Slashdot Log In
iTunes Might Lose Labels
Posted by
CowboyNeal
on Sat Aug 27, 2005 09:32 AM
from the different-strokes dept.
from the different-strokes dept.
Dreamwalkerofyore writes "According to the New York Times, the iTunes music store might have to change its 99 cents per song policy or risk losing a huge amount of songs due to recent disputes with record companies, who demand an increase in the cost. From the article: 'If [Mr. Jobs] loses, the one-price model that iTunes has adopted 99 cents to download any song could be replaced with a more complex structure that prices songs by popularity. A hot new single, for example, could sell for $1.49, while a golden oldie could go for substantially less than 99 cents.'"
Related Stories
[+]
iTunes Sales Ban Does Increase CD Sales 185 comments
Guinnessy writes "According to the New York Times, some music labels have deliberately stopped selling some new singles on online stories such as iTunes or Rhapsody while promoting songs on the radio, so that listeners will rush out to buy the CD album instead. The album appears in itunes at a later date. Not everyone seems to think this is a good idea. From the article: 'The labels are shooting themselves in the foot,' says Rhapsody's Tim Quirk. However, Ne-Yo's CD In My Own Words sold 301,000 copies using this method. Chris Brown's Run It, that was in the itunes store, sold 154,000 copies in its first week. Ne-Yo's So Sick was downloaded approximately 3.4 million times on the peer to peer networks during the week of his album release while the album Run It!"was downloaded approximately 5.3 million times in the same release period."
This discussion has been archived.
No new comments can be posted.
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
great! (Score:5, Insightful)
might change that 'it's new - it must be good' thingy people have in their heads..
Re:great! (Score:5, Insightful)
Parent
Re:great! (Score:5, Insightful)
better stick with web radios
Parent
Re:great! (Score:5, Insightful)
So while it's easy to see the record companies' points, they fall down under any scrutiny. It comes down to "what price will the market bear?"
And if they want more for the more popular songs, they will quickly find those songs less popular.
Which will be fine for the record companies, because they'd rather you buy out of their catalog so that they can tell new artists, "Sorry, kid, you don't sell," and screw them out of royalties, fame and etc. They may then go on to blame P2P for the failure of new artists.
You'll find Muddy Waters really cheap, though, because the record companies always owned all of his rights.
Parent
Re:great! (Score:5, Insightful)
Parent
Re:great! (Score:5, Insightful)
Perhaps increased demand should lead to higher prices...but then, if we're pricing music based on supply and demand, then the nearly infinite "supply" of digital music should make it damn near free.
I guess could agree that music should be priced at what the public is willing to pay, based on demand. But continued piracy of music online shows that even at 99 cents a song, much of the public feels that price is too high. One would argue that it's hard to compete with somebody giving away your product for free, but at the same time I really do feel there is a price point at which a vast majority of people would choose the legitimate market over the black market. I just don't think the record labels have dipped that low yet, and I know they don't want to.
Really, the quality of the product being given away for free is also much lower than what is being sold. I'm more than willing to give up good money to have a physical disc, at full audio quality, that I can re-rip should I lose my files. I like liner notes. Hell, I even think buying a full album on iTunes has some value...such as knowing that the entire CD will have been ripped at the same quality, with accurate and consistant tags without my having to take the time to do/fix it myself.
But is the physical CD worth $14.99 to me? Is the "virtual" CD worth $11.99 or $12.99 (the price the labels seem to be pushing for full albums on iTunes, compared to the original $9.99)? No.
For sake of argument, my personal price point would be more like $9.99 for physical CD's (and I'm not talking old/surplus stuff) and $6.99 or $7.99 for whole album downloads. $0.99 a song actually doesn't bother me, as for many CD's it would be saving me about ten bucks, as there is often only one song I want. Do the labels want to try these price points? Hell no. They'd argue that they cannot possibly make money at those levels.
At which point I would pull out a tape of MTV Cribs, which to me is absolute proof there is some room to lower prices. And that's just what artists pull in...I also know that there aren't many record execs driving Civics.
Parent
Re:great! (Score:4, Insightful)
I was talking about how they justify the different pricing. And simply pointed out that supply and demand isn't their reason.
They also are not suggesting some sort of popularity model -- songs that sell X number of times per day cost $1.50, Y sales are $1, Z sales are $0.50 -- I could see that. That would be entirely popularity-based pricing, perhaps something like the stock exchange (roughly; don't think about it too much). That pricing might not be a bad idea, actually.
