass that it doesn't cost Apple even a tenth of that. The same pricing curve still applies, except that supply is infinite and distribution costs are negligable. Charge more, less sales; vice-versa: find the point on the graph where sales * price is at its highest point and there's your ideal price.

        Of course, things change with demand and whatnot, but just suppose that songs all start at 99c, and as sales decrease the price is dropped by a dime to as low as 29c. Sales will pick up a bit due to the dropped price. If sales seem to be picking up too quickly, bump it back up a level. Make some uber-algorythm to automate this and all you've gotta do is add new music to the store.


        And the RIAA becomes a problem again. Suppose that it worked out, as it roughly does, to 70c: RIAA, 5c: artist, 24c: Apple. Remove RIAA from the picture. 29c a track is remaining. Remove the RIAA, charge 49c a track, divide the extra twenty cents evenly between Apple and the artist. Sales shoot up more than twofold from the price drop in all likelyhood, the artists get FAR more money (three times as much even if the rate of sale stays the same), and Apple wins too. You've undercut the assholes and given more money to the people that deserve it, while simultaneously spreading the product to more people at less cost to them. Hell, Apple would probably be making so much extra profit that they could lose the CRAP and people using devices other than the iPod wouldn't hurt overall profits (assuming, of course, that a: people buy iPods for iTMS and not it being an iPod and b: they can be hassled to transcode from m4a to mp3/other)

        • Re:It makes me feel all good inside... (Score:5, Informative)

          by Doctor Memory ( 6336 ) on Monday May 01, 2006 @09:53PM (#15242249)
          With downloads, costs are almost nonexistant.

          Now that's not even close to right.

          You ever priced a Mackie? Studio time? A decent microphone? There are a large number of non-trivial costs to producing an album. No, GarageBand and a Shure mic from Sam Ash isn't going to cut it. If you want professional sound (i.e., something that will sell), then you've got to get some professional gear. And that takes professional amounts of cash. Sure, you can cut your distribution costs with on-line sales, and yes, distributino costs are significant. But to hand-wave the rest of the costs of production as "almost nonexistent" shows a shocking lack of common sense.

    • Inside truth behind variable prices (Score:5, Interesting)

      by Anonymous Coward on Monday May 01, 2006 @09:20PM (#15242086)
      Price as Signal

      Forbes: "EMI Group boss Alain Levy said at press conference today that he believed Jobs would introduce multiple price points for iTunes music within the next year."

      The story they're trying to tell you is that "older, less popular songs could be discounted, and in-demand singles could go for more than a dollar."

      Let's think this through, because I think the recording industry is lying about why they want different prices.

      Before I start with that, have you ever noticed that movie theaters charge the same price for all movies, whether they are Steven Spielberg blockbusters or crappy John Travolta religious quackery disguised as science fiction that nobody in their right mind would want to see?

      Theoretically, when a super-duper-blockbuster comes out, like, say, Lord of the Rings, there's so much demand that the movie theaters just end up turning people away. Econ 101 says that they should raise the price on these ultra-popular movies. As long as the movie is sold out, why not jack up the price and make more money?

      Similarly, when stinkers like Lesbian Gangster Yoga with Ben Affleck come out, the movie theatre is going to be pretty much empty anyway ... so Econ 101 says they should lower the price and try to get a few more bucks filling up the theater with price-sensitive moviegoers.

      And indeed this is what the recording industry is telling you that they want to do on iTunes. But they don't do it in movie theaters. Why not?

      The answer is that pricing sends a signal. People have come to believe that "you get what you pay for." If you lowered the price of a movie, people would immediately infer from the low price that it's a crappy movie and they wouldn't go see it. If you had different prices for movies, the $4 movies would have a lot less customers than they get anyway. The entertainment industry has to maintain a straight face and tell you that Gigli or Battlefield Earth are every bit as valuable as Wedding Crashers or Star Wars or nobody will go see them.

      Now, the reason the music recording industry wants different prices has nothing to do with making a premium on the best songs. What they really want is a system they can manipulate to send signals about what songs are worth, and thus what songs you should buy. I assure you that when really bad songs come out, as long as they're new and the recording industry wants to promote those songs, they'll charge the full $2.49 or whatever it is to send a fake signal that the songs are better than they really are. It's the same reason we've had to put up with crappy radio for the last few decades: the music industry promotes what they want to promote, whether it's good or bad, and the main reason they want to promote something is because that's a bargaining chip they can use in their negotiations with artists.

