“EMI Group PLC Chairman Eric Nicoli Tuesday rebuffed Apple Computer Inc.’s assertion that a single price for songs sold over the Internet helps prevent piracy in the music industry,” MarketWatch reports. ‘I’m not persuaded by the argument that a single price deters piracy,’ Nicoli said at a news conference. ‘I’m not persuaded of the fact that a lower price deters piracy. What I am persuaded of is that making music more convenient and better value is a deterrent to piracy.’ Nicoli was responding to comments from Apple Chief Executive Steve Jobs who last month called music companies greedy for seeking higher prices for downloads and who argued that this would encourage piracy.”
Full article here.
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Try raising the price and let’s see how well that deters piracy.
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“What I am persuaded of is that making music more convenient and better value is a deterrent to piracy.”
Huh! Isn’t that what the ITMS does?
MacDailyNews Take: Try raising the price and let’s see how well that deters piracy.
Exactly.
‘What I am persuaded of is that making music more convenient and better value is a deterrent to piracy.’ So this means…..? On the one hand, you slap Apple, on the other, you say it’s good? More convenient and a better value? I don’t get it?
Are you suggesting subscriptions????
To a degree he is right. Single pricing vs. multi-pricing doens’t deter piracy. If iTMS had tracks ranging from 99 cents down to say 69 cents piracy would not increase. Multiple pricing from 99cents up to whatever they want for current/popular tracks would either encourage piracy or in my case just deter me from purchasing. I’m used to a buck now, it will be hard to pay more.
yeah, and neither does overcharging for crap – nuff said
Anti-piracy laws and copy protection from the Man is like those disclaimers that say “Don’t try this at home”- Youre more inclined to do it…..
MW: school
as in “wo0o! no school today!!”
Its scary to think these music label CEO’s really have NO CLUE as to what to do. All the better for the RDF to work next year when they renegotiate with Steven Paul.
I would like to see the results of a study which would show just how much actual money the average music “artist” (these days) receive from the sales of CDs … as opposed to the money they receive from live performances and the sales of T-Shirts, buttons, et al..
I bet todays artists are being gouged more by the record companies than they are by the iTMS…
Wasn’t it the Greatful Dead who encouraged the “pirating” of their music ?? …. I doubt their record sales suffered much
MDN MW “data” … (Wasnt he on Star Trek ?)
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Convenience and value deters pricing. Right on. Thing is, that given the convenience of iTMS, I find $0.99 to be the right value. Lower prices would really be a greater value, but higher prices? I don’t think I would be willing to pay $1.19 or $1.49 for a single. That’s too much. I would rather p2p it. Now for a video, lyrics, etc, perhaps…but then my value is increasing commiserate with the price now isn’t it?
Plus, what Dumb-A doesn’t remember is that this is a new medium (still) and there should be some price consideration for the fact that if Apple stops making iPods, I can’t lossessly transfer my collection to another pocket media player.
MDN word: attack
>EMI chairman says Apple’s iTunes Music Store’s single 99-cent song price doesn’t deter piracy>
Yes it does—Big flash of lightning. BOOOM!!
WalMart & Costco has done a great job in dropping prices, yet crime still exists.
Nothing is cheaper than stealing.
Mr. Nicoli, please understand that there is a difference between “deter” and “prevent”. A padlock on my door might not prevent theft, but it probably does deter it. Or, as my father used to say, locks keep out the honest folks.
That is one ridiculous stamement obviously made by someone who NEVER pays for music and probably doesn’t even care about music very much.
iTunes has made music more convenient and digital music sales have tripled according to latest reports. It’s been said before, can’t be said enough, if they want variable pricing then have .99 as the ceiling and go down from there.
Greed. Pure greed.
Yes! Liz Phair returns to her roots. I just bought the album, thanks to the iPodDN ad above and it is great.
I love iTunes
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Funny,
Would you believe I read this article mere moments after downloading three songs. I was planning on using a P2P but instead thought it’s be easier and quicker to use iTunes and paid the $2.97.
These record companies need to realize something before the Internet starts to kill them slowly again.
“Sometimes it’s difficult to see the real world below when you sit up so high in an ivory tower.”
“….I’m not persuaded of the fact that a lower price deters piracy. What I am persuaded of is that making music more convenient and better value is a deterrent to piracy….”
which, IMHO, flies in the face of gobs of historic evidence from any economic sector that has spawned a black market….