But it would freak out the record companies, because they don't want popular things to be more expensive. They want the things that they market heavily to be more expensive. That's the model that they are familiar with and one that they know works.
Apple, however, has completely changed everything about their economic model. Nothing makes sense to the recording industry anymore. There aren't any DJs to buy off with payolla, there aren't any record store chains to give under-the-table kickbacks to -- everything is above the board, and they don't even control the distribution channels.
The record companies want to guarantee hits. They want to control prices so that you are either buying (a) something that they've put a lot of money into at a high price or (b) something that has been sold at a high price for years and is nothing but pure profit. Hits or classics. Expensive or cheap.
But they don't want you buying independent music -- certainly not independent music that costs exactly the same as the stuff they've pumped millions into to convince you to buy.
Which begs to question why they are pumping all this money into promoting these artists if they can't guarantee a certain amount of profit.
But they're finding that when they put their heavily marketed tracks up on iTunes then they lose control. You've got classic music records from 1996 by Telrac Records right between "The Who Sings My Generation" and U2's "How To Dismantle An Atomic Bomb"; D.L. Menard's "Cajun Saturday Night" on Rounder Records in with Justin Timberlake and Travis. If Apple is selling that placement (and it wouldn't be too hard to convince me with the Timberlake appearance), it's certainly diluted.
There are five major labels -- Universal, EMI, BMG, Warner and Sony -- who own nearly everything.
The current new releases are Trick Pony (Curb->MCI->Universal); Craig David (Warner->Atlantic); The Flaming Lips (Warner Bros.); and Crazy Hits by Crazy Frog on Mach 1 Records Gmbh, which is owned by Ministry of Sound, which is definitely not one of the big five.
It's also at the bottom of today's top 10 album list. Coincidence? No.
Apple doesn't care because Apple just sells whatever people want for $1. But the record companies must be livid. Yes, they have 1-9, but they're used to having 1-100. And you can be damn sure they want more money for their efforts. (Though in the end, it will just do more for Crazy Frog.)
The real economics at work here is "Seller sets the price, buyer decides if it's too much." And we have two sellers who 1) disagree about how buyers will react and 2) have completely different motivations toward selling.
Apple thinks buyers will baulk on all sales if some are weirdly more expensive and want to keep everyone using iTunes to sell the most music to the most people. The record companies want more money for their product and don't care if they sell it through stores or iTunes or beam it directly into your head as you sleep (which they may already be doing) as long as they get the most money out of it.
So there you are.
Notice also that these models also never once involve the artists directly, even though one would hope that they did all the real work.
Parent
Re:great! (Score:5, Interesting)
I have bought a couple of albums because it was still cheaper than buying a CD. As an example, American Pie by Don McLean. A great album of the early 70's (yeah, I'm old)
Great! Really. Except that it should be in the public domain by now. Like most of the music I listen to these days. So you bought stuff. Great! Now watch me not pay for stuff that should be free decades ago.
It seems the **AAs are succesfully wiping the notion of a public domain from people minds.
Parent
Re:great! (Score:5, Interesting)
As you may or may not have noticed, I never said artists shouldn't get paid. However the point off copyright isn't that artists should be able to live indefinitely of whatever they create.
Copyright is a legal construct, an artificial monopoly which provides artists a incentive to create, which in turn was meant to benefit society by making society richer (ie the public domain).
Are you going to tell me that Beatles, Miles Davis or whoever weren't going to make that music anyway, if they knew that they would "only" be able to profit from it, say, 35 years? You got to be kidding. If I could strike any deal like that for anything I did, I'd sign up before you could say "showtime".
Had todays copyright regime existed in the time of Beethoven, Bach or Wagner we would have never heard about them at all, as they'd be copyrighted into oblivion. Now we can all enjoy them instead, as they belong to the public. As it should be.
Can you please tell me exactly what copyrighted material has entered the public domain since the creation of Mickey Mouse? Which incidently was based on Steamboat Willie, which incidently also was copyrighted, but happened to have entered the public domain.
Had it not been for the public domain, Disney would never have existed today, nor would your dear Mickey Mouse. Copyright is granted with the intent that the copyrighted material should in the end belong to society. It's simple. There's supposed to be a balance. Now there is not.
