“After years of complaints, last year the music labels finally got what they wanted from Apple–the ability to raise prices on their songs,” Peter Kafka reports for AllThingsD. “Last April, iTunes introduced a ‘variable pricing’ scheme, which gave the labels the ability to move prices from 99 cents a song to $1.29 (and for some tracks, down to 69 cents).”
Kafka reports, “The results? Music sales are slowing.”
MacDailyNews Take: Shocking.
Kafka reports, “Warner Music Group said this morning that it has seen unit sales growth at Apple’s iTunes decelerate since the price increase: Industry-wide, year-over-year ‘digital track equivalent album unit growth’ was at 5 percent in the December quarter, down sequentially from 10 percent in the September quarter and 11 percent in the June quarter.”
“Warner CEO Edgar Bronfman Jr. argued that the pricing change has been a ‘net positive’ for Warner. But he also suggested that in hindsight, perhaps it wasn’t a great idea to raise prices 30 percent during a recession,” Kafka reports. “So here’s the question for the book industry, which has been working very hard to boost the price for its digital goods: Which lesson do you learn from this?”
Kafka writes, “My gut is that the industry will see this parable the way Bronfman apparently does: If you can move prices up early in the digital adoption cycle, you’re much better off.”
Full article here.
I’m curious, has anybody seen these mythical 69-cent songs in iTunes?
Greedy that’s what I call it. I refuse to pay more than 99p full stop
iTunes Canada still has the best pricing after the dollar conversion. As of today, 99 cents Canadian is about 93 cents US.
Evidently, If you make a decision and screw up, its best to blame someone else or the situation. Never admit you screwed up!
Is this what they teach in management schools?
The music labels have no clue. The days were people had to buy a album with 13 filler songs and 2 hits are long gone. Now, you guys have to actually work at producing a great album.
surprise… surprise….- NOT.
Vote with your wallet and tell them where to put it. Enough down pressure will make them lower the price and see that Jobs was right on the money with 99ç.
“Warner CEO Edgar Bronfman Jr. argued that the pricing change has been a ‘net positive’ for Warner”
I am always amazed that business people are so incredibly short sighted.
Until digital sales of music are > 60% or so of all music sales, you have to price them to sell more units and grow that method. Once you have them trapped in that model, then increase prices.
“Which lesson do you learn from this?”
Which lesson?!?!?! There’s only one lesson – higher prices = slower sales. Bronfman’s spin is not a lesson, it’s denial and stupidity.
I used to buy about 5 songs a month at 99¢ each.
Now that they cost $1.29 I buy about 1 song every 2 months. In my case it has nothing to do with the recession, just the pricing.
Maybe higher prices yeah, and just how freaking many Beyoncé songs can anyone buy?
Crap gets old after a while.
Not to mention with free services like Pandora the concept or purchasing music has become a quaint anachronism.
And (no matter what anyone says) double digit unemployment is not good for music sales.
‘Scuse me, Lucy. Anyone here know there’s a recession going on – probably a double-dip one!?!
Naboobs and naysayers. Gasp!
This is just another example of the same ol retarded republican greedy thinking that messes up a good thing
It should be also be noted that the music industry has multiple opportunities to add to their bottom line — their called concerts and road shows.
Where as a writer has only a single shot at the pie — when said writer sales a copy of his book.
Just a through…
“Vote with your wallet and tell them where to put it. Enough down pressure will make them lower the price and see that Jobs was right on the money with 99ç.”
Well no. History has shown that the music industry is incapable of lowering prices once they’ve been raised, even when it’s detrimental to sales. They will look around, blame everyone and everything else and raise prices to make up the loses. When that doesn’t work, maybe a fresh round of suing your customers and new government regulations will help. And of course, there’s always the fallback of getting some sort of tax on media to subsidize the industry, ‘cuz, you know, our customers are all crooks.
There are a lot of sub 69¢ tunes on iTunes if you buy the whole collection and the whole collection is out of copywrite protection. Music from the 40s, 50s and early sixties is as cheap as 15¢ or less a tune.
Of course, you have to be at least 10 years older than the music to really appreciate it.
OK, music/ movie/ book execs…. math problem. What would you rather have… 3 billion sales at 99 cents or 1 billion at $1.29? hmmmm….
It was all about the pricing for me $0.99 was perfect. $1.29 I have to think twice about buying newer songs asking if it’s worth it.
Maybe for the iPad, Publishers will learn the lesson and show some insight by not repeating the Music Label’s stupidity of trying to kill the goose that lays the golden eggs…
Weird. All the songs I’ve bought lately are still 99c. I must not be hip enough to like the “hot” stuff.
