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Apple iTunes to End Flat Fee Pricing? 556

MdntToker writes "According the Forbes, EMI has an understanding with Apple that flat fee pricing will end within the next 12 months, and more popular songs will be priced higher than 99c, while lesser known acts will be priced lower than 99c." From the article: "Label executives have made multiple arguments for flexible pricing. They argue, for instance, that almost all retail businesses have different price points for different products. But they are particularly interested in boosting their revenue from digital music sales, which aided by the sale of mobile phone ringtones, are increasing but not quickly enough to replace the continuing drops in compact disc sales. EMI said today that digital sales, made up 4.9% of the company's sales in the last six months, up from 2.1% a year ago." We've previously reported on this story.
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Apple iTunes to End Flat Fee Pricing?

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  • by erick99 ( 743982 ) <> on Thursday November 17, 2005 @03:58PM (#14055597)
    I take it that this will translate into the vast majority of what is downloaded being above ninety-nine cents; otherwise, I don't see why they would bother with "flexible pricing." I know this is cynical - but I suspect that this is intended to be flexible mostly in an upward direction . . .
    • by interiot ( 50685 ) on Thursday November 17, 2005 @04:02PM (#14055648) Homepage
      Not necessarily; profit is one of those microeconomics things that is a curve. If you're on the top half of the curve for a specific product, lowering the price of a product will increase profits because volume goes up faster than unit-profit goes down.
      • by AdmiralWeirdbeard ( 832807 ) on Thursday November 17, 2005 @04:38PM (#14056089)
        except that we already have heard from the RIAA robber-barons that they want to be charging more for new releases.

        if they really understood, well, anything, let alone economics, they would not be giving their customers the middle finger on a daily basis.

        what I want to know is, what the hell happened to Jobs calling them greedy and standing firm on the flat pricing scheme?
      • It is not. What you speak of is the Laffer Curve, the backbone of Republican 'Voodoo Economics'
      • Your assumption is that, by lowering prices, more people will buy. However, the number of people in a given market is finite, and as such that rule doesn't always hold. If only N number of people are interested in band B's music at any price, then lowering the price will not increase N.

        You may be in the middle of a curve where decreasing prices will increase volume, but due to the finite nature of N, there may not be sufficient demand to recoup the difference.

        In other words, you gave money away.

    • If Apple were actually able to leverage lower pricing on lesser-known artists, it might benefit many users. Most of what I download is not consdered "popular music."
    • Going down (Score:4, Interesting)

      by SuperKendall ( 25149 ) * on Thursday November 17, 2005 @04:10PM (#14055772)
      I like ITMS - a lot. But if songs start rising in price I will simply use any time I consider a price to be unreasonable, possibly dropping ITMS altogether if variable pricing gets too crazy.

      What I see happening is the EMI song sales on ITMS start dropping substantially.

      What I would do if I were Apple is tell EMI they would be happy to drop thier music altogether. Apple can only do that to a certain extent of course as ITMS wouldn't hold up well with no major label support (or, perhaps it will would with indie stuff? Hard to say) but record companies are getting a fair amount of money out of ITMS and I think being cut out cold might have a few exec heads rolling at the loss of many milllions in recurring revenue, and probably some arsists chafing to drop the label. Record labels can only afford so much heat and if new acts wont sign with you because you're not on ITMS then it could affect the bottom line substantially.
    • by danaris ( 525051 ) <> on Thursday November 17, 2005 @04:13PM (#14055812) Homepage

      Yeah, but is anything really going to happen?

      From what TFA says, this is based on what one music industry exec thinks Steve Jobs might do. Now, if it was something the exec had heard that Jobs was going to do, that might be something.

      This looks to me like nothing more than wishful thinking. And Slashdot jumps in with a sensationalist headline proclaiming certitude, never one to let a little thing like reality (or sanity) get in the way of a nice flamewar...