With the de-facto end of the public domain, watch me no longer respecting the artifical construct that copyright is.
Parent
Yeah well (Score:5, Insightful)
Re:Yeah well (Score:5, Interesting)
Of course, they'll be absolutely convinced the price is too low. How many morons downloaded the Crazy Frog ringtone at a significantly higher price than 99 cents? They want to go back to gouging the customers and giving kickbacks to corrupt legislators to take your house off you for petty copyright infringement.
Honestly, someone give me a google map for the RIAA headquarters. I've got my Illudium Q36 explosive space modulator somewhere around here and a strong urge to use it.
Parent
Re:Yeah well (Score:5, Insightful)
If they're really lucky, these record labels won't see a further drop in their CD sales. Plus they won't have the revenue stream from Apple anymore. They'll come crawling back in no time.
Parent
Geeeze (Score:4, Insightful)
To be fair to us Americans (Score:4, Interesting)
Parent
Re:To be fair to us Americans (Score:4, Insightful)
I don't think this has much of anything to do with actual profit by the labels. They're making plenty right now, and growing plenty simply by virtue of increased volume. This is a power play. This is the industry telling Apple, "We own you, we don't need you. You do what WE say."
Basically, since they can't compete with Apple in digital distribution individually, they are colluding to strong-arm Apple and will likely run iTMS into the ground eventually. I think laws are being broken here, but I don't expect anything to be done about it.
Parent
$0.99? Yeah, right. (Score:5, Insightful)
Greed, greed, greed... (Score:5, Insightful)
I really LIKE iTunes, and I *KNOW* how to steal music if I want to. I really LIKE the fact that I can buy a specific song for a pittance on a whim instead of hoping someone will upload it to the Usenet.
It's not that $1.49 is too much, but it just shows that they will try to reach a price that people will accept, however grudgingly. But the $1 mark is a psychological barrier; once they reach that, people will start to think, "Is this song worth $1.49?" and might not buy it after all.
In any case, good luck to 'em. I don't buy any new stuff anyway. Most of it is crap pushed by the payola artists.
Re:Greed, greed, greed... (Score:5, Funny)
Parent
Greedy bastards (Score:5, Insightful)
The record labels pretty much killed CDs by charging 20 bucks each for them, now they'll kill this outlet as well.
this news reads: (Score:5, Funny)
Ignores the long tail... (Score:5, Interesting)
Of course, this could be their goal: to make iTunes less profitable and drive them out of business, then swoop in and offer a different service... Or maybe they want to make iTunes less profitible in order to drive music consumers back to purcashing CDs... ??? </conspiracy_theory>
Re:Ignores the long tail... (Score:4, Insightful)
Nah... You just need to realize that the "could go for substantially less" part of the deal means maybe all the way down to $0.95. They threw that in there to make the idea more palatable, but in practice, it won't happen that way.
Also, consider that even a slight reduction could end up boosting sales of such material, in the same way that otherwise slow-selling unknowns fly out of the cutout/discount bin at any local music store... We might agonize over whether or not to buy a decent new release at $18.99, but we'll throw away a $50 without blinking on $5-$10 discs we've never heard of.
Parent
AllOfMp3 (Score:5, Insightful)
I'm still waiting for the day when the general population knows about sites like AllOfMp3, where you can download an entire album in just about every popular format for around a dollar. You can even preview an entire album before purchasing, and the selection is pretty decent. Not as good as iTunes, but probably enough to satisfy a good chuck of iTMS users.
And given all this, the record companies want to make themselves look worse? Hilarious! Let them!
Same old story (Score:5, Interesting)
They have found the sweet spot in the market and simply collect the checks. But the corprate mantra of constantly growing profits has taken over. Which is not a bad thing, but it should have manifested itself in the recruitment of new musicians, not the raising of prices for the hell of it. That of course, would take effort, and when you make more money off of an album than the artist does - after you have merely loaned them the money to make their next album - you get used to screwing people over as much as you can.
If banks worked like the music industry, you would pay 90% of your paycheck to whatever bank gave you a student loan 20 years ago - 15 years after they were paid off.
Idiots (Score:5, Funny)
Dang it (Score:5, Funny)
Please help us think of ways to blame this on piracy. We're really stuck on this one!
Sincerely,
The RIAA
Gas prices (Score:5, Funny)
Oh, wait. Nevermind. Yeah, they're just jerks.
