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Why music labels want to force multiple price points on Apple’s iTunes Music Store
Monday, November 21, 2005 - 02:42 PM EST

"'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,' Forbes recently reported. The story they're trying to tell you is that 'older, less popular songs could be discounted, and in-demand singles could go for more than a dollar.' Let's think this through, because I think the recording industry is lying about why they want different prices," Joel Spolsky writes for Joel on Software.

"The reason the music recording industry wants different prices has nothing to do with making a premium on the best songs. What they really want is a system they can manipulate to send signals about what songs are worth, and thus what songs you should buy. I assure you that when really bad songs come out, as long as they're new and the recording industry wants to promote those songs, they'll charge the full $2.49 or whatever it is to send a fake signal that the songs are better than they really are. It's the same reason we've had to put up with crappy radio for the last few decades: the music industry promotes what they want to promote, whether it's good or bad, and the main reason they want to promote something is because that's a bargaining chip they can use in their negotiations with artists," Spolsky writes.

"Here's the dream world for the EMI Group, Sony/BMG, etc.: there are two prices for songs on iTunes, say, $2.49 and $0.99. All the new releases come out at $2.49. Some classic rock (Sweet Home Alabama) is at $2.49. Unwanted, old, crap, like, say, Brandy (You're A Fine Girl) -- the crap we only know because it was pushed on us in the 70s by paid-off disk jockeys -- would be deliberately priced at $0.99 to send a clear message that $0.99 = crap," Spolsky writes. "And now when a musician gets uppity, all the recording industry has to do is threaten to release their next single straight into the $0.99 category, which will kill it dead no matter how good it is. And suddenly the music industry has a lot more leverage over their artists in negotiations: the kind of leverage they are used to having. Their favorite kind of leverage. The 'we won't promote your music if you don't let us put rootkits on your CDs' kind of leverage."

Full article here.

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Related articles:
Will Apple's iTunes Music Store be forced to raise prices by greedy music labels? - November 17, 2005
EMI chief: Apple's Steve Jobs may alter iTunes pricing model within the next 12 months [UPDATED] - November 16, 2005
In 99-cent fight with 'Looney iTunes' labels, Apple CEO Jobs will get whatever Jobs wants - September 29, 2005
Warner music exec discusses decapitation strategy for Apple iTunes Music Store - September 28, 2005
Warner CEO Bronfman: Apple iTunes Music Store's 99-cent-per-song model unfair - September 23, 2005
Analyst: Apple has upper hand in iTunes Music Store licensing negotiations with music labels - September 23, 2005
Steve Jobs plays high-stakes poker with greedy record labels - September 22, 2005
Record labels accuse Apple CEO Jobs of 'double standard' as they seek to force iTunes price increase - September 21, 2005
Apple CEO Steve Jobs to repel 'greedy' record companies' demands for higher iTunes prices - September 21, 2005
Apple CEO Steve Jobs vows to stand firm in face of 'greedy' record companies - September 20, 2005
NYT's Pogue to record companies: it'd be idiotic to mess with Apple iTunes Music Store prices - August 31, 2005
Apple CEO Steve Jobs prepares for pivotal fight on digital music prices - August 28, 2005
BusinessWeek: Apple unlikely to launch music subscription service - August 15, 2005
Record labels to push Apple for higher iTunes Music Store prices in 2006? - August 05, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service - April 11, 2005
Record labels look to raise iTunes wholesale prices, music industry fears Apple's market domination - March 05, 2005
Report: Apple CEO Steve Jobs 'angered' as music labels try to raise prices for downloads - February 28, 2005
Report: Music labels delay Euro iTunes Music Store fearing Apple domination - May 05, 2004
Greedy Big Five music labels looking to jack up iTunes songs to $2.49 each? - April 22, 2004

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Reader Feedback: ( = registered)

Nov 21, 05 - 02:54 pm Comment from: Mac4lfe

Those Bastards

Nov 21, 05 - 02:56 pm Comment from: Cloudwall

Interesting take, different from the usual greedo take, and certainly believable.

Nov 21, 05 - 02:57 pm Comment from: dogfriend

Marketing is the art of convincing people to spend additional amounts of money for something they really never needed in the first place.

Nov 21, 05 - 02:58 pm Comment from: winmacguy

It is always possibly and wouldnt really surprise me at all.

Nov 21, 05 - 02:59 pm Comment from: OzzysCross101

Damn corporate America.....DAMN THEM TO HELL!

MW: I wish that "justice" wasn't blind, then she could see what the people of the world have done to her.

Nov 21, 05 - 03:00 pm Comment from: Veronica

I feel like I've been violated

Nov 21, 05 - 03:03 pm Comment from: Jeff

I'll ignore the new stuff at $2.49, it's crap anyway.
But please, give us the old stuff at a decent price, $0.29 let day.

Nov 21, 05 - 03:15 pm Comment from: hammer

I was gonna answer this one question pop quiz by saying 'greed', but the explanation here will suffice, as it is the same answer but with more info.

