• The Mac Music Report: Would You Pay $1.49 for a Hit Song?

    October 1st, 2005

    Up till now, you could be certain of one thing with Apple’s iTunes Music Store, and that is a 99 cents price for a single track. Yes, I’ve seen a few complete albums that exceed the standard $9.99 price, but, in all fairness, a few for less. This mostly uniform price structure has been the hallmark of the world’s largest legal music download service. It’s also a tribute to the fabulous negotiating abilities of Steve Jobs, who somehow managed to persuade those “greedy” music companies to accept such a deal.

    But all is not sweetness and light in the music industry, and there are troubling signs on the horizon, in the form of demands from some of those companies to be able to charge different prices for different product. That means exceeding 99 cents, particularly for a hot new artist whose music may be in high demand. Well, at least this week anyway, so might as well strike while the iron is hot.

    Now I suppose that hit recordings may, in theory, deserve higher prices. But consider the costs of raw materials for a musical download which is, of course, zero once the file is submitted. Consider, also, the fact that the music you buy from iTunes and even the competition isn’t of the same quality is the CD version. It’s compressed, to save storage space. Now that might not be a significant issue for you, unless you have a high quality audio system and you’re extremely demanding. In that case, you’d be better off buying the CD version.

    The other factor is how much that compressed track is worth, even if the artist is the hottest act on the planet. It is true that there are fixed expenses in launching a new album, particularly promotion. Even if paying radio stations some money on the side to get airplay is increasingly frowned upon, there is standard advertising and even subsidizing a tour to boost sales. Recording costs? Well, artist contracts traditionally force them to pay those bills, and they don’t receive any royalties beyond the original advance until all costs are deducted. I suppose The Rolling Stones and Madonna and other superstars don’t worry about such mundane concerns, but most do.

    On the other hand, would you rebel against the legal download movement if the price suddenly increased to $1.49 or $1.99 a track for your favorites, with proportionate increases for the entire album? Would you risk the potential of an RIAA lawsuit and switch back to one of those peer-to-peer networks to get the music you want? Wouldn’t such a maneuver end up working against the laudable goals of the music industry, which is to get paid for its merchandise?

    In any case, I think that, in the end, Steve Jobs will probably prevail and keep the prices down. If anyone is going to talk sense to the music companies, he’s the one to do it. But it isn’t going to be an easy negotiation process. Already a part of the industry has thrown down the gauntlet. Fortunately for you and I, not everyone appears inclined to demand a multiple-tier price structure. According to published reports, for example, Universal Music Group is inclined to leave well enough alone, and without a unified stance, it is going to be far more difficult to persuade Jobs to accept this point of view.

    Actually, I have a better idea. For older, slower moving product, the music industry ought to agree to reduce the prices. So, for example, you pay 79 cents for the tracks that aren’t exactly on the top of the charts, and perhaps $7.99 for the corresponding album. Now that’s going to be a hard sell. On the other hand, if the music industry suddenly notices that it is selling a lot more files that way, would it come to realize that maybe, just maybe, some of its product is overpriced?

    Yes, I suppose I am supporting a multiple-tier pricing structure, only I’m sure the more vociferous proponents of higher pricing, particularly Edgar Bronfman Jr., the CEO of Warner Music, wouldn’t sit still for moving in the opposite direction. But perhaps Bronfman is still living in the 20th century, in an era before music downloading caught traction. That seems to make sense, because he seems very out of touch with what the public wants and is willing to tolerate.

    But I have one more thought that can be summed up with just one word: Lossless. If the music industry truly wants to be able to charge more for some songs, it ought to agree to deliver a higher quality product to earn the right. How about a premium line of true CD-quality music for $1.49 a track and, perhaps, $13.99 an album? Would you be willing to pay extra to get a file that’s identical in sound quality to the original? Would you be willing to endure hours of downloading to get a complete CD at full resolution? Even if the file size was reduced by half, how many of you would bother? I suppose those who complain that those AAC files are inadequate will have a solution, other than, of course, going to your local music store and buying the actual CD.

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