Apple is the WalMart of Music Downloads (Score:5, Insightful)
Re:Apple is the WalMart of Music Downloads (Score:5, Funny)
Parent
remember that they can track sales. (Score:5, Interesting)
Replace the 'hot new hits' smokescreen with 'anything that's actually popular' and you have what the music industry actually wants. Does 'Highway to Hell' get more action than the latest push-the-star album? No problem.. that song gets a price hike.
It leads to a state of smoke and mirrors, where all the songs that sell less than one copy a month are $.50, anything that actually has an audience is $.99, and anything getting more traffic than normal, for any reason, gets kicked up to $1.99. Even more heinous, but technically feasible, would be per-user and related-hits tracking, so if you buy a $.50 song, all the 'other songs purchased by people who bought this one' go up to $.99 for you personally. In such a system, the only way to get the low prices consistently would be to buy random selections of stuff nobody else wants.
It's a great dodge, from a marketing standpoint. The labels can come out and say that 99% of the music in the iTMS catalog is listed below $.99, while quietly failing to mention that 90% of the actual purchases were at $.99 or more. Then they can wring their hands and claim that those "few" premium-priced songs are the only place they make a profit, and that anyone who wants to take away that price tier is just a nasty mean corpse-raping villain.
Personally, I'm amused that the labels are willing to play chicken with a company that recently announced a major change in its hardware platform. Apple (or Steve Jobs) certainly has the nerve to tell one of the big labels to take a hike if necessary, and it's not like the market is just flooded with other venues where the labels can peddle their goods.
The game theory of the situation is interesting.. if all the labels bailed at once, it would hurt Apple a lot. But if only a few labels leave, the ones that stay will probably do better business, since they'll have less competition. The more labels that go, the better the advantages for the few that stay. So basically, all the labels are in a position where they want someone *else* to sacrifice profits and teach Apple a lesson, while they personally stick around and glean the benefits of both the smackdown and reduced competition. But nobody wants to be the hero who dies for the good of everyone else.
All told, I hope.. and expect.. that Apple will stick to its guns on simple, flat pricing.
A Cent Sign (Score:5, Informative)
On a Mac, press Alt + 4.
Re:A Cent Sign (Score:5, Insightful)
Parent
WalMart is at 88 cents per song. (Score:5, Informative)
"The labels price things based on what they believe they can get -- a pricing philosophy a lot of industries have. But we like to price things as cheaply as we possibly can, rather than charge as much as we can get. It's a big difference in philosophy, and we try to help other people see that." - WalMart senior VP (entertainment) Gary Severson.
WalMart pushed the labels into a $9.97 retail price for CDs. Then they started signing deals with artists on their own. WalMart now has exclusive rights to Garth Brooks.
It's hard to cheer for either side here. But from the music industry's perspective, WalMart is scarier than Apple. Apple needs the music industry. For WalMart, audio CDs are a minor business. WalMart sometimes threatens to cut back on audio CDs and devote more shelf space to DVDs and games. And Apple doesn't care about content. WalMart imposes censorship on both music and cover art.
Priceless ! (Score:5, Funny)
Kazaa: Free
Sticking it to the screw-the-buyer record companies once again: PRICELESS!
Turn you over to shake out that last penny (Score:4, Informative)
At the price of 99 cents a song, the share of the major labels is about 70 cents
Apple needs to get their profits from the iPod, since most of the 99 cents is already going back to the record companies. What's so hard about this for the NYT to understand?
The other main battleground in Apple's coming confrontation with the industry has to do with "interoperability" of services and devices. Mr. Jobs has so far refused to make the iTunes software compatible with music players from other manufacturers, and he has prevented the iPod from accepting music sold from competing services that use a Microsoft-designed music format. As a result, songs purchased from Napster, for example, will not play on an iPod.
Ah, now we know the real reason why Sony is unhappy. Won't play on Sony players either.
Re:"Its," damn it! (Score:5, Funny)
Your fighting a loosing battle. Its impossible to win when most of Slashdot doesnt' even have a basic grasp of english to good. Chose you're battles wisely...
Parent
Re:Wow (Score:5, Informative)
How is Apple to blame? According to the article summary (can't see actual article) Apple is fighting to protect it's current model, and may be forced to (or to lose a large chunk of it's inventory). I'd hardly say Apple is to blame for that.