      Dan Aris

  • End Result? (Score:5, Funny)

    by Shads ( 4567 ) <> on Thursday November 17, 2005 @03:59PM (#14055610) Homepage Journal
    ... I go back to snail mailing money to the artists and downloading the mp3. Shrug.
    • Re:End Result? (Score:3, Interesting)

      by skyshock21 ( 764958 )
      Me too. As a matter of fact, we've had great luck with people sending us PayPal in our online "tip jar" if they dug the music. Fuck iTunes. Are they going to make music that isn't as popular cheaper now? Hell no.
    • Great idea! (Score:3, Funny)

      by sseaman ( 931799 )
      And do I make that check out to "50 Cent" or "Fiddy Cent"?
  • As the Ferengi say (Score:2, Insightful)

    by Anonymous Coward
    Greed is eternal
    • by ScentCone ( 795499 ) on Thursday November 17, 2005 @04:17PM (#14055866)
      Greed is eternal

      The funny thing is that the usual arguers on both sides of this issue will think you're talking about the other side. People who produce and distribute the product are eternally interested in remaining profitable as the do so, and the people who want popular music seem to eternally want their entertainment for free. At the intersection is (supposed to be) a market economy. But a lot of people on the consuming end seem to have lost touch with the general notion of "the person selling it is asking more than I want to pay, so I'll buy something cheaper, instead" and have shifted to "so I'll rip it off, instead" without any sense whatsover of causality (when it comes to the consequences).
      • by krbvroc1 ( 725200 )
        But a lot of people on the consuming end seem to have lost touch with the general notion of "the person selling it is asking more than I want to pay, so I'll buy something cheaper, instead" and have shifted to "so I'll rip it off, instead" without any sense whatsover of causality (when it comes to the consequences).

        You contradict yourself. If the consumer feels 'the person selling it is asking more than I want to pay', they are likely not to purchase the item anyhow (if it is a luxury item). The industry l

  • by w.p.richardson ( 218394 ) on Thursday November 17, 2005 @04:00PM (#14055624) Homepage []?

    Only way more expensive...

    And encumbered with DRM...

    No thanks!

    • Everyone KNOWS that the only reason Apple has done so well selling iPods is because of the beneficence of the music companies allowing iTMS to sell stuff for only 99 cents. Without them, the iPod would be history and the other players with pay per month models would be king.

      "Sum ergo Cogito" -getting Descartes before de horse...
    • by Jeff DeMaagd ( 2015 ) on Thursday November 17, 2005 @07:25PM (#14057757) Homepage Journal
      Forget the arguments of legality, is anyone really convinced that the artist gets any of the money from the sales of music from that site?
  • by MyTwoCentsWorth ( 593731 ) on Thursday November 17, 2005 @04:00PM (#14055626)
    Why complain ? It is their stuff, and they can price it at any level they want. You can always buy from somewhere else or refuse to buy it altogether if YOU think it is too expensive, but I'll bet you that lots of people will keep buying at the new, higher prices. Why leave money in their pockets if they are willing to give them to the record companies ?
    Happy Posting.
    • Why complain ?

      Why not? It is certainly their right to price it higher, but it doesn't make it moral/ethical. Of course we can complain!
    • by CyricZ ( 887944 ) on Thursday November 17, 2005 @04:08PM (#14055731)
      It's important to complain, as that provides them with feedback on their decision. Everyone is better off if there is dialogue between the two parties.

      If enough people voice their opposition, then perhaps Apple will realize that it is not in their best interests to switch to such a scheme. Thus everyone is potentially better off if Apple listens and responds accordingly. Customers can then continue to purchase the songs they want, rather than to boycott. Apple can continue to receive revenue from such customers, rather than having the customers go elsewhere.

      Notice that the same thing happened recently with regards to Novell/SuSE and their switch from KDE to GNOME. They announced the switch, and many customers complained. The customers let them know that KDE was still wanted. And what did Novell do? They agreed to keep offering KDE.

      It's better to work out such problems before involving money.

      • then perhaps Apple will realize that it is not in their best interests to switch to such a scheme.

        I could be wrong, but the way i've been reading this, it's not Apple that's pushing this change... it's the copyright holder, and since they own the rights to what Apple is selling, they don't have much choice in the matter.
        Just like the consumer has the choice to pay more, or not buy, Apple has the choice to pay more or not sell...