The thing about the 99c price vs. the $1.29 price is that 99c is below the psychological impulse barrier, while $1.29 is not. An amount less than a dollar is easy to throw away on something perceived to be “small”, like a 3-5 minute song. At $1.29, you may think about it for a few moments. (Mind you, I don’t have a problem with $1.29 personally. When you factor in the inflation since the iTunes Store was launched, it’s not as big an increase as it looks.)
A book is not usually an impulse purchase, at least not as impulsive as buying a single song. (I’m talking about real books, not the tiny paperbacks full of insipid homilies they sell near the cash register.) So it’s not as important to keep the price under some kind of psychological barrier. This is my long-winded way of getting around to saying that $12.99-$14.99 price predicted for iBooks is unlikely to be a problem as far as sales are concerned.
But as others have said, the market will decide.
——RM
The book publishers won’t “get it” either.
Nobody in content (video, music, print) understands what he heck they should do in the digital age.
The worst, though, is TV/Movie industry. They are so slow and blind and loaded to the gills with cash that they’re hopeless to adapt.
I know I’ve slowed my purchasing. You do notice a 30% increase when you buy in volume month to month. I’m now content just to listen to Pandora in the car and if there is something I must have, I buy the CD first week (which has been cheaper than the digital pricing and that makes no sense to me) and rip it.
Damned labels are just too greedy.
@ Gabriel
I have seen some 69 cent songs. “The Best of Badfinger, Vol. 2” has two!
Sell Lossless.
I found one!!!
by Ella Fitzgerald – track 5
http://itunes.apple.com/us/album/ella-fitzgerald-the-best-songbooks/id374485
http://itunes.apple.com/us/album/the-lady-is-tramp-1956-version/id374485?i=374457
@ Mr. Reeee,
256 kbps is lossless, unless you have canine DNA.
$.99 is my limit for an individual song unless it’s a superfantastic song. I haven’t found many superfantastic single songs in quite a while. Songs that great tend to come from great albums. Great albums I’d rather purchase on CD.
Since the RIAA started their threaten/sue-fest of fans, my CD purchases have plummeted. I don’t think I bought even 10 CDs last year. There are only certain musicians that I trust to offer up a full album’s worth of good work anymore, and those tend to be the only ones I buy without previewing the entire album. They are few.
@ Mr. Reeee again,
I did not just intentionally call you a son-of-a-bitch.
are they serious they really didnt see this one coming? supposedly the hit single were supposed to be 1.29 and the others would be less but the only 69 cent tracks are the little 30 second skits artists throw in for no apparent reason! i know i slowed down in my click happy finger when they added them 30 cents. bring it back down!!!!
Gabriel writes, “I’m curious, has anybody seen these mythical 69-cent songs in iTunes?”
Yes. I downloaded Counting Crows “Rain King” (the live version from the New Amsterdam album) for $.69. But I sure as hell won’t download the Rolling Stones “Gimme Shelter” for $1.29!
@Davidlow
“I used to buy about 5 songs a month at 99¢ each.
Now that they cost $1.29 I buy about 1 song every 2 months. In my case it has nothing to do with the recession, just the pricing.”
I agree with you completely. At .99¢ I was buying songs. At $1.29 – forget it. I’ve pretty much stopped buying completely.
.99¢ was a perfect price. Over that – it becomes real money.
Bronfman is a moron.
Before – I could go to the iTunes Sore, find a song & just buy it. Now, I have wade through the $1.29 tracks that I’m not going to buy. It’s not as enjoyable as it use to be.
Apple made buying music easy & pleasurable. The music industry is desperately trying to make it a pain in the ass.
We’ll see what book publishers do. Hopefully they’re not as incredibly stupid as Bronfman.
MDN:
Could you provide us an email for Bronfman so we can all tell him we think he’s a moron.
Gee, I was expecting a much more entertaining MDN take on this topic.
Bronfman logic: Since we have less sales at $1.29 we need to raise the price to cover the loss in sales.
I think Edgar Bronfman and Jeff Zucker probably sat next to each other in idiot school.
Deus Ex Technica:
They are the principals
@ brynchard; you’re an idiot if you think “republican” has anything to do with this. In case you don’t know, hollywood and the music industry is NOT republican.
It’s no surprise that sales have dropped. Beyond the fact that most of what they’re producing is boring crap, there’s also the issue that $1.29 screws up the use of an even money iTunes card. At $.99 I know I can buy 10 songs with a $10 card; at $1.29 each it screws up the easy math and I feel like I’m getting gouged. I see these clowns parading around with “bling” all over themselves, pulling up in limos at the endless “oh how we love ourselves” so-called “awards” shows, Ferraris, Lambos, etc. and I’m supposed to believe they aren’t making enough money?
BEE ESS
Bronfman reportedly said, “It’s interesting that the book publishing industry, on the iPad, has much more flexibility than the music industry had.”
B.S. Yes, 20,000 people are going to spend $75 each to go and listen to an author read a book. Moron.
