MP3 Download Prices to Rise?

OBeardedOne writes "The major music labels are in talks with music download services attempting to get them to increase the price of music downloads. " Sounds like there is division in the ranks of the music companies, but something to watch.

working link

[saleenS281]

working link [clickability.com][clickability.com]

Hate to reply to my own post... LINK

[Mz6]

Here's the link -- http://www.theregister.co.uk/2005/02/28/downloads_ price_rises

Link to CNN article

[Tree131]

Here's a link to CNN article [cnn.com].

Beancounter Logic

[bigtallmofo]

First, since the article appears to be a bum link, here's the text of it:

Music companies seek larger chunk of online music revenues

Dow Jones
Published on: 02/28/05
LONDON -- Leading music labels are in talks with online retailers to raise wholesale prices for digital music downloads, in a bid to capitalize on growing demand for legal online music, the Financial Times reports Monday.

The moves, which suggest that the labels want a bigger slice in the fledgling market's spoils, has angered Steve Jobs, the Apple Computer chief executive officer who is behind the popular iTunes online music store, the newspaper says.

But music executives expressed caution about their ability to push through unilateral price increases, the report says.

Among the biggest groups, Universal Music and Sony BMG are known to be particularly reluctant to disrupt the market for downloads.

One top label said it would not raise wholesale prices now because the market wasn't yet mature enough for a price increase, the newspaper reports.


This is typical bean-counter logic. Let's see... 1 million sales at $0.99 = $990,000. But 1 million sales at $9.99 = $9,990,000! Wow, that's 10x better!

HERES THE LINK!

[keeleysam]

http://www.theregister.co.uk/2005/02/28/downloads_ price_rises/ [theregister.co.uk]

Bunch o' Rocket Scientists on Slashdot

[corporatemutantninja]

I just clicked on "View Source" to find the missing link. As it were. http://www.theregister.co.uk/2005/02/28/downloads_ price_rises/ [theregister.co.uk]

Contracts...

[somethinghollow]

I think it was Steve Jobs who said Apple has contracts with the record labels to sell songs at .99. These contracts, if I remember correctly, were for at least 5 years. The same rumors [macobserver.com] happened last year in may. But, I guess we'll see what happens.

Bad title: does not involve MP3s

[AtariAmarok]

The files sold being referred to are mostly protected WMA, AAC, or Real files. Maybe some non-tech idiots think that all digital music files are MP3s, but these are the same idiots who think that all picture files are JPG's and GIF is a kind of peanut butter.

Price Elasticity

[irhtfp]

If they raise prices, it will drive more people back into Kazaaland. At the margin, some people will be willing to pay $.99 but not $1.09. The curve that describes this behavior is by no means linear. I would think that Apple has done a fair bit of research to determine where the optimal price point on this curve is.

It will no doubt change as competition (i.e. Walmart, et. al.) enters the market. It's one of the most common fallacies in business to raise your prices to make more money (or conversely to have a sale). It takes careful research and testing to determine the correct price point to maximize profts. You can't just decide to raise more prices to get more money.

Re:How to eliminate MP3.

[Tree131]

Very few sites sell MP3s anymore. The one in russia just got shut down or in the process of.
Napster sells them in DRM protected WMA, so does Walmart (I think).
Apple sells their songs in AAC format, which also has some sort of DRM on it.

Re:mp3s?

[Anonymous Coward]

emusic.com

Hate to reply to my own post... LINK

[AvitarX]

Hate to reply to my own post... LINK [theregister.co.uk]

Re:Well they have to raise prices

[khallow]

The correct terms are "oligopolistic collusion", "semantic games", and "oligopoly". "Monopoly" means the market is completely dominated by one supplier. In the music industry there are multiple competiting suppliers, but only a few have huge and cozy distribution chains. That's an oligopoly not a monopoly.

Thanks for proving it is not theft.

[AtariAmarok]

"No, really, it's an idiotic argument by people trying to rationalize their behavior"

You mean like when someone insists that "rape" is not the same as "arson"? No, I do not buy your argument that insisting that certain crimes be properly described and not confused is "trying to rationalize behavior".

" it has become useful to describe such activity."

How is it useful when it does not fit the requirements?

"Intellectual property is considered just that: property, and taking such wrongfully is stealing. So get over it."