*cigarettes
*booze
*currency, etc
consumer piracy and wide-spread contefeiting is a black market developed market response to preceived low value/high prices in a tightly controlled market coupled with a technological change the industry didn’t respond to…
the question for this guy is what “value add” could the industry possible give to the product that could justify higher prices and overcome the convenience of itunes or piracy and the lower prices?
none that I can think of……
More convenient and better value?
How does one make it MORE convenient that iTMS?
How does one make music a BETTER value by RAISING prices?
I guess the context of the statements must be from the perspective of the music industry, NOT the consumer?
<<EMI chairman says Apple’s iTunes Music Store’s single 99-cent song price doesn’t deter piracy>>
Maybe not, but isn’t 99 cents better than zero Eric? And by overpricing CDs for all of these years, you guys did a better job of detering piracy than iTunes is doing? Geez, what a Dil…
The whole point of the single price for a single song is that it makes pruchases transparent – you always know what you are paying. Albums are different because you get different numbers of songs etc, but whilst the online music market is still growing single pricing makes sense.
” ‘I’m not persuaded by the argument that a single price deters piracy,’ Nicoli said at a news conference.
Of course not if it’s $5 a song, but it’s 99¢, a important physcological number
“‘I’m not persuaded of the fact that a lower price deters piracy.
Not all of it, but the more you raise the price the more will decide upon other alternatives, and once they find something else, they aren’t coming back.
” What I am persuaded of is that making music more convenient and better value is a deterrent to piracy.”
Those two iTunes provides, you raise the price and the value disappears. If you lower the prices on songs that are not so popular, people may be more inclined to pay for them.
You raise prices on songs people want, they will go elsewhere and may never come back to iTMS. You don’t see a red cent.
‘What I am persuaded of is that making music more convenient and better value is a deterrent to piracy.’
m/w: idiot
Nicoli says, “Making music… a better value will deter piracy.”
First off, the product of music is extremely vulnerable to varied tastes and opinions… i.e. what one person considers “a value” as far as a song goes is actually worthless to some other individual. Some people like Britney Spears, others would rather gouge out their ears. Britney Spears, in terms of quality, does not have a universal value in the same way, say, a hammer or a TV would have. Better hammers are stronger and last longer; they have a tangible value. Some TVs have more features or better picture quality; they have a tangible value. No song in the world has this sort of tangible value.
Thus, in the general sense for music as a commodity, “value” must come down to one variable: price. To increase value with price as the only variable, you have to lower the price.
Eric Nicoli’s statements are inherently a contradiction. Lowering price doesn’t deter piracy, except for the times that prices are lowered.
Music label double-speak. We should all be used to it by now.
What most people fail to understand is that the iTMS model echoes the success of P2P – the same pricing structure is akin to a free price structure. So mentally it registers the same way, and you simply use the iTMS for all of your buying needs. Now, if they price songs all over the place, what will happen is people will use P2P for the higher priced songs, and while they are at it, will probably steal as much as they can. It would be a step backwards, to be sure.
Most people, however, lack the ability to see this.
At last, someone who doesn’t say “a” better value.
The more the CEO’s of these companies open their mouths on this subject the more the artists must wonder that these people have been in control of their music…
Many would be willing to pay more for a higher quality download.
How about 99¢ for the current 128/AAC and $1.29 for 224/AAC and $1.49 for the Apple Lossless Codec? Many Classical/Jazz fans would jump at the chance to buy higher quality stuff. A digital download to replace a CD has to be lossless.
99% of the people i know still dont buy music. and i havent seen any of them go to jail. paying 99 cents for a song is still a rip.
I’m surprised that more bands aren’t approaching Apple directly to sell their songs online!
Obviously they would have to be at a level where they could produce/record a song independantly of record label backing (so there’s no big advance to repay), and find some way of advertising the song and plugging it with radio stations to promote sales (maybe a collective effort between bands here…), but at the end of the day surely a larger slice of royalties would come to them directly from Apple (with fairly transparent accounting), rather than the hope that Fony, EMpie et all throw them a crust every so often…
They’ll say it would never work, but they said that about downloading tracks in the first place! All it would take is for a few bands to prove it can be done and the Majors will be cacking themselves….
Setting a higher price won’t deter piracy either??????
The jackasses never stop.
MW – front – as in, step to the front of the line to get your spanking.
The business model for music is changing. Record companies are in the promotion and distribution business. (I read that the Looney Tunes cartoons, Bugs Bunny etc, primary purpose was to sell sheet music.) With P2P systems and artists self-promoting and alternative distribution streams, the business model must adapt. The question is what would the new model be for the record companies? Since they do not have an answer, the are struggling to maintain the status quo.