@LordRobin – I agree with your “impulse threshold” idea, but I think it is hopeful for the publishing industry to think they’ll get $15 for an e-book that you can’t loan, donate to the library or use as trade goods in a used book store. The impulse ebook price is probably more like $6.99 than $12.99, IMHO.
@ brynchard: Do you not realize that big media tends to lean very much Democrat, and *not* Republican?
As for the issue at hand, it sure sounds like the *growth* rate is slower. That does not mean that sales are down! A growth rate of 5% is still an increase in sales, and if they’re average price is higher, then the studios are pulling in more money.
Also, how much of the decrease in growth rate can be attributed to higher prices, and how much due to the generally crappy economy? Are there any online music sellers that stuck to a $0.99 price model who have growth rates we can compare to?
Complain all you want, but if the price is to much, just don’t buy it. Why is that so hard for folks to understand? Figure out what you’re willing to pay, and go without if the cost is too high. It’s not like there aren’t alternatives out there.
Note, I don’t work in the entertainment industry, and have no love for the big studios. Is some music worth more than others? I don’t know. Maybe. I suppose that depends on your taste in music and how much enjoyment you get from different music.
@brynchard
This is just another example of the same ol retarded republican greedy thinking that messes up a good thing”
Yeah, all those evil DEMOCRATIC PARTY MEMBER artists and producers and executives – it’s a right-wing conspiracy!!!
ROFLMMFAO
And the Music Labels wonder why I use Limewire.
“Perhaps it wasnt a great idea to raise prices by 30% in a recession” — Warner
NO SHIT!!! >:O Apple had it covered, and you decided to F*ck yourself. Your fault.
Life has taught us that when Steve Jobs speaks, thou shalt listen.
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who is setting the prices at Amazon? why are they different at itunes?
Haven’t bought a single track at $1.29 and I never will!
Mt iTunes spending has slowed solely on the fact that digital radio and streaming has become more abundant and easier to access.
I, for one, just don’t buy music at $1.29. If I go to buy a track off iTunes and it’s $1.29, I just do without. Apple was right about pricing. Screw the labels.
A “net positive?” You’re a lying bitch, Bronfman.
Bronfman is a maroon of the highest order. That is, dark maroon.
What will eventually happen is that there will be fewer and fewer $1.29 songs until it really does not matter that there is a $1.29 option. Most songs will be at 99 cents again. And the 69-cent price will be irrelevant too (as it is already), because pricing a song at that lower price does not significantly increase sales. The 99-cent price is ideal for both consumers and suppliers, and Steve Jobs knew it all along.
“This is just another example of the same ol retarded republican greedy thinking that messes up a good thing”
Yes, must be because RICH Democrats like Al Gore give all their money away to charity and are wholly altruistic, they would never PROFIT from global warming would they..Oh wait..he does.
All the while flying around in his PRIVATE JET, while back at his palace lights just keep on sucking juice from the grid. But then again, since he is RICH with all that OIL money he can afford it now can’t he…
Well then they must be republicans in disguise. If you want in on the party in Washington, you better make sure you look and vote like them. I stand by my take that it’s a republican tea baggin conspiracy.
At this time I refuse to pay more then 99cents a song. If I feel like I’m being financially raped like when music stores had full power ( pre-iTunes store days), I’ll pirate music. I’d rather pirate music and see the industry collapse then pay more then what something is worth. My message to greedy publishers: I was a consumer but now I download for free and piracy… Is your fault.
I find it incredibly amusing that 30¢ causes such furor. Did no one notice that Blue Cross of California is raising its rates by as much as 39%. Now there’s number that has meaning. And it’s a tad more significant than 30¢ of disposable income.
Whenever I want to purchase a track that is $1.29 on iTunes, I immediately go to Amazon and purchase it for 99¢. I will not support the music industries’ greed. If more people do this, eventually they will cave in and drop the prices back down where they belong.
I refuse to pay over $0.99 for a song. Just not gonna do it.
But I do believe that it was probably “net positive” for the labels in the short term. If their sales dropped by 5%, but half of their songs are now selling for 30%, that is a net benefit of 12.5%, all going to pad the bottom line. Longer term, though, if they have cut their growth rate in half from 10%, it will be a “net negative” for them within a few years.
Are we sure that it’s not a reflection of the overproduced “music” that has been released lately?
Or perhaps people have learned how much more cost effective used CDs are?
Or could it be that political hacks here on MDN are busy arguing/distorting/obfuscating/lying rather than doing the primary number one job of every American: buy buy buy.
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/03/AR2008100301977.html
I am amazed to see that many people have the same behavior. it’s not the price, it’s the principle.
Also if you look, you can get all new stuff on the radio, on Youtube. No need to pirate. And maybe if the music is that good when it will be 99c we may buy it…
I find it a responsible attitude of net citizen… LOL
Damn greedy bastards, we’ll get you!!