Thanks for deflating your own argument by even mentioning the "taking" requirement of the definition. When a copy is made of something, that something is not "taken": it still remains.

Get over it. Stop wasting time. Get a dictionary.

Re:I don't believe it

[glenstar]

No no no. Apple does not pay the artist... the label pays the artist.

Re:I'm probably not alone in this:

[gooser23]

If it costs the same as a CD I'll buy the CD if I want to be legit. A CD is lossless and comes with the little booklet anyhow

I aggre with your point, but a CD is not lossless. In fact, by definition all digital recording schemes are not lossless. For a CD, the analog wave form is runthrough an AtoD that encodes the music at 320kbps, sampled 44.1 Hz.

I think what you meant to say is that all online music stores (at least, all the ones I'm aware of) have encoded the music from a CD to some lossy format and sapped on some DRM scheme.

If you really want the original waveform, I suppose you'll have to settle for a live performance -- I don't even think the master DAT will do.

Re:Illegal?

[shark72]

" Wasn't the recording industry nailed for trying to force retailers to up the price for CD's."

Kinda. They set up a MAP (minimum advertised price) program with Tower Records and TWE in which they helped pay for advertising if Tower and TWE agreed not to advertise the price of CDs for below a certain point. The MAP program started because Tower Records and TWE complained that Wal-Mart, Best Buy, etc. were putting them out of business by selling CDs at or below cost. When Wal-Mart and Best Buy found out about the MAP program, they went to the government.

As another poster put it, "nailed" isn't the best term. The MAP program didn't affect the distributor price of the CDs, so the record labels didn't lose any profits as a result of being ordered to stop MAPping. The big winners here were Wal-Mart and Best Buy. The losers are indie and specialty record stores like Tower (who subsequently filed for bankruptcy), as Wal-Mart and Best Buy will continue to drive them out of business. Also among the list of losers is music fans who might be willing to pay a buck or two extra per CD for the opportunity to shop in a cool indie store with great selection, rather than having to deal with the Wal-Mart or Best Buy shopping experience.

"Wouldn't this be just as illegal for Mp3 downloads?"

It's a different scenario here, as in this case, the record companies are actually trying to raise wholesale prices. An equivalent to the price-fixing case would be if the record companies were now offering to help fund Apple's advertising if they agreed to only advertise tracks that sell for, say, $1.29.

Re:I'm probably not alone in this:

[Kiryat Malachi]

16 bits per sample per channel, 2 channels, 44.1 kHz. This happens to work out to 1.411 Mbps (176.4 kBps). At which point the CD tacks on a Reed Solomon codec and some other crap for error correction, significantly upping the recorded data bitrate, but the audio bitrate for a Red Book CD is definitely not 320 kbps in any way, shape, or form. 2 channels. 16 bits (2 bytes) per channel per sample. 44,100 samples per second. 176,400 bytes per second. 1,411,200 bits per second.

I'm certain that's what you meant to say. In your pedantic "digital is always lossy" argument. But if you're going to be pedantic, please, please at least get your numbers right.

Not everyone wants CDs...

[ralinx]

Sure, a lot of people are like you and prefer to buy the actual CD. There are however also people like me... if i buy 10 albums in a store it costs me 150$ while it would only cost me 100$ on iTunes. But if i were to buy them in the store, i would also have to take the time go to the store to pick them up, and after that i'd have to rip the CDs so i can transfer them to my iPod. After that, the CD are put away and the next time i'll use them is if i want to rip them again. So for me, iTunes is not only cheaper, it is also more convenient than buying actual CDs because it takes me less time, and i don't have a bunch of CD's lying around. I also take weekly backups of my iTunes music library on a seperate harddrive so the possibility of losing my tracks is rather small.

oh and yes i know i can only listen to my iTunes tracks on 5 concurrent pcs... but seriously, i only have the songs on my iMac and on my iPod. So that only counts as one Authorized Computer because iPods don't count towards your authorized computer total. To me, the DRM is not an issue and if it was, i could remove it with Hymn

Re:Funny, I thought prices should DROP...

[IAmATuringMachine!]