      Here's the dream world for the EMI Group, Sony/BMG, etc.: there are two prices for songs on iTunes, say, $2.49 and $0.99. All the new releases come out at $2.49. Some classic rock (Sweet Home Alabama) is at $2.49. Unwanted, old, crap, like, say, Brandy (You're A Fine Girl) -- the crap we only know because it was pushed on us in the 70s by paid-off disk jockeys -- would be deliberately priced at $0.99 to send a clear message that $0.99 = crap.

      And now when a musician gets uppity, all the recording industry has to do is threaten to release their next single straight into the $0.99 category, which will kill it dead no matter how good it is. And suddenly the music industry has a lot more leverage over their artists in negotiations: the kind of leverage they are used to having. Their favorite kind of leverage. The "we won't promote your music if you don't let us put rootkits on your CDs" kind of leverage.

      And Apple? Apple wants the signaling to come from what they promote on the front page of the iTunes Music Store. In the battle between Apple and the recording industry over who gets to manipulate what songs you buy, Apple (like movie theaters) is going to be in f
      • "Pricing sends a signal..."

        ...much weakened by recommendation engines. With a recommendation engine in place, pricing really only fits a supply-demand curve, not some false psychology. If the record labels really wanted to promote something, iTunes could charge the labels big money for engine distortions, per title, per user, per week. Apple could raise the cost of advertizing enormously and earn a huge profit from it by using a recommendation engine as leverage against it.

        "The entertainment industry h

      • The answer is that pricing sends a signal.
         
        This is a strong argument, and no doubt has a lot of backing. But you don't see this everywhere. When I go to tescos, I see dvds selling from £2 to £20. I really believe that cinemas would benefit from selling cheaper tickets when the movie is on its way out.
    • This is my response every time some naive anti-DRM blogger decides it would be a good idea to "open" up FairPlay. If FairPlay was open, you wouldn't be getting popular songs for $0.99, that's for sure. If the record companies could pick up their cards and go home, they'd tell Apple "charge $6 or we'll only sell through Napster". The fact that Apple's music experience encompasses the "whole enchilada" is why we have reasonably priced music downloads instead of 20-second, downsampled $2 ringtones style pri

    • Re:It makes me feel all good inside... (Score:4, Insightful)

      by Overly Critical Guy ( 663429 ) on Monday May 01, 2006 @10:18PM (#15242377)
      greedy corporate america

      I'm so tired of seeing these kinds of tired, emotive phrases uttered. There's nothing greedy about being a corporation or American, or wanting to have variable pricing.

      I'm opposing to variable pricing for downloads, but I'm not going to fly the standard anti-capitalist flag over it.

  • good job! (Score:3, Funny)

    by clackerd ( 797052 ) on Monday May 01, 2006 @08:45PM (#15241897)
    the shortsighted me says horray for only having to pay $.99 a song still. i don't listen to the farsighted me.

    • Re:good job! (Score:4, Funny)

      by Guppy06 ( 410832 ) on Tuesday May 02, 2006 @01:34AM (#15243281)
      "i don't listen to the farsighted me."

      I see a position in Congress in your future.

  • Good to see leverage moving from the labels, (Score:4, Funny)

    by benow ( 671946 ) on Monday May 01, 2006 @08:46PM (#15241905) Homepage Journal
    but big label artists are still being boned.

    • Re:Good to see leverage moving from the labels, (Score:5, Insightful)

      by Quantum Fizz ( 860218 ) on Monday May 01, 2006 @08:55PM (#15241959)
      But they're being boned either way, it's really the fault of the record labels, not Apple's. The record label doesn't need to put out as much overhead for physical media and distribution, (maybe advertising stays the same), but they're still taking the same cut they always have.

      What it will do, though, is lower the incentive for newer bands to sign with the big labels, and go with more indie labels, because the distribution will be the same (assuming Apple doesn't start doing dirty things like making labels pay a $1M fee to include their songs on iTunes or something like that).

