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Digital Music Stock Market?

Zonk posted more than 8 years ago | from the going-up-and-going-down dept.

Media (Apple) 475

tommertron writes "Adam L. Penenberg has a column on Slate about about the pricing of digital music, specifically, iTunes' 99-cent-a-song model. Basically, he suggests that song prices be determined by market forces, just like stock and commodities markets. The more a song gets downloaded, the more it would cost. Song by big-name bands would cost more, and lesser-known acts would cost less (with a minimum of 25 cents.)" From the article: "Steve Jobs, who has been willing to take a few pennies per download so long as he sells bushels of iPods, calls tiered pricing 'greedy.' That view is shared by millions of consumers who believe the record companies have been gouging them for years. From the buyer's perspective, however, Apple's 99-cents-for-everything model isn't perfect. Isn't 99 cents too much to pay for music that appeals to just a few people?"

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475 comments

Oh, for God's sake (5, Insightful)

Daniel Dvorkin (106857) | more than 8 years ago | (#14196298)

"Isn't 99 cents too much to pay for music that appeals to just a few people?"

No, apparently it's not.

This is a striking example of how dumb the "popular=good" meme is. When I buy music, or anything else, I don't care what it's worth to other people; I care what it's worth to me, whether I'm one of a hundred, a thousand, a million, or a billion.

Aaargh. Why the hell are people trying to fix something that's not broken? (Well, okay, I know why the RIAA is trying; what's this guy's excuse?) Tiered pricing, supply-and-demand pricing (hey economist guy: the supply is unlimited!) or any other fancy pricing scheme that requires people to pay more than 99 cents per song doesn't work. 99 cents per song, OTOH, does work. That's what online music buyers have decided, en masse, they'll pay for legal music downloads. Charge more and piracy looks a lot more appealing that paying for it. That's the reality.

Not to mention that it just makes sense: buy one song, pay x, where x is some reasonable amount (say ... oh ... just for example ... 99 cents); buy two songs, pay 2x, etc. People want their music, they don't want to have to solve an accounting problem to figure out how much they'll pay for it. "Ten songs, ten bucks, plus I save a dime. Cool." That's how people want to buy music, and that's why iTunes has succeeded while every other pay-for-download system has pretty much crashed.

Stock market pricing is one of the stupidest ideas I've ever heard WRT the music industry ... and you know, given the long sad history of stupidity in the music industry, that's saying a lot.

Re:Oh, for God's sake (2, Funny)

fembots (753724) | more than 8 years ago | (#14196359)

more than 99 cents per song doesn't work. 99 cents per song, OTOH, does work

This reminds me of "There's Something About Mary", when the Hitchhiker was telling Ted that his 7-Minute Abs will be more popular than the 8-Minute Abs.

Re:Oh, for God's sake (0)

Anonymous Coward | more than 8 years ago | (#14196566)

lol what?

Re:Oh, for God's sake (5, Informative)

Anonymous Coward | more than 8 years ago | (#14196409)

I didn't read the article but the entire idea is flawed for one reason: Price elasticity is different for every song and artist. To use one demand-driven criteria for every song and artist would be stupid. To determine individual price elasticities for each song & artists would be impossible, at best a guessing game.

Demand only determines price when coupled with price elasticity.

Re:Oh, for God's sake (2, Interesting)

capt.Hij (318203) | more than 8 years ago | (#14196450)

When I buy music, or anything else, I don't care what it's worth to other people; I care what it's worth to me,
The problem is that the price that the supplier wants to sell matters just as much as the buyer's price.
Stock market pricing is one of the stupidest ideas I've ever heard WRT the music industry
I seriously doubt that the recording companies would use a stock market price scheme. Instead they would more likely choose a market driven scheme. They would charge more for music that only sells a few copies because those people will shell out the money for their couple of copies. For music that sells to billions of teens, well... they would charge less for that because teens will be cautious about shelling out their baby-sitting money for Britney.

pfffft. Oops sorry, didn't mean to let that slip.

Re:Oh, for God's sake (5, Interesting)

ZachPruckowski (918562) | more than 8 years ago | (#14196559)

The problem is that the price that the supplier wants to sell matters just as much as the buyer's price.

Except for two basic facts:

1) People don't need this. It isn't vital and required for life, it's music they can live without. If you charged me $5 a song and that was the only choice, I wouldn't buy it. I'd just listen to the radio or something.

2) There is still a music piracy underground, and it's pretty big. Whatever anyone's feelings on the issue, we have to accept that stamping it out through force isn't looking too possible right now, or anytime in the foreseeable future, since there are thousands (at least) of tech savvy people to create new networks and forms of filesharing, and they can move faster than the music industry. Therefore, the way to beat piracy is to make the "official" files that cost money worth more than what is available over bittorrent or LimeWire or whatever.

Re:Oh, for God's sake (5, Insightful)

PepeGSay (847429) | more than 8 years ago | (#14196513)

supply-and-demand pricing (hey economist guy: the supply is unlimited!)

Thats the rub, the *music industry* as the prejorative term is usually referring to the distributors and "record companies". They exist as a means of distribution and marketing. Without the distribution portion, they are hurting. $13 for a CD... you gotta be kidding me.

They are trying to figure out where they fit in and create a purpose for themselves. Maybe they want to reinvent themselves as the stockmarket of music, what a dumb idea. The stock market idea is rooted in the idea that a company actually needs capital to continue growing. The really high quality bands cannot turn money into new songs, because it is a creative endeavor. However, the music industry *can* create more marketing generated pop bands with money... ugggh

Anything you see the record companies do in regards to online sales at this point, in my opinion, is a self preserving act. Word of mouth can do marketing, web sites can do marketing, but the record companies have been the ones who can put up the money to create the CDs that are released. With that gone, the record companies become largely anachronistic and will be eaten up by other more nimble companies that can provide the softer services. Until then we get beaten to death in our wallets by their death throws.