Nov 21, 05 - 03:30 pm Comment from: M.X.N.T.4.1

Well, in a way I would be happy to see this. Most of the stuff I buy on iTunes are individual old songs I don't own in any other format and wouldn't want to buy the whole album of. My cart has hundreds of songs in it so I can wait for them to come down.

Nov 21, 05 - 03:37 pm Comment from: William McFadden

Pricing sends a signal? This must the lamest theory yet of why the music labels want to control the marketplace themselves and reap more profits.

How's this for a signal: Apple has a pure moneymaker here and the labels are powerless to muck it up. They could walk away, but it would be walking away from serious profits and chart sales.

Marketing is the way that people get the idea what is supposed to be big, just like the Movie business -- one ticket price for all movies.

I mean, who gives a shiite if they want to highlight newer titles with higher prices? Good for them! But if the consumers are grabbing older titles for the same money, or other bands are catching on greater than other bands -- maybe the consumer will actually be more content and happy and the music industry will dominate again.

Nov 21, 05 - 04:01 pm Comment from: ron

Regular and new tunes---99c. Old tunes ---50c. Sold!

Nov 21, 05 - 04:03 pm Comment from: hmmm

Don't really agree with this theory. I do agree with the idea that they want to charge as much as someone will pay, which will not happen in the $0.99 model.

I also suspect that this signal a gradual shift upward in the median price. It only makes sense that if things are priced according to demand, with the most popular at $3 (OH, sorry, I meant $2.99...) and the least at $0.99, then things of average popularity, of which there are the most, will be at $2..no, wait! $1.99! Therefore, it won't just affect the Britneys and other pop songs, but will end up jacking up the prices of most titles.

Nov 21, 05 - 04:04 pm Comment from: hairbo

If they actually get a scheme in place that charges 2.50 for new songs, the quality of which is *worse* than a CD, then they'll drive iTunes out of business. It's already about the same to buy an album off of iTunes as it is to buy a CD, and the quality is so much better on the CD that for me, at least, it makes iTunes a hard sell right now. Raise the price on some songs, and forget it.

Nov 21, 05 - 04:13 pm Comment from: Naraa Haras

One sure way to get Steve Jobs to NOT do something is to announce it before he does.

Nov 21, 05 - 04:14 pm Comment from: Botvinnik

I don't require some dickbrained EMI Alain Levy to tell me what music is "crap" and "non-crap." I have my own ears and mind.

P.S.
Mr. Levy: You may jump up and kiss my Okie ass.

Nov 21, 05 - 04:21 pm Comment from: Macaddicted

I swear if iTunes songs eclipse $1.00 US then I'll stop buying music and learn to make my own.

And if Gasoline ever reaches $2.00 a gallon, er I mean $3.0- oh 4 bucks then I'll stop driving and get a horse & buggy.

Nov 21, 05 - 05:00 pm Comment from: AlanAudio

Who's to say that given a free choice, an artist might prefer to sell lots of copies at ¢99, rather than a few copies at $2.49 ?

As the report suggested, they might enjoy the kudos of being in the higher price category, but they might prefer being in the higher income category instead.

Nov 21, 05 - 05:11 pm Comment from: PC Apologist

You are all missing the big picture here.

Brandy (You're a Fine Girl) is an excellent track. The sad, sweet tale of a lonely barmaid who was left behind to remind those men who belong to the sea that there is another world for them, if they only have the courage to embrace it.

If that's (magic word) not worth $2.49, I don't know what is.

Nov 21, 05 - 05:16 pm Comment from: John

Greedy, simple as that.

Nov 21, 05 - 05:32 pm Comment from: dogfriend

PC Apologist -

I'd pay $2.99 if there was a guarantee that I'd never have to hear that song again. ; )

Nov 21, 05 - 05:44 pm Comment from: max

I have to take a crap. That'll be 99 cents please.

Nov 21, 05 - 07:03 pm Comment from: MacDude

Joel Spolsky has a point, we iTunes users have a choice if we like a song we buy it.

Even if it's 29¢ song, if it's not something one is willing to listen to over and over, why waste 29¢?

Look here, I got the Complete U2, every darn song they ever made, do I listen to all of the songs? No. Just a few good ones. Technically I should have saved my money and bought just those songs. Am I some sort of DJ that needs tons of songs to grant everyones wishes? No. So why buy them?

I was still locked into the idea of "buying albums" and it has cost me dearly. Now I buy just only what I want to hear and even if the crap songs were free I wouldn't want to bother hogging up drive space for them.

So Joel Spolsky is absolutely right, it's a power trip by the labels testing Apple's resolve, seeing if they can do buisness as usual.

I'm emailing Steve on this.

Nov 21, 05 - 07:11 pm Comment from: Tinkie

"Brandy, You're a Fine Girl" ROCKS!

Nov 21, 05 - 07:47 pm Comment from: Jump

Give me a reasonably priced subscription service where I can get a complete listen of a substantial selection of artists/albums from which I can then identify which albums/artists I want to buy so I can then go out and buy the full quality CD and I'll be happy.