    • Re:Good to see leverage moving from the labels, (Score:5, Insightful)

      by Original Replica ( 908688 ) on Monday May 01, 2006 @08:59PM (#15241980) Journal
      big label artists are still being boned
      So maybe they need to stop being big label artists. Easer said than done I realize, but if they can maintain and even use their fanbase to move to a more progressive indie label they will pave the way for artists who currently need the clout of a big label to get noticed. Once listening to bands on a Internet only indie label becomes trendy, then digital music will be all that we want it to be, right now there is still too much $$$ in the old corperate giants, because people still go for the big corperate product.
      • Call me a pessimist & an elitist, but I don't think it's ever going to change. The unwashed masses have always loved the, well, pedestrian. That's why it's called mainstream. Sure, maybe one day the big mediopolies will be gone, but people as a whole will still enjoy all the stuff that I think is stupid and mundane.
    • Big label artists get boned by their label, not by Apple.

      Seriously, their contracts are draconian, and in many cases an artist would get more money by "downgrading" to a smaller, independent label.

      Now, they wont get MTV exposure, but a good band should be able to counter that by touring extensively and tirelessly (ask the Red Hot Chili Peppers or Soul Asylum about their early years)
  • As long as older songs are less than $0.99, I wouldn't really mind. A dollar a song still seems a bit much. I'd rather just send the money to the artist instead. At least they get more money that way.
  • I call you when I need you, my hearts on fire
    You come to me, come to me wild and wild
    When you come to me
    Give me every song I need
    Give me a lifetime of DRM and a world of corporate music
    You speak of giving the artist his fair share like you know what it means
    And it can't be wrong
    Take my iMac and make it strong baby

    You're simply the best, better than all the rest
    Better than Napster, Any of pieces of crap I've ever used
    I'm stuck on your heart, and hang on every song you sing
    Tear us apart, fuck RealPlayer, I wo
    • Thank you for the parody. Although we have no idea what the original song is, please remit to us $200,000.

      -RIAA-

    • Dear [name]: It has come to my attention that you have made an unauthorized use of my copyrighted work entitled [name of work] (the "Work") in the preparation of a work derived therefrom. I have reserved all rights in the Work, first published in [date], [and have registered copyright therein]. Your work entitled [name of infringing work] is essentially identical to the Work and clearly used the Work as its basis. [Give a few examples that illustrate direct copying.] As you neither asked for nor received

  • It's all about simplicity (Score:5, Insightful)

    by El Cubano ( 631386 ) on Monday May 01, 2006 @08:53PM (#15241947)

    (note: I am not an iTMS customer. I don't even own an iPod)

    Everything I have seen/heard/etc about the iTunes store is that it is simple.

    People like simple. That's it. Why do companies not get this? How many people's VCR clocks blink 12:00 becuase (to them) it is too hard to actually set it?

    Now, Apple is on to something with their pricing model. It is simple. Sure, some older songs are probably not worth as much and some newer songs might be worth more, but overall it is a good balance. It's simple. They would likely lose more revenue by going a variable (and more complex) pricing model than they do by not squeezing those last few cents out of the most popular songs.

    • You've got a good point. If the pricing model were variable, and you wanted to buy a few songs, you might get caught up looking for cheaper songs, and maybe cringe when one of the ten you were looking for was the $2 variety. Then you'd be upset. Also this would make you a lot more mindful about how much money you were spending since it involved more thought to buy, and the more you think about spending, the less you spend. Also, it's easier for people to be unhappy over a bad deal than it is for them to

    • Re:It's all about simplicity (Score:4, Informative)

      by Phroggy ( 441 ) * <slashdot3@@@phroggy...com> on Monday May 01, 2006 @11:11PM (#15242657) Homepage
      I don't have an iPod either, but I am an iTMS customer. Granted, I'm on the cheapskate end of the curve and I've never paid them for music, but I bought Multipass subscriptions to The Daily Show and The Colbert Report, because I don't have cable TV, don't have a TiVo, have had really bad luck recently dealing with my VCR, and after using BitTorrent for awhile I finally decided it's just more hassle than it's worth. So yeah, I'm paying for ease-of-use.

  • It all comes down to one thing ... (Score:3)

    by ScrewMaster ( 602015 ) on Monday May 01, 2006 @08:55PM (#15241961)
    for the time being, the labels need Apple more than Apple needs the labels. Now, if Apple begins to bank too heavily on the iPod and neglects their other profit centers, that might change. But for now, Apple has a lot of leverage, which just goes to show why the music industry has always fought to maintain control of distribution.

