Why music labels want to force multiple price points on Apple’s iTunes Music Store

“‘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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36 Comments

  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.

  2. 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.

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