    • Why complain ? It is their stuff, and they can price it at any level they want.

      Um, maybe because we installed iTunes based on a promise that it wouldn't work this way, because we've already bought music that only iTunes can play, and because it S-U-C-K-S.

      If we didn't complain, they'd probably blame something else for their sudden lack of revenue. Like, oh, piracy or something.
    • Ha! Ha!

      The joke is on them, since I make MY OWN MUSIC!!!1!

      For my own personal enjoyment, too!
    • Why complain ?

      ...'cause without complaints, /. is a pretty quiet place.

    • It is their stuff, and they can price it at any level they want.

      Of course it's their prerogative to set their prices as they like, but their liberty to do so doesn't include an immunity from criticism.

    • Why does anyone complain about anything? Why are you complaining about other people complaining?
  • Good news (Score:5, Funny)

    by generic-man ( 33649 ) * on Thursday November 17, 2005 @04:01PM (#14055634) Homepage Journal
    According to Slashdot, popular music sucks. As a result, non-sucky music will cost less than it does today. This is good.
    • Don't worry about that. The music companies will soon be implementing a new system to assist you in getting the lowest price! Here's how it works:

      Every song in the system will be ordered by the number of downloads it had last month. The rank will then be sorted in reverse. The position of the music on that list will be its price. Therefore, Britney Spears will cost only a penny, while Simon and Garfunkel will cost $300! See? Now you can get Britney Spears for cheaper! Aren't you HAPPY!
  • And so it begins.. (Score:5, Interesting)

    by Anonymous Coward on Thursday November 17, 2005 @04:01PM (#14055636)
    I wonder if 'flexible pricing' will allow them to adjust prices 'on the fly' - let's say 10,000 users download Song A priced 99c and software automatically then adjusts the price to say 1$ 29c or similar price.

    Then again, there is no end to corporate greed so I'm expecting to see this in action.
  • by Ossifer ( 703813 ) on Thursday November 17, 2005 @04:01PM (#14055640)
    Shouldn't B-sides actually be cheaper than the hits? New material more expensive than oldies? People have been justifiably complaining for years of having to buy whole albums just to get one or two songs they want, and now they don't have to.
    • this is why the music companies have a problem with itunes.
      People don't have to buy the entire album to get a single or two, so the instead of spending $16+ for two songs, they are spending $1.98.

      They are used to screwing people over with crap, so they can't see why people are fighting this.

    • I really don't see how you got modded up, since you seem to working with a world view that is fuzzy and warm and has absolutely no connection with how the labels work.

      Shouldn't B-sides actually be cheaper than the hits?

      Maybe. Since supply is effectively infinite, it may also be that the hits should be cheaper. And who is to decide what is a B-side these days? You think a record exec is really going to walk away from money should something initially considered B hits big?

      New material more exp

  • by daviddennis ( 10926 ) <> on Thursday November 17, 2005 @04:01PM (#14055646) Homepage

    It's a story if you have someone say that he "knows" Mr Jobs will do something, or - better yet - if Mr Jobs actually says he's doing something.

    But if a record company executive says it, and he has a vested interest in having it happen, and perhaps almost a desperate need for it to happen, well, I don't think his word or judgement is necessarily good.

    Record company executives have, from what I've noticed, little reputation for integrity. Until I hear this from Mr Jobs' mouth, or a slick press release and video from Apple about its inevitability, I'm not going to believe it.

  • by ErikTheRed ( 162431 ) on Thursday November 17, 2005 @04:02PM (#14055647) Homepage
    Yeah, and I'm sure their opinion is 100% pure and unbisased. This could very well be a ploy to pressure Apple into complying. Also, even if it is true, Steve Jobs will send them packing for pre-announcing it.
  • It seems that they will end their flat fee sometime within the next 12 months . This gives them plenty of time to decide on pricing and get public opinion on the issue.