Well, for some clarification, you can get a bit of a deal when you buy the whole album, usually $9.99, to make it cheaper than physical media. Similarly, if they were for some reason to have those strange sound effects CDs with 300 tracks on them, they'd still probably give you the whole set of tracks for 9.99.

Re:www.allofmp3.com

[EggyToast]

Same here. My girlfriend still buys CDs at best buy, whereas I tend to look at the iTMS. For me, it's because I like more obscure music, but her stuff is a little more mainstream, or available in the classical or folk sections.

She still buys the CDs because at Best Buy, everything is under $13 again. She just bought the Garden State CD for $9.99. So it cost the same for her to buy the actual CD as it would have to buy the AAC version of it online.

I saw $16-18 CDs a few years ago, but after the price-fixing lawsuits went down, everything started dropping, and now I regularly see CDs in the $10-13 range.

Re:www.allofmp3.com

[igny]

According to the Russian news, allofmp3 has found a loophole in the Russian laws, which equated the music downloads to a (radio) broadcast as long as they pay the license fees. Allofmp3 is currently under investigation by the Russian Police because of a (local) conflict between two Russian licensing agencies, not because RIAA is after them.

Re:Profit Margins

[Leo McGarry]

The real problem is that when you sell the 3 billionth pill, they have recouped their costs to make that product.

To continue the drug analogy, the 3 billionth pill of Viagra certainly covers the costs of developing Viagra ... but it doesn't come close to the cost of developing the 16 other drugs that the company released to the market that year.

In the drug industry, R&D costs are enormous. In the media industry, it's the cost of production that's enormous. Most drugs, like most movies or CDs or what have you, do not recover the investment that went into making them.

So it's not as simple as you make it out to be. Not by a country mile.

Note, though, that even though they've recouped their costs, the price never quite seems to go down to the price of over-the-counter drugs.

This isn't apropos of anything, but the price of drugs do, in fact, drop precipitously when the patents expire. Haven't you heard of the "brand vs. generic" thing?

That has nothing to do with the media industry, though, so pardon the digression.

They didn't incur any costs for the band making the recording, they charged them for it.

Except you're ignoring the costs involved in finding the band in the first place, transportation and other necessities, hotels and other perks, not to mention the costs associated with marketing and promotion. These costs are huge.

Quite a bit of the money goes to people who don't really deserve it, the recording studio.

I beg your pardon? Do you think professional audio equipment is free? Do you think talented recording engineers work for nothing? Of course recording studios deserve their money. They work for what they receive, just like you and I do.

This hate against the recording studios isn't irrational

Oh, don't be silly. Of course it is. Have you read the other comments in this discussion?

seeking to subsidize their own failures with the success of a few bands rather than simply dump said failed projects

I don't think arguing that we should have less music just because not all music is commercially successful will go very far. Do you?

Re:Can't be done

[beanlover]

In the U.S.A. I believe you are correct. In Canada (I'm a U.S. citizen) they pay a tax on blank media that is "given" to the music companies so I think it's legal for them (Canadians please correct me if I'm wrong).

If I owned a shop in Canada I would set up for exactly that.

B

try magnatunes

[Anonymous Coward]

First, I like the music.
Second, I decide what price (if any) I want to pay for the music.
Third, It's about 1/3 the price of "label" music.
Fourth, the artists get HALF the money.

You can find it at www.magnatune.com .
You can play the various tracks you are interested in and if you like them enough to pay, then you can get some quality music knowing it's a good deal for the artist and it undercuts RIAA's business model.

I'm happy with the site as you can tell!

maxo-texas

Re:Monopoly by artist?

[Macadamizer]

"If only one recording company owns the rights to the Beatles, then they can charge whatever they want for a copy of a CD."

Yep, that's the way the music industry works. You could say that whichever record company owns the rights to sell Beatles songs holds a "monopoly" on Beatles music -- and therefore there cannot be any price-fixing or other collusion, because there is no competition in the market for Beatles music -- there is only one supplier.

It's like Coke. There is only one supplier for Coke, and they can charge whatever they want for it. The fact that Coke basically costs the same as Pepsi is because of marketing and economics -- not collusion or other anticompetetive behavior. Pepsi and Coke compete in the same market space, but each is a monopoly.