  • Huzzah (Score:5, Insightful)

    by mgabrys_sf ( 951552 ) on Monday May 01, 2006 @08:59PM (#15241979) Journal
    After the Sony DRM debacle, I've ruled out CD-based media altogether.

    Say what you will about Apple DRM, but at least it's honest - and doesn't attempt to sabotage my CPUs. Good to know my pricing hasn't gone haywire in the near-term. For those who think that variable pricing is the way to go (except for whole albums) check out the raging success story that is google video. They're pay model is so - easy to understand - and easy to work with - no one I know is using it.

    I'd say that's a ringing endorsement for keeping it simple.

  • relative pricing (Score:5, Insightful)

    by wall0159 ( 881759 ) on Monday May 01, 2006 @08:59PM (#15241986)

    We hear so often that variable pricing is good. I think it's interesting that newly released music is commonly considered more valuable just by virtue of being new. This particularly applies to covers, rehashes, etc.

    • Re:relative pricing (Score:3, Interesting)

      by TubeSteak ( 669689 )

      We hear so often that variable pricing is good. I think it's interesting that newly released music is commonly considered more valuable just by virtue of being new. This particularly applies to covers, rehashes, etc.

      I think the idea is that 'older' music has already payed off its producers for whatever effort they put into it.

      New music is worth more because the artist/label hasn't gotten the payoff yet.

      "New" music might not be worth what they're charging, but until they've gotten their money back, there is

  • Side note: what is Apple going to do about the French lawsuit?
     
    I'm glad to see that Mr. Jobs got his way and the labels are forced to continue with the current pricing model. I'd like to see some expanded quality options, however. How does Jobs feel about selling the same song at a higher price if it's higher quality or lossless?
     
    I don't own an iPod, and I still buy my music the old-fashioned way. Well, the kinda old-fashioned way. Involving a shiny disk.

  • Server-side storage (Score:2, Interesting)

    by Runesabre ( 732910 )
    What I want from a music download is for them to track what songs I have licensed/paid for and store that on their servers so I don't have to worry about keeping track of my song collection. I don't want to have to worry about whether I have a backup copy of 300 songs when my harddrive goes on the fritz and I don't want to have to spend a weekend figuring out what I need to save off and what can be erased when I decide to upgrade machines. I don't want to have to worry about how many times I've burned a s
    • I don't understand. You want them to track your music. That sounds like D(R)M to me.

      Napster already does what you request. Any tracks you purchase can be redownloaded simply by pressing a button for free. Any tracks you rent can be redownloaded as long as that subscription is current.

      Of course, if Napster no longer has a license (contract) for that song, you are out of luck.

      --Sam
    • eMusic does this, and does it without DRM. They sell mp3s (LAME --alt-preset standard), and keep track of what each customer has downloaded. Songs can be re-downloaded for free, and they also use these data to make recommendations (via people with similar taste, etc).

      I actually find eMusic better to use than iTunes, because it's geared toward people discovering new music, rather than being 'told' what's cool.

      But no, eMusic doesn't have the latest Britney pop ditty... ;-)

    • I'm reasonably convinced that Apple does this (Score:4, Interesting)

      by Space cowboy ( 13680 ) * on Monday May 01, 2006 @10:11PM (#15242342) Journal
      I've heard of several accounts where someone had lost all their music, phoned Apple in desperation, and been given the right to download what they had already purchased.

      I think Apple just don't want the administrative overhead (for no extra value to them) and there may also be legal issues with promising that sort of thing - or maybe they just don't want to set the precedent...

      Still, I've heard it 3 or 4 times now from different people, and though I hope I'll never need it, it's nice to think there's *some* backup for my music on Apple's databases. It doesn't protect my ripped CD music, but at least I could get what I'd paid for...

      Simon

  • Stop complaining (Score:3, Insightful)

    by Anonymous Coward on Monday May 01, 2006 @09:05PM (#15242010)
    You guys can stop complaining about .99 being too much. It's obviously far out of Apple's hands. I think we should put our hands together than thank Steve for fighting The Man. (And don't stay Steve is The Man... because he is, but he damn well isn't, too)
  • Now most of them are changing their tunes. They were saying before that Apple couldn't/wouldn't stand up to the labels over their pricing plan. Now they're all saying that $0.99 is just too much. Well, good luck finding the singles of the sam quality for less. Why not just admit that Apple has a good thing with the iTunes Music Store?