Nov 21, 05 - 08:49 pm Comment from: TripleHead

I guarantee that what the labels want is pricing STARTING at 99 cents and up from there.

Be vigilant.

Nov 21, 05 - 09:23 pm Comment from: Less is More

They want variable pricing to control their artists? Sorry, that presumption is way over the top ... stupid, even. They want variable pricing for many reasons, including some related to control of their artists or even iTMS, but mostly to maximize the value of their titles - old and new.

Even so, I think Jobs hit the sweet spot with his pricing model, even if it is rather idealistic. Discounting older titles while putting a premium on newer ones (driving cosumers to p2p) could result in less revenue overall.

The problem is, RIAA bigwigs aren't thinking clearly. Instead of concentrating on adding value to physical media (multi-discs and dvd), or embracing/studying online delivery solutions, they are sitting on their desks, sipping Pinot, twirling pencils, blowing smoke-rings towards the ceiling, and thinking very, very small thoughts.

Nov 21, 05 - 10:15 pm Comment from: robiwan

I agree: Brandy is a killer track.

You know, I don't even know what the dudes from Looking Glass look like...

Just Googled em...
http://www.webfitz.com/lyrics/Lyrics/1972/lglass.jpg

Anyway, I still agree that Brandy was a fine track (a fine track), what a good track it would be (such a fine track)...

Nov 21, 05 - 10:22 pm Comment from: cb

Ha - what a freakin hoot... I love 70s pop...

here is my playlist...

• Landslide - Fleetwood MAc
• 10cc - I'm Not In Love
• Coven - One Tin Soldier
• 5 Stairsteps - Ooh Child... Over The Edge Song...
• Sweet - Fox on the Run
• Brandy - Looking Glass
• Summer Breeze - Seals & Crofts
• Byrds - Eight Miles High
• Ian Matthews - Shake It
• Ventura Highway - America
• Firefall - Strange Way
• Dont Fear the Reaper - BoC
• Oh What a Night - Frankie Valli
• Talk Talk - It's My Life**
• Peter Gabriel - Solsbury Hill
• Jefferson Starship - Miracles
• Simon & Garfunkel - Scarborough Fair
• Tin Man - America
• Simon and Garfunkel - Hazy Shade of Winter
• Gordan Lightfoot - The Wreck of Edmund Fitzgerald
• Knights in white satin - moody blues
• Crosby Still - Wasted on the Way
• America - A Horse with no Name


Brandy is right in there...


A message to the powers that be:

99¢ is what got me to buy music again - PERIOD. Break that dollar barrier - boom, I'm gone.

Luckily, one mans trash is anothers treasure.

If only iTunes soold Shannon by Henry Gross WITHOUT Will Ferrell crying over the track.

eat that.

Nov 22, 05 - 12:15 am Comment from: Jack A

The Music Co.s are trying to bullshit us with the "older songs would be discounted" crap. You can be sure that it will end up cost the consumer more if they get their way. Else why would they do it?

I think it would be smarter if they LOWERED the prices across the board so more and more people would start using it (and more pirating people become legit). Say 50 cents or even 25 cents per song. With the costs they save in distribution I think there is a very good chance that in the long run this could end up making them much more cash. Certainly more than if they continue to pursue DRM schemes that are too restrictive and so are hacked and ultimately are meaningless.

THAT is how the Music Co.s should be fighting pirating. With convenience and lack of viruses at a painless price point.

Nov 22, 05 - 01:39 am Comment from: F.U.B.A.R.

It's not just greed, it's more about power and control.

MW= trial
as in, that's where these guys should be held accountable.

Nov 22, 05 - 01:56 am Comment from: leodavinci

The recording industry is so clueless.

And I pretty much mean everybody, including the artists. Oh hell, particularly the artists. If any artist had a clue they would never sign a contract that, for all intents and purposes, makes them an indentured servant.

Then there's the business end of the recording industry. The phrase, "Cutting off your nose to spite your face" comes to mind whenever I hear a new piece of dreck (like two-tiered pricing) that they come up. Clueless just doesn't begin to descibe how short-sighted these clown-farts are.

Nov 22, 05 - 02:13 am Comment from: TheConfuzed1

Conspiracy theory has its merits. This one at lease, is entertaining.

Nov 22, 05 - 02:16 am Comment from: TheConfuzed1

Oops! That should have been, "This one, at least, is entertaining.

Nov 22, 05 - 08:02 am Comment from: Petey

Well if they are going to charge $2.49 for a song I guess im gonna start downloading illegally then.

I will not pay that amount for a 3 minute song.

They do this and you can say goodbye to the legal music download market!

Nov 22, 05 - 08:04 am Comment from: Petey

What they should be doing is have 99c as the price for chart or most demand music and have 59c for everything else.

REDUCE the price - NOT increase it!!

GREEDY BASTARDS.

Nov 22, 05 - 01:47 pm Comment from: mike

Hey Petey..

Pay more for the files which we know are the most accessible on file sharing networks?

wink

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