Music, however, is different. If Coke prices got too high, people would start drinking Pepsi for the most part. However, if Britney's CD prices get too high, that doesn't mean that people are going to start buying Cannibal Corpse CD's instead, just because they are cheaper. The products just are that fungible (although it certainly seems that way...).

So yeah, these are monopolys. But monopolies are not illegal, in and of themselves. Misuse of monopoly power is where most monopolies get in trouble, and it is usually when a monopolosit uses its power to drive competetition out of the market in order to raise prices, or uses its power to keep others out of the market, that sort of thing.

But simply having a monopoly -- especially when the monopoly is a "natural" monopoly, like with exclusive recording contracts -- is not in and of itself illegal, or anything to be feared.

Robinson-Patman Act

[Otto]

There was also some speculation as to how consumers could deal with this.

Mainly, they can sue. It's called price-discrimination, and it's illegal.

Now, proving it using the Robinson-Patman Act (1936) is not the easiest thing in the world to do. There's loads of exceptions, sort of thing. But nevertheless, public outcry and a highly public case against the first person who tried this sort of thing would likely be enough to put a stop to it.

Amazon.com tried something like this several years back, didn't they? Different customers got different prices. They dumped it, I think, because of all the attention it got when people noticed it happening.

Re:www.allofmp3.com

[cpt kangarooski]

There have been multiple cases in the US that have shown that the actual reporduction of digital copy occurs at the *server* not the client.

Aside from that such an argument is nonsense -- you say there are cases. Cite them.

I can cite mine:

The district court's grant of summary judgment on MAI's claims of copyright infringement reflects its conclusion that a "copying" for purposes of copyright law occurs when a computer program is transferred from a permanent storage device to a computer's RAM. This conclusion is consistent with its finding, in granting the preliminary injunction, that: "the loading of copyrighted computer software from a storage medium (hard disk, floppy disk, or read only memory) into the memory of a central processing unit ("CPU") causes a copy to be made. In the absence of ownership of the copyright or express permission by license, such acts constitute copyright infringement." We find that this conclusion is supported by the record and by the law.

MAI v. Peak, 991 F.2d 511 (9th Cir. 1993)

Unlike the defendants in MAI, the court reasoned, neither the operator nor the provider initiated the copying; their systems were merely used to create a copy by a third party. Id. at 1369-71. Similarly, the court found that only the subscriber should be liable for causing the display or distribution of the copyrighted work because the actions of the operator and the provider were "automatic and indiscriminate." Id. at 1371-72. Thus, Northwest argues it cannot be held liable for direct infringement because if any copying, distribution or display of plaintiff's work occurred, it was caused not by Northwest, but by Internet users.

Northwest's second argument is persuasive.

Marobie-FL v. NAFED, 983 F. Supp. 1167 (N.D. Ill. 1997)

The first question, then, is whether those who browse any of the three infringing websites are infringing plaintiff's copyright. Central to this inquiry is whether the persons browsing are merely viewing the Handbook (which is not a copyright infringement), or whether they are making a copy of the Handbook (which is a copyright infringement). See 17 U.S.C. 106.

"Copy" is defined in the Copyright Act as: "material objects . . . in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." 17 U.S.C. 101. "A work is fixed' . . . when its . . . sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration." Id.

When a person browses a website, and by so doing displays the Handbook, a copy of the Handbook is made in the computer's random access memory (RAM), to permit viewing of the material. And in making a copy, even a temporary one, the person who browsed infringes the copyright.

Intellectual Reserve v. Utah Lighthouse Ministry, 75 F. Supp. 2d 1290 (D. Utah 1999).

We agree that plaintiffs have shown that Napster users infringe at least two of the copyright holders' exclusive rights: the rights of reproduction, 106(1); and distribution, 106(3). Napster users who upload file names to the search index for others to copy violate plaintiffs' distribution rights. Napster users who download files containing copyrighted music violate plaintiffs' reproduction rights.

A&M Records v. Napster, 239 F.3d 1004 (9th Cir. 2001).

So, they make a copy and send it over the wire to me.

Which is impossible.

A copy is defined by the law, at 17 USC 101, as being a tangible object. If you've figured out how to send tangible objects via wire, then please demonstrate this absolutely stunning new technology, by, e.g. emailing me a glass of water.

Of course, that's not what's going on here. What's actually