BTW, most artists have always made more money from touring than they did from CD sales…why do you think they tour?
This is bull. Prices should be going down not up. This guy tries to sound like he knows what he is talking about when all the labels were just wringing their hands and had no clue on what to do about piracy until Apple stepped into the game.
thinking back to college econ., the record companies are just trying to maximize their profits. Unfortunately, not enough market research has been done to determine what the price point for digital downloads should be to maximize profits (ie. $0.99, $1.29, $2.99) In the the CD world, each of the companies compete and pick a price point they believe will maximize profits. When the demand begins to decrease, they lower their price.
This has not been done with iTunes in which the low price point was set as a marketing experiment. Probably, to the surprise of the record companies the experiment worked exceptionally well and now they are trying to tweek it. It might be too late now however.
BTW… whoever suggested that Apple license fairplay to the record companies is not thinking. If Apple were to do this, then every record company could pull thier collections off of iTunes and open their own stores that would be compatible with the iPod.
SJ needs to go to the next phase. Buy up a few music studios, use his music recording software and Apple publicity to remove the big 5 from the equation.
Who needs the money grabbing bastards anyway?
Apple offers recording deals, sets up promotional companies and distributes the lot via the internet.
Offer the artists a direct 50 cents and keep 49 cents ( 29 cents profit and the remainder overhead) – we all know SJ wants 25-30% margin on any product.
This is the weakest attempt at rationalizing raising music download pricing, yet.
“I’m not persuaded of the fact that a lower price deters piracy.”
I like how he calls it a fact. It serves to make him appear stupid. He might as well have said, “A lower price deters piracy. That’s a fact. But I don’t like to believe in facts.”
M says:
“thinking back to college econ., the record companies are just trying to maximize their profits. Unfortunately, not enough market research has been done to determine what the price point for digital downloads should be to maximize profits (ie. $0.99, $1.29, $2.99) In the the CD world, each of the companies compete and pick a price point they believe will maximize profits. When the demand begins to decrease, they lower their price. This has not been done with iTunes in which the low price point was set as a marketing experiment. Probably, to the surprise of the record companies the experiment worked exceptionally well and now they are trying to tweek it. It might be too late now however.”
I think it’s important to point out that raising prices is only one way of riding market demand. The other is to simply sell more product. You efficiently maximize profit in both circumstances, assuming supply constraints aren’t a factor. And this is where these music execs are falling over themselves in the ‘Supply & Demand’ debate; they are trying to get everyone to forgetting the former by overemphasizing the latter.
What I mean is that if you make a physical product – say, Apple computers – you have to deal with all sorts of real world limitations on just how much of something you can make in order to meet demand. For example, materials availability, parts pipelines, assembly/labor costs and availability, not to mention hopw fast you can physically ship the product from point A to B.
From this frame of reference, producers use the pricing mechanism to put the brakes on overheated buying activity that they can’t match for the time being, or to maximise profit in order to pay for the ramp up of the factories to meet demand, or to ride the wave of entreprenurial profitablility before lack of demand eventually sets in which will in turn require the shutting down of production capacity … etc. For physical goods (or even services which require a large degree of human involvement, or a large degree of risk on the part of the seller of the service), price is a necessary tool for keeping things managably provided to the consumer AND profitable for the supplier/producer.
Digital downloads – of any sort – have little-to-none of the physical world’s limitations. When demand goes up, your servers work a little harder. When demand goes down, they cool off. The product is a single, infinitely downloadable, and certainly non-physical bit of data. So, in this case, standard pricing is actually the more logical way to go. The actual supply is effectively infinite, so the pricing mechanism has no use as a brake to ensure supply and demand don’t get too far out of kilter. In fact, since supply is effectively unlimited, demand could theoretically be infinite as well. As long as you set a price that everyone makes any kind of profit from (i.e. above and beyond basic infrastructure & maintenance costs), almost any sort of demand (within reason) will generate a plus in the accountant’s book.
Thus, if one accepts that lower costs spur demand – and anyone who’s taken economics OR lived in the real world should accept that – then the lowest pricepoint possible is, in theory at least, the best one to set in a digital downloadable environment.
“BTW… whoever suggested that Apple license fairplay to the record companies is not thinking. If Apple were to do this, then every record company could pull thier collections off of iTunes and open their own stores that would be compatible with the iPod.”
Right. But at some point, assuming continued Apple success, that’s what’s going to happen anyway. If Apple gets so successful that they are the only game in town, fairplay becomes the default standard. And since Apple won’t actually own these titles, it seems almost certain that they would be sued into opening up the whole thing to the ones who do own it. To not do so would be akin to stealing their property, since they would no longer have control over what to do with it. That’s a far off projection, but logically (and given our legal system) that’s what would be expected to happen.