  • No big surprise here... (Score:3, Insightful)

    by Ritz_Just_Ritz ( 883997 ) on Monday May 01, 2006 @09:09PM (#15242028)
    The big labels had absolutely no leverage unless they were willing to "go on strike" and cut Itunes off altogether. Given the numbers that Itunes has been pumping for the labels, the result (after the requisite bluster) was a forgone conclusion.

    However, you can bet your ass that the labels are colluding to cut Apple out of the pie after getting a very public caning.

    Cheers,

  • Still sucks for artists. (Score:3, Informative)

    by PAPPP ( 546666 ) on Monday May 01, 2006 @09:12PM (#15242044) Homepage
    At last count, the breakdown of where that $.99 goes is (on average):
    Apple - $.35
    Label - $.53
    Artist - $.11
    And thats only after the label reclaims whatever they claim they spent in production costs.
    See http://www.downhillbattle.org/itunes/ [downhillbattle.org] for details.

    • Re:Still sucks for artists. (Score:4, Insightful)

      by 1000101 ( 584896 ) on Monday May 01, 2006 @10:05PM (#15242305)
      "At last count, the breakdown of where that $.99 goes is (on average):
      Apple - $.35
      Label - $.53
      Artist - $.11"

      I have never been paid 11.1% of 'market value' for any work I've done, and I can see why many people cringe over this figure. However, there is another side to the story. If an artist didn't sign with the label, their chance at large-scale success diminishes greatly. So, why not sign the deal, make 11.1% for each song sold on iTunes, and then build a following so you can pack the arenas and make the big bucks?

    • Your (their) numbers are wrong and misleading (Score:5, Insightful)

      by linuxbaby ( 124641 ) * on Monday May 01, 2006 @10:57PM (#15242597)
      My company is one of the largest distributors of music to iTunes. I know what I'm talking about.

      For a 99 cent sale, Apple pays the copyright owner 70 cents.

      What the copyright owner chooses to do with that 70 cents is up to them.

      If the artist sold their life, soul, and music over to a huge label in return for a massive advance, then the label is now the copyright owner (NOT the artist), and the label might pay the artist a pittance of that 70 cents. (Every contract between label and artist is different, and Apple has nothing to do with that.)

      If the artist did not sell their soul to a label, then they are still the copyright owner, and the artist gets to keep the entire 70 cents.

      I admire the Downward Battle guys in some ways, but their protest is misguided when they try to make Apple look like the bad guy because an artist chose to sell the rights to their music over to a big label.

      It was the artist's choice give up ownership of their music. They could have remained independent but they chose the big up-front advance in return for no longer owning their own music.

      • Which copyright? (Score:3, Informative)

        by snowwrestler ( 896305 )
        For every recorded song there are 2 copyrights--the copyright to the music and the copyright to the individual recorded performance. It is very common for contracts with record labels to assign copyright for the unique recorded performance to the label. The artist still owns the music and is free to re-record that song or play it live for more money, but the version on the album belongs to the label. For that reason I think it's disengenuous to imply that only sucker bands "give up ownership of their music"

  • Good. (Score:3, Insightful)

    by Transcendent ( 204992 ) on Monday May 01, 2006 @09:19PM (#15242073)
    Considering supply/demand, there is absolutely no reason a song should cost more because it's popular (besides bandwidth costs). It took absolutely no more effort on the RIAA's part or any Label's part to create it, and it can be distributed theoretically to an infinite amount of people from a single copy. It would have been a purely artificial inflation that's tantamount to price fixing.
    • Wouldn't a more popular song have greater demand?

    • Re:Good. (Score:3, Interesting)

      by tsotha ( 720379 )
      Your logic applies if the record company pays every artist the same amount of money per song. I would think you'd have to pay more for an esablished, successful star than some band you're taking a chance on. This is surely reflected in the price of the CD.

      I've always thought the price-fixing argument has some merit, though, since the artist is always in a contract that excludes other lables. I can imagine a market where the artist makes a track and labels bid for the right to sell copies in lots of 100,

  • Serves right - Profit Maximization does not always (Score:5, Insightful)

    by unity100 ( 970058 ) * on Monday May 01, 2006 @09:20PM (#15242083) Homepage Journal
    ... maximize profits.

    Profit Maximization and its importance is taught in econ classes, and the sales crowd give it a rather exagerrated importance, but the fact that the 'market' is in fact people which have a tendency to behave according to their own choosing and not as mindless drones of the 'invisible hand' is not.