Parent
Re:Wow (Score:5, Interesting)
"$0.99 a song is no longer possible due to the rampant greed from BMG,SONY and other record labels."
it works we do it all the time in the cable industry. Discovery tried to increase their rates to us and force us to carry some more of their crap channels.. we said no, they pulled our encryption key so we replaced discovery with a screen that said "discovery wants to raise your cable rates, we said no and rthey pulled the plug, call 888-888-8888 and tell them what you think."
we were down 5 days on that channel before they agreed to make the calls stop.
the record companies are making HUGE profits at the $0.99 pricing. they just wnat in on this price gouging that the oil companies are enjoying right now.
Parent
Re:Wow (Score:5, Insightful)
The cable company story doesn't really seem comparable. Cable companies have a lot of leverage on content and it is a hassle for people to switch cable companies. However, it is very easy for people to buy music from a different store than iTMS.
Apple does not have monopsony power.
Parent
Re:Wow (Score:5, Insightful)
I can just see the RIAA, overcome with jealousy over OPEC, arranging a Music shortage. Prices going to $60 an album, people waiting in giant lines at record stores just to pick up a new Black Eyed Peas album. People avoiding playing music while driving to work because it's a precious commodity, while the record industry rakes in profit. Network news would alternately go nuts about how apocalyptic it is, then reassure people that it actually isn't the highest price peralbum ever when adjusted for inflation, informing us that people used to pay more for wax cylinders that could barely hold a song. Then the record industry would graciously recieve generous subsidies from the US government as part of a giant omnibus Music bill. Politicians will promise to help reduce America's dependance on foreign music, and to help keep the chart hits American.
Then we'll invade France to take control of Khaled and his snappy North African pop beats.
Parent
Include more indies (Score:5, Insightful)
It seems to me that the primary problem with the music industry is the history of price fixing.
Parent
Re:Include more indies (Score:5, Interesting)
That, and the trend for albums to contain 2-3 good songs (at most) and a load of filler crap. Why would anyone want to buy an album like that?
I heard an interview with Jay Kay of Jamiroquai talking about the way the trend towards downloading means fans are buying individual tracks at a time rather than whole albums, which is forcing them and other artists to spend more time on the "other" tracks on their albums to make sure they're up to scratch. If this is the case (more people downloading = higher quality music), then great! And if we can get it for less than $0.99 even better!
Let's hope it's really true and not just words...
Parent
Re:Variable price != lower price (Score:5, Insightful)
If varible prices led to an open market with artists competing on price, then variable prices would like lead to a drop in price.
There are several big ifs in the equation.
Our first big if is the assumption that the prices would have a decent minimum that is near the price of delivering the music. The second big if is the assumption that rights to music is held in enough hands that there will actually be pricing pressure. Right now, the big music collections are owned by a few mega corporations.
You are complete right. If Apple has a pricing structure that sets $.99 as a minimum, then we would see a big jump in price.
Parent
Re:Great! (Score:5, Insightful)
Parent
Re:Great! (Score:5, Insightful)
It's quite simple when you think about it: They are not demanding higher prices to discourage buyers from getting the popular tunes and steer them to obscure songs. They're asking for more because they want a net gain. Guess who's going to pay for that. The low end will have to pay for the reduced number of sales of high priced songs, so the price range for anything above garage band level is going to go from $0.99 to $1.49. The few songs which will sell for less you could probably get for free from a crappy website where a rightfully starving artist put them in a hopeless promotion attempt.
Parent
Re:Great! (Score:5, Insightful)
This is about prices going UP.
And considering they already nearly match the price of an actual CD (without cover, case, physical medium, and at a lower quality with DRM to boot)) it's an incredibly bad deal for the consumer. But hey, it's convenient right?
Parent
Re:It was only a matter of time (Score:5, Informative)
Parent
Re:It was only a matter of time (Score:5, Interesting)
(yes, i am totally shameless: http://www.meetgoodwin.com/ [meetgoodwin.com]
Parent
Re:iTunes monopoly (Score:4, Insightful)
Parent
Re:iTunes monopoly (Score:4, Interesting)
iTunes
Music Match
MusicNet
Music Now
Audio Lunchbox
DownloadPunk
Downrip
Sony Connect
So, if you think iTunes is the only choice for independent labels, it's your own fault for not seeking alternatives. And no, iTunes is not the biggest seller for all of our labels.
Parent