Apple at some point will play ball to avoid that headache. It’s just a question of when, or if another paradigm will crop up that mounts some competition.
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@ m >
Well, you simply don’t have a good feel for history.
For decades, most artists toured simply to promote their albums and, by the time they’d paid for venues, promotion, PA, their own management and every other parasite, they made no money at all.
If you want to find out the real truth about most touring – as opposed to the top 5% of acts who do make a serious profit – try and find copies of Robert Fripp’s diary articles from International Musician in the early Eighties.
[B]——[/B]
As for Mr. Nicoli’s original point, I am coming to the conclusion that the music industry is a walking, talking demonstration on the dangers of mixing recreational drugs and in-breeding.
I find it unbelievable that Eric, Edgar and others seem to think that legitimate downloads will increase if they if raise prices for people like iTMS, Napster, Connect et al.
Yesterday, MDN carried news of IFPI’s latest reports which stated that digital music sales had reached $790 million for the first half of the year, presumably including ringtone downloads: Apple itself has probably moved around 400 million tracks this year so far (we haven’t had an update since 18/07, according to my records), and they are probably on track for 1 billion downloads for 2006: this is surely proof that Apple knows far more about the distribution of digital music than the record industry which failed miserably for years to establish a viable download industry.
And then we come to simple logic combined with elementary arithmetic…
Take 100 downloads – say that 20% of them are chart material in the first flush of popularity (small range, high sales), 40% are mid-range back-catalogue (larger range, medium sales), and 35% are real rarities from the distant past (huge range, residual sales).
Price them at $1.29, 99¢ and 79¢ respectively.
The total generated is $99.50, or 99.5¢/track; in other words, exactly where we are today – except with more complexity for the e-talier (iTMS) who will have to maintain different pricing for each track in every market dependent on the whim of the record company and less transparency for the customer.
Ever since the iTunes store came online, I haven’t download ONE illegal song. Period.
So, this idiot at EMI is wrong.
– Mark
m: To put it simply, the whales/artists swim to digital waters, the megalodons/labels can’t follow, and they go extinct.
Back in the bad old days of kings, if you wanted to print something, you had to go to the elite few who had special permission from the king (who held the only “copyright”, or right to publish) to print stuff, and do whatever the elite few asked to get them to print it.
The US constitution did things differently. They set up freedom of the press (publishing, not just journalists), and after much begging, established the copyright and patent as a short term reward for creators/inventors/etc. contributions to the public domain.
Unfortunately, this didn’t work for music. When records came out, only the label companies had the technology to reproduce songs, and they reverted to the old way it was done under the kings, if not worse. Artists were forced to sign with them, as there was no other way to gain access to record publishing or the radio stations. They sign away their copyrights, their use of their own voices (frequently not allowed to sing without label permission), and in return they stand a good chance of ending up bankrupt. The only “freedom of press” they had was which label to sign with, and sometimes not even that.
Once upon a time, Apple put the power of desktop publishing (everyone could have a printing press on their desk) in the hands of the people, creating finally what the founders of the US intended. Now iTunes Music Store, home studios and a variety of other technologies do the exact same thing for music artists (and getting close to it being there for movies too).
Now, finally, we can ditch the labels and put the artists in the driver’s seat of their careers. Now artists can subcontract for certain services (ITMS, web designer, etc.), and keep hold of their own copyrights. It has happened already in Japan, when Sony refused to join the ITMS there, their artists defected and made their own deals with Apple, leaving Sony to follow their lead like a reluctant child. It works in the US too, as there are quite a few indie artists on ITMS, enough that I have only bought songs from them, all of which I had never heard of before I encountered their songs on the store.
Do you want to speed this up? Avoid RIAA member songs, and buy independent artist songs instead. Vote for artist freedoms with your wallet.
I agree with variable pricing. 99 cents for the latest and hottest tunes down to a nickel for the crap they roll out. There not paying for any packaging or distribution costs, so their already making more money on average than a CD.
Go variable pricing!!!
DIE, DIE, DIE, RIAA!
we did have a variable pricing test last year. Real lowered prices to, what was it, 69 cents I think, and they sold a bunch more. We’ve not heard from them ever since they raised their prices back to .99.
so it’s clear that lower prices increase sales. now, did that increase in sales come from the .99 crowd or from the p2p crowd?
we also know that .88 wma at walmart is not a draw for anyone compared to .99 itunes.