    If there were a major backlash, I wouldn't be surprised if they back off the decision.
  • conjecture? (Score:4, Insightful)

    by vena ( 318873 ) on Thursday November 17, 2005 @04:02PM (#14055663)
    What a label boss "believes" doesn't translate to "Jobs will do it" for me. I'll wait for word from Apple before calling Jobs out on his previous spine.
  • by Spytap ( 143526 ) on Thursday November 17, 2005 @04:02PM (#14055664)
    ...So the most easily pirated material (the popular stuff) is going to be more expensive, while the harder to find stuff (the less popular songs) will be cheaper? Either they're changing their business model more drastically than ever before in their history to expand the appeal of smaller artists...or they're just in it for the short run to prove that digital downloads don't work...
  • Good. (Score:4, Insightful)

    by Senes ( 928228 ) on Thursday November 17, 2005 @04:03PM (#14055668)
    Let the prices change. If someone wants to price their music competitively, let them price their music cheaper. If someone thinks that the latest Britney Spears/Eminem/Metallica album is worth more for a digital file than a CD, then let them get ripped off to their heart's content.

    Apple often seems to be on the side of the RIAA over our side, but that's because our side is OUR side and that makes any compromise be less than what we want. I really would welcome price changes in both directions; independant artists being more competitive, and big fat companies ripping off diehard fans more than usual. Go Apple.
  • by KodeJockey ( 928302 ) on Thursday November 17, 2005 @04:03PM (#14055683)
    As part of the deal, Sony has agreed to include malicious code that will open gaping security holes on your devices with the higher-priced downloads.
  • Crap (Score:3, Insightful)

    by psykocrime ( 61037 ) <mindcrime@cp p h a c k e r . c o .uk> on Thursday November 17, 2005 @04:04PM (#14055692) Homepage Journal
    Buying music online should be less expensive than buying the equivelant CD, since you're not getting as much value when you buy online (see: DRM), and the manufacturers aren't paying for packaging and shipping. If they push the prices up to where all the tracks on a given CD cost more than just buying the CD, you'd have to be an idiot to download from an online store.

    Within that framework though, I don't see any reason not to have flexible pricing. Most of the music I listen to is older, less popular stuff anyway, so I'd probably benefit (if I actually used iTunes in the first place). I hope Krokus, Vixen, White Sister, Rough Cutt, Faster Pussycat, etc. songs go down to about a quarter each... I might actually start buying online then.
  • Since I think that most popular music sucks, I don't think this will affect me too much. I'll just keep downloading songs from obscure groups, and paying my $.99.
  • Sensible capitalism (Score:5, Interesting)

    by jfengel ( 409917 ) on Thursday November 17, 2005 @04:05PM (#14055704) Homepage Journal
    The reason people complained before is that the record company exec was insisting that Apple raise prices but not lower any prices, which is just foolish. You can let the market help you set pricing to maximize profit, but you can't have it both ways. If you just raise prices that's not letting the market decide, and you'll lose money from people who would pay $.49 for a less popular song but not $.99.

    It makes sense to me that the one good song on an album would go for more than the rest. The record companies are ticked that they're losing revenue that they used to get; it used to be you had to buy an entire $12-$16 album to get the one non-sucky song. Perhaps $.99 is too low for that song, if people are willing to pay more, as evidenced by the fact that they used to spend MUCH more.

    There will be the inevitable replies to this about how you can get it all for free on P2P, but Apple has demonstrated that people will pay for music if it's convenient. Now they get to fine-tune the pricing model.

    Personally, I look forward to it. If the latest top 40 goes up, and the older and obscure stuff that I want goes down, I win, at the expense of the rubes paying $2.49 for whatever is hot today.
  • No matter which way you cut it, the moment you introduce a variable into the equation it's going to raise the costs. Assuming even the copyright holders were not bastards, which they are... you gotta employ people to keep track of the market value of tracks and makes bookkeeping more tedius. 99c each would actually encourage artists to actually produce songs worth paying for as opposed to the system of one or two singles and a bunch of filler crap which no one would pay for, but switching to variable pric
  • by Suzumushi ( 907838 ) on Thursday November 17, 2005 @04:07PM (#14055724)
    If they are going to use demand for a product to determine pricing, they should also be required to factor in supply. The supply is infinite, so then the price should be practically nothing!
  • This works well for me: If the most popular songs, and generally suckiest, are the most expensive, a quick sort from lowest price to highest will yield the best songs. What's not to like?
  • Some record exec says he *thinks* Apple will introduce variable pricing, and suddenly all the news sites report that Apple will do it. The record companies have been after Apple to introduce variable pricing for some time. Is it any surprise that they think they'll get their way?
  • Apple provides a viable way for record labels to transition from media-based distribution to an on-line model, and the labels in turn slap Apple in the face and say they're not making enough money.