    They always go for getting the maximum profit achievable with a given or minimum quantity of sales. The very thought at the end does not deliver what they want to get indeed :

    If you make an easily obtainable/copyable product overpriced, you pump up piracy, or at the least unwillingness to buy your products in the target crowd.

    How many of us would think 'well, its just nothing, let me get 5-10 songs tonight' if the price per song was $5 or $10 ? or would any of us get a 'cheaper' song because the song we wanted was priced much higher ? is it that simple that we are going to get the 'best obtainable' from the songs provided ? a sheer stupidity scratch for the marketing crowd ? yes .

    Not only the 'profit maximizing' concept actually hampers the profits, but it also shatters market reach and market control - which is something priceless in most respects. Sell a song for just $0.10, and youll get hordes of people buying songs because 'its just nothing' in price - youll become a net standard.

    Sell them for $5, and youll get piracy.

    • Re:Serves right - Profit Maximization does not alw (Score:5, Interesting)

      by roystgnr ( 4015 ) <roy&stogners,org> on Tuesday May 02, 2006 @12:35AM (#15243062) Homepage
      How many of us would think 'well, its just nothing, let me get 5-10 songs tonight' if the price per song was $5 or $10 ?

      For one or two bands, I would. Lower that to $2 per song and I'll go up to 5 or 6 bands.

      or would any of us get a 'cheaper' song because the song we wanted was priced much higher ?

      I do, all the time. For $20 a CD had better be something I'm sure I'll love. For $10 I'll buy an album from someone who's played something I liked on the radio. For $5 I'll take a chance based on just word of mouth. Am I that abnormal, because I base my purchasing decisions on both price and expected value?

      Of course, I'm not too sympathetic with the music industry here. They're supposed to be publishers, and if they'd been smart enough to start publishing over the internet ten years ago, Apple would be in no position to start dictating terms now. The labels would just undercut iTunes for any songs they wanted to price at less than $1, and they'd refuse to put on iTunes any songs they wanted to price at more than $1.

      But they didn't want to do their jobs (Gosh, isn't the internet that place with all the pirates? We'd better stay away from that!) and now they're mad that they're being ordered around by a company who did their jobs for them. How sad! If the record companies get smart, they'll just be silently grateful that Apple hasn't started dealing with bands directly and cutting the less competent middlemen out altogether.

  • Too bad only 4 years (Score:5, Interesting)

    by suzerain ( 245705 ) on Monday May 01, 2006 @09:21PM (#15242088)
    It's too bad the contracts are only for four years...so we'll see this whole senseless charade again soon enough.

    I had thought Apple might try to secure a longer term deal with the labels (maybe agreeing to a pcrice increase with inflation or something). My plan at Apple would be:

    (1) Negotiate long-term deal with the labels (10 years or more).

    (2) Spend the next year either inking a deal with Apple Records and the Beatles, winning the lawsuit, or buying them outright.

    (3) Convince one or two BIG artists to sell directly themselves with Apple as the distributor. Offer them like 50% of the proceeds of sales, and sell through the iTunes Music Store exclusively, with possible physical distribution at Apple Stores.

    (4) Other smaller artists take notice, and an Apple label (maybe not named 'Apple' if the Beatles situation can't be won) suddenly begins to gain momentum, and fuck over the labels in the process (which would make me rather happy).

    (5) Profit.

    You could throw another step in there, since Jobs is Disney's largest shareholder. Apple and Jobs could buy Disney outright, and gain some record distribution and music IP themselves, which they could immediately market at a different standard than the labels who "won't play nice". Then they could sign artists to Buena Vista Music or whatever.

    I know, I know, the prospect of Apple having this kind of media control is a bit scary. But personally, I don't fear it because I believe all music and video is destined to be free ("pirated", if you want), anyway...but I would sure like to see someone (Apple would be fine) bend those record industry jerks over and do to them what they've been doing to us for the past 40 years.

    I feel so much better after a nice diatribe...

  • The RIAA doesn't mind iTunes (Score:5, Insightful)

    by TorKlingberg ( 599697 ) on Monday May 01, 2006 @09:39PM (#15242182)
    People make it seem like iTunes is on our side against the big record companies or something. It's not. If the RIAA companies really disliked iTunes, they could stop iTunes from selling their songs any time. The RIAA likes iTunes. Sure, they would like to make even more money from it, but they make plenty now as well. All this "fighting" between Jobs and RIAA is just a show.