    Jobs was absolutely right to publicly go on record saying this behaviour is "greedy". The arrogant fat cats who run the music industry will, in the end, price themselves into extinction.

    There is value in a unified pricing model that consumers find attractive. I believe the increased volume would make up for the
  • I think the record company is just trying to raise price of downloaded songs overall. First they will say flexible pricing and raise price on most of the popular songs, while lower price on a small number of unpopular ones. Then a few months later, all the cheap ones will go back to 99 cents with most songs sell for higher.

    Read between the lines.

  • by Warlock7 ( 531656 ) on Thursday November 17, 2005 @04:09PM (#14055763)
    From the article:
    "Today 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."

    This does not say that "...EMI has an understanding with Apple that flat fee pricing will end within the next 12 months..." as the story claims.

    Why was this story allowed to be posted this way? /. seems to be slipping...

    The actual Forbes story is talking about how the labels want to take advantage of the consumers while Steve Jobs does not want to change the pricing structure. He's fought against it from the beginning and there has been nothing reported to support that the labels have won the fight yet.
  • ... he'd say "You want variable pricing? You got it! You can charge anything you want, but the cap is still 99 cents!"

  • I never buy from iTMS anyway. I refuse to buy DRM'd tracks. Let them charge $99, it doesn't matter.
  • I have the solution for you and it consists of a few simple steps:

    1. Stop producing crap artists with guaranteed star power and invest long-term in less popular but more qualified artists that you are currently rejecting
    2. Divorce yourself from the ClearChannel monopoly in the United States. It's not helping matters since they aren't exactly a hotbed of diversity in programming
    3. Continue to offer your music on CD as well as non-DRMed cross-platform media files and watch your profits soar higher than you e
  • Sounds good to me (Score:5, Insightful)

    by mapmaker ( 140036 ) on Thursday November 17, 2005 @04:12PM (#14055809)
    The world's 14 year olds can pay $2 for the latest 50 Cent "song", and I'll pay 50 cents for real music.
  • the bad:

    now I have to check the price of every song before I buy it to make sure it's not been deemed "worth" $2.99 or whatever.

    the presumed good:

    much of the music I'm interested in will drop to $0.79 because it is far from "popular".

    yeah right.
  • The audience for digital music buys it because they get the songs for 99 cents and can buy one or two at a time; not because it is digital. I don't see the more popular songs making the labels any more money. CD sales will continue to drop because the majority of purchasers are looking for bargains; not hits. Those that look for 'hits' are going to continue to watch VH1 and BET and trade copies either analog or digital. I know that in my 30s I'm not really the market for what they're doing; but everyone
  • ... after all, the labels charge a lot less for stuff from the 60s and 70s that they don't have to amortize, market any more, etc.

    Oh, wait ...

  • Everyone sets their own "do not exceed" price limit. 99 cents would be a logical point for most people. When they can't sell anything above 99 cents, the market has effectively limited the price. Meanwhile, the prices have dropped for some of the older stuff, so once again, the music industry shoots itself in the foot. They will have no problem getting people to accept a decrease.

    If nobody has the self-discipline to set a limit, then the music companies truly deserves more money because people are willi
  • Um.. ATI anyone? (Score:2, Interesting)

    by enderwig ( 261458 )
    Wait, this record company exec released information about iTunes Music Store and Apple wasn't available for comment? I don't think Jobs like being put on the spot like that. If a deal has been struck and EMI jumped the gun, will they be punished like ATI for "leaking"?
  • They were all stuck in an arduous meeting trying to determine the pricing of every song for each of these albums:

    Sgt. Pepper's Lonely Hearts Club Band (Soundtrack) - Bee Gees and other Various Artists
    The Endless Dream - Yanni & John Tesh
    Osmond Family Christmas Album - The Osmonds
    Lord of the Dance - Ronan Hardiman & Michael Flatley
    All or Nothing - Milli Vanilli
    Middle of Nowhere - Hanson

    see: []
  • for me, $.99 isn't bad, it is easier than searching for songs for 1/2 hour. now, they can go screw themselves. i will not pay over that, it should be 1/2 that price.
  • Apple makes what, $0.29 out of $0.99, the artist gets maybe $0.10. That means that the record labels get $0.60 for doing jack-crap. In truth, I support variable pricing. The record labels should forego some of their pennies and let the oldies retail for $0.50.

  • Users will be more willing to use digital downloads now, since the whole debacle over "malicious code" infected CDs from Sony. So, the industry might have to come to terms with their pricing just to keep consumers.
  • by Dekortage ( 697532 ) on Thursday November 17, 2005 @04:25PM (#14055949) Homepage

    From the article: "Label executives have made multiple arguments for flexible pricing. They argue, for instance, that almost all retail businesses have different price points for different products." Who decides the price points, however? Who decides which albums/songs are popular vs. less popular? Would Apple decide, or the music companies? Is it "according to traffic on iTunes" -- e.g. when more people buy it, the price goes up, like a stock -- or "measured by radio play or CD sales or Billboard ranking", or "what the record companies are declaring as popular"? What's the reference???

  • by PortHaven ( 242123 ) on Thursday November 17, 2005 @04:25PM (#14055954) Homepage
    1) Start signing bands on a 50/49 cent split. (OMG...can you imagine it, artists getting more money than the label for a change)

    2) File a lawsuit on behalf of the artists...that said artists only negotiated "analog" recording distribution rights. That none of the old contracts covered digital distribution. And that all of the artists retain the rights to their digital distribution, including the right to negotiate a digital distribution contract.

    (Think about it, a) the common people would support it as I would buy a lot more music at $0.99/song if I knew the artists actually benefited. b) think of how many artists would support such a move? big names too like "Paul McCartney"... As many artists were screwed over big time. Even big name artists saw very small percentages of their songs. This would allow Paul McCartney to regain ownership of his music (for digital distribution only). RIAA would still retain the analog rights (but we all know that's a dying medium). And with RIAA pushing so much legislation distinguishing the difference between Analog and Digital (DMCA) there may in deed be enough cause for a court to decide in Apple's favor especially if 90% of the artists and consumers are in favor of it as well.

    RIAA would find themselves the owner of an extinct business model. Left with a rotting carcass...

    - The Saj
    • by Morgalyn ( 605015 ) <> on Thursday November 17, 2005 @06:13PM (#14057037) Journal
      Unfortunately, Steve has commented multiple times (here's one [], an interview with the Rolling Stone) that they are not in the business of signing artists. He recognizes that music companies have an expertise in signing artists, in choosing the ones they think will do well versus the ones that will flop. Apple does not have that expertise. Granted, I think it they really wanted to, they would do it, but that might cause the wrath of Apple Corp (see other comments if you need background). Then again, he also used to dispute the coming of the video iPod....
      From the linked article:
      When is Apple going to start signing musicians - in effect, become a record label?

      Well, it would be very easy for us to sign up a musician. It would be very hard for us to sign up a young musician that was successful. Because that's what the record companies do. Their value is in picking that 1 out of 5,000. We don't do that.

      We think there's a lot of structural changes that are probably gonna happen in the record industry, though. We've talked to a large number of artists that really don't like their record company, and I was curious about that. And the general reason they don't like the record company is because they think they've been really successful, but they've only earned a little bit of money.

      They feel they've been ripped off.

      They feel. But then, again, the music companies aren't making a lot of money right now ... so where's the money going? Is it inefficiency? Is somebody going to Argentina with suitcases full of hundred-dollar bills? What's going on?