    To make it simple, Apple and RIAA are in bed with each other. They just can't decide who's to be on top.
  • go to the artist, then look for sites that offer a larger cut to the artist.

    I don't know of any at the moment but it can't be that hard to setup a site that allows the consumer to download with payment and the artist to setup a simple pay-per-click marketing campaign. I'm sure the artist can get more than 0.11 cents out of the dollar.

  • why does the iTunes search engine suck? (Score:3)

    by opencity ( 582224 ) on Monday May 01, 2006 @10:59PM (#15242605) Homepage
    I've spent some $ on iTunes. Hate the DRM, not a huge fan of mp3 (vinyl: new thing the cool kids are into), but .99 is just right for an impulse buy.

    However,

    The search engine blows. Having to find a Kelly Clarkson song for a young student (she's 10) I couldn't type Kelly Clarkson into the search. Had to go to the pop charts and follow a diffent hit. Get it together or have google do the indexing.

  • All hail, Steve Jobs (Score:4, Funny)

    by Enrique1218 ( 603187 ) on Monday May 01, 2006 @11:39PM (#15242777) Journal
    I am not the type to place anyone on a pedestal, but damn, good job Jobs. Man, that reality distortion field was must have been set so high, those negotiators didn't have a chance. They must have believe in free love, down with big brother, and Macs are the faster PC's on Earth. Later, when the effects wore off, they were dumbfounded when they realized that the terms of the contract were the same as before.

  • If Apple had their way, music would be free! (Score:5, Interesting)

    by Hobobo ( 231526 ) on Monday May 01, 2006 @11:57PM (#15242888)
    http://fifthroom.blogspot.com/2006/01/why-apple-wa nts-free-music.html

      Why Apple wants free music
    The recording industry keeps asking for tiered pricing on iTunes, and Apple keeps saying no. This seems odd--why can't the two agree on how to make the most money off online music sales? In fact, I'm sure they agree, and I'm sure the recording industry is right: more money could be made with tiered pricing. The real problem is a conflict of interests--the recording industry makes money off music, and Apple makes money off iPods. Here are some numbers: in under 3 years, 600 million songs have been purchased on the iTunes music store. Apples cut of that comes to just over $210 million. Meanwhile, the Apple has sold 6.5 million iPods in the last quarter of 2005 alone. That's well over $1 billion in just 3 months; the money from iTunes is pocket change.

    From the perspective, it's clear why Apple doesn't want to raise prices on iTunes. They could double revenue from the music store and they still wouldn't approach iPod level revenue. While the recording industry is interested in iTunes to generate revenue, Apple doesn't it see this way. They have other things in mind for iTunes:

    1. Apple does not trust a 3rd party to develop a music store for the iPod. They have two reasons for this: first, making good software is tough, and I don't believe they would trust someone else to do it for them. iTunes is easy-to-use, well designed, and well programmed, and the iPod is all the more successful because of this. Second, depending on a 3rd party for a business critical application could put them in a strategic bind in the future. Napster's subscription model and other byzantine DRM restrictions pose obvious problems here.

    2. The more stuff people put on their iPods, the better for Apple. I think this is Apple's main concern. Everyone who has taken Econ 101 knows about complement products--when the price of DVD's goes down, sales of DVD players increase. Alcohol prices on the rise? Bad news for Trojan. Music is a complement to the iPod, and the lower the price of music, the more iPods Apple can sell. If it were up to Apple, music downloads would be free, and we'd all be out buying 60GB iPods because our old 10GB models just can't fit everything. Do you think Apple is concerned that people are using iTunes to steal music? Not at all! Free music makes it easier for Apple to push their new, high capacity iPods. The motivation for the two latest additions to iTunes becomes clear in this light: fill up people's iPods faster (videos) and without asking for money (Podcasts).

  • Why the ripoff tag? (Score:4, Interesting)

    by rehashed ( 948690 ) on Tuesday May 02, 2006 @04:17AM (#15243726)
    How on earth can you people complain about $0.99 a download?
    There are a lot of people that need to get paid out of each track sold, and bear in mind the razor thin profit margins apple themselves must be taking.

    Here in the UK, we are paying £0.79 ($1.44) for EXACTLY the same music from iTunes.
    Now THAT is a ripoff.

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