      And it turns out, after talking to a lot of people, this is my conclusion. A young artist gets signed, and they get a big advance -- a million dollars, or more. And the theory is that the record company will earn back that advance as the artist is successful.

      Except that even though they're really good at picking, still, only one or two out of the ten that they pick is successful. And so, for most of the artists, they never earn back that advance -- so they're out that money. Well, who pays for the ones that are the losers?
  • by ortholattice ( 175065 ) on Thursday November 17, 2005 @04:29PM (#14055992)
    The law of supply and demand in action, I guess... It would be a shame for them to run out of the more popular songs, so they price them higher to keep the demand lower, right?
  • Not Apple's stance (Score:5, Insightful)

    by amichalo ( 132545 ) on Thursday November 17, 2005 @04:31PM (#14056011)
    Steve Jobs is quoted [] as saying the opposite and further than music companies are "greedy" for wanting this price flexibility.

    I for one welcome flexible pricing because I think there is some music I would buy for less than $0.99 that I have not bought because of its current price. Pay more an a dollar for a single? That would have to be some great music, I doubt I would do it. Everyone has their price. mine feels like a dollar.
  • by phillymjs ( 234426 ) <slashdot AT stango DOT org> on Thursday November 17, 2005 @04:34PM (#14056054) Homepage Journal
    ...that lays the golden eggs? What a bunch of morons!

    The iTMS achieved its status as the most popular online music store by being easy to understand: You get the same rights for every song, and every song is the same price. That's called being customer-friendly. Contrast that with the stores where songs are all different prices, and some can't be burned to CD, etc.-- they're all also-rans, killing each other for the small sliver of the market not controlled by the iTMS.

    When the prices go up from 0.99 and that psychological barrier is broken by a nonzero digit left of the decimal point, sales will go down as people balk at song prices and go back to p2p for their music. And does anyone think the record companies will really lower the prices on anything people would actually buy? Haven't they demonstrated that they have no stomach for charging x when they could be charging x+1?

    When will these jackals learn? <shaking head in disgust>

  • I am sure the conversations between Apple and Music EXECs where something along these lines:

    Execs: You need to allow a flexible pricing model where more popular stuff costs more so we can all make more money

    Apple: No we don't .99 is working just fine, its an excellent price point sure the less popular stuff we are probably way over charging for, but its made up for by the fact we undercharge for the more popular stuff so money gets made on can look at it the other way too and the model looks just as good.

    Execs: We don't care about the less popular stuff from the bands with actual talent, never did, those acts could drop off the face of the earth for all we care, charge whatever you want for that stuff, here is a list of the artists we care about and have the payola going to promote them even though we all know they suck, oh wait crap *sleep* When I snap my fingers you will akwake and not remember I ever mentioned anything about payola *snap*

    Apple: huh, wa...oh yeah, no we are sticking with .99 its an effective sweet spot price point, we will stick with that, besides we control 85% of the online distorbution model we must be doing something right.

    Execs: We'll stop selling our stuff through iTunes, then where will you be?

    Apple: Eh, whatever you'll be back...we control 85% of the market and sell the most popular player.

    Execs: Oh yeah we wanted to talk to you about that we want a cut of the iPod hardware sales too, its only fair.

    Apple: Na, You don't seem to understand you need us as I've pointed out we basically own this market yes you make the widget we are the only effective way of getting the widget to the customer

    Execs: We'll take our toys and go home, without the music you have no store....

    Apple: Without our STORE you have NO STORE

    Execs: so there see we need each other so lets talk about that pricing

    Apple: no really you don't seem to understand .99 is what the consumer will pay, they are tired of $18 for a CD with two good songs on it, they would rather pay $1.98 to get those two good songs, or $18 to get 18 good songs. Your trying to achive price parity we see it you want the same cash for that CD without selling the end user the physical media. Nice cost savings for you, no raw materials cost, no shipping, no brick and mortar, You must really think those users are idiots.

    Execs: (TO self) Oh shit they are on to us.

    Apple: No really I think we are going to stick with .99

    Execs: I think you don't understand, we really are going to take our ball and go home, ALL of us where will your store be if none of us provide the music to sell in it. NONE. Other stores will work with us on it, sure the players they support are not as good, the store isn't the best model, but hell they will charge whatever we tell them to charge just to get their hands on the product...

    Apple: Well you don't have to go that far, maybe we can work "something" out.

    Execs: Well thats more reasonable, perhaps we can work "Something" out.

    Apple: (TO Self) umm humm you just keep thinking that, sure we'll agree to your "Flexible" pricing...BUT just wait until you see the terms, and when the sales slump on the first couple of releases under this plan, because TRUST me they will, we will make sure of it...

    Execs: So we have a deal

    Apple: Sure Sure we'll phase it in like the next year

    Execs: Excellent!

    Apple: (To Self) Umm humm more like 2-3, never, perhaps a token release here or there for a higher price, actually you have played right into our hands, yeah we'll rasie the prices on a few things, but wait until you see the price drops on the back catalog...Volume, its all about Volume, and didn't you notice that clause in the agreement that says we always get the same wholesale cost and keep the same amount of the profits per purchase no matter what, when the price goes down to .79 on that Metallica song from 1990, that .20 is coming out of your share not ours.

  • by aduzik ( 705453 ) on Thursday November 17, 2005 @06:31PM (#14057246) Homepage
    If there's anything we genuinely know about Steve Jobs, it's that he loves simplicity. You can see it in the design of everything that Apple produces from its hardware to the iTunes Music Store. That's why Apple sells only two configurations of each of its iPods. And the prices even mesh well: the low end full-size iPod is more expensive than the high end iPod nano. Offering every song for the same price eliminates all the guesswork. If you're standing in a store looking at a CD, you know exactly what it would cost at the iTunes Music Store. That makes your decision largely a matter of "are the liner notes and actual CD worth an extra $5-6 to me or not?"

    But what's most important to notice is this: a variable pricing scheme as described in TFA could seriously hurt Apple's sales. While I have no data to support this claim, I'm sure that Apple makes most of its money from popular songs. However, remember that when an album is new and popular, the retail price is usually lower to boost first-week sales. I doubt that this same policy would apply to the iTunes Music Store. Thus, if the price is higher at the iTunes Music Store, a full album could very well end up being more expensive than the retail CD.

    We live in an impatient world, and this has at least two implications: people won't wait for the price to come down and will buy the CD at retail, or people will pay more for the instant gratification of the iTunes Music Store. I think the former is more likely, because in reality you would be getting more (a real CD) for less. People love a bargain.

    So if you're the kind of person who buys popular music when it first comes out, which many if not most of the iTunes Music Store's customers are, chances are good that you will never have cause to buy an album from the iTunes Music Store again. Plus, suppose that when an album is no longer "new and hot" that Apple is permitted to lower the price. By that time, people have lost interest that Apple could lower the price substantially and they still wouldn't sell many copies -- everyone who wants it already has it.

    There's also a psychology at work here. $.99 seems a lot smaller than $1.00, even though for all intents and purposes there's no real difference. That's why you rarely buy anything in a store that is an even dollar amount because $39.99 looks a lot smaller than $40.00. Suppose Apple starts selling at $1.19 for a popular track. That's only $.20 more and 20% higher than $.99, but gosh, $1.19 looks huge compared to $.99. That $1 mark makes a big difference in terms of the perceived cost of a song.

    In the long run, I don't see how this can be anything but bad for Apple. And, the more the record labels try to screw people over with high prices, the more people are perfectly content to screw over the record label by downloading illegally. So it may even end up being worse for them. What it boils down to is this: one way or another, people will download music. Whether it happens legally or not is entirely in the hands of the record companies.

  • Bye Bye Itunes (Score:3, Interesting)

    by nurb432 ( 527695 ) on Thursday November 17, 2005 @07:24PM (#14057745) Homepage Journal
    This will only serve to increase market share of those services where for a flat monthly fee, you get to download what ever you want.

    Bad move Apple. Steve Jobs must be calling the shots again.

The road to ruin is always in good repair, and the travellers pay the expense of it. -- Josh Billings