Re:Oh, for God's sake (2, Interesting)

sp0rk173 (609022) | more than 8 years ago | (#14196552)

This is a thinly veil attempt to drive people to search out "better", less popular music. As more people download a new pop song, its price increases, and people will be (hopefully) less willing to pay the inflated price and move onto another, less expensive, song/artist. This will give independent artists more exposure on itunes, and give the fans of their music a bit of a price break. Since most of the music I like isn't even on itunes, i don't really give a crap. I think this *Could* lead to more diversity in what's bought, though. Could lead to interesting results.

Re:Oh, for God's sake (1)

Red Flayer (890720) | more than 8 years ago | (#14196578)

"Tiered pricing, supply-and-demand pricing (hey economist guy: the supply is unlimited!)"

So what if supply is constant, or unlimited? That just removes one of the conditions for ideal pricing.

Pricing based on demand is not invalidated at all.

Supply & Demand (1)

fembots (753724) | more than 8 years ago | (#14196303)

Digital song prices is determined by market forces, and with unlimited supply and limited demand, the price can only fall, because for every demand, there is a supply (and more) to match.

If music industry really wants to command the price, they should limit how many downloads per song iTunes is allowed to sell, then iTunes will automatically change its pricing to maximize its profit.

And the music industry on the other hand, will also automatically change its limit based on a song's (expected) popularity, so that it won't sell less than it should have been because of the stupid limit.

However I think the major problem here is, iTunes is not set up to make profit out of songs, it just wants to sell as many at the cheapest possible price because the profit comes from iPod.

Maybe it's time for the music industry to drop iTunes and find a proper online music store that is set up to maximize its profit, then the supplier and retailer will have the same goal.

And as a side question, are music CDs currently priced differently based on their popularity? I haven't been to a music shop for 5 years, but last time I went there, "Vanilla Ice" sold for the same price as "Step By Step".

Re:Supply & Demand (2, Insightful)

ivan256 (17499) | more than 8 years ago | (#14196413)

Maybe it's time for the music industry to drop iTunes and find a proper online music store that is set up to maximize its profit, then the supplier and retailer will have the same goal.

If they did that they may have to come to the realization that in order to make the most money they may actually have to lower their prices. Since they're acting as if their real goal is to piss off and inconvienience their customers, and not to make money, I don't see this happening anytime soon.

Re:Supply & Demand (1)

theJML (911853) | more than 8 years ago | (#14196631)

Well, actually they have bargin bins now. You know, you go to walmart or best buy or whatever and they have a bin full of disorganized CD's or DVD's that are on sale for 5 bucks a pop because they want to get rid of them. Mostly because they're taking up perfectly good shelf space that could go towards something they know they'll be able to sell at 15 bucks each.

Now, you have to remember, that following the same idea, a digital online store with finite storage space will want to populate it's storage with songs that will also fill their wallets. If you can, say, only fit 10 songs on your site, you want as many of those to be frequently downloaded 99 cent songs. So if they have the option to carry 5 that are very popular and 5 that arent, they'll wonder why they don't get rid of the ones that don't make money and put money makers in their place.

Using that logic, this example site would want to either A.) Dump the 5 that don't sell, or B.) Charge more for the ones that don't sell to make them make as much as the ones that do. (Of couse, if they're too high, then they won't sell, but there's usually some happy medium that meets the supply and demand principal) That policy is why AutoCad and 3d Studio and other such highly specific programs are so darn expensive. Sure your average game probably has more development time in it, but you know you're going to sell them to every tom, dick, and harry... where as 3d Studio, well, there are only a few hundred people out there that have the coffers to dump a number of grand on the table for a copy.

I'm not saying it's the way music should go, I'm just playing the DA here. Frankly I think if it ain't broke, don't fix it. 99 cents a song isn't bad considering most albums only have like 3-4 good songs anyway (and if it doesn't I don't buy it), so you end up spending 4 bucks for an album instead of 15 (which comes out to like $3.75 per good song instead of 99 cents).

FRISTY PSOT!!!!!!!!!! (-1, Offtopic)

Anonymous Coward | more than 8 years ago | (#14196311)

FRISTY PSOT!!!!!!!!!!

Re:FRISTY PSOT!!!!!!!!!! (1)

IainMH (176964) | more than 8 years ago | (#14196614)

I've been here for 5 years and I will never understand why people are this dull.

Downloads aren't subject to the same market forces (5, Insightful)

jmp_nyc (895404) | more than 8 years ago | (#14196314)

Commodity pricing is based on the idea that supplies are limited. Likewise with stocks, as there are a finite number of shares of any given company in circulation. Even if every person with a computer on planet Earth bought a copy of the same song, it would not be in short supply.

That's not to say that there isn't value in a variable pricing scheme, but it wouldn't really be commodity pricing, or a "digital music stock market."
-JMP

Re:Downloads aren't subject to the same market for (1)

TLouden (677335) | more than 8 years ago | (#14196596)

Just what I was thinking. Supply and demand (the basic principle behind free markets and stock/commodity markets) doesn't apply when supply is virtually unlimited. However, the economics do work on a different level. Whether a company is willing to produce a product at all is based on whether there is enough demand for the product at a given price. Recording studios might be willing to produce a greater variety of music for online sales if the prices were variable enough to adjust for maximum sales (quantity purchased * price).

I've suggested to my economics professor that this idea be debated in class, I'll post a summary of our conclusion if to topic comes up.

Re:Downloads aren't subject to the same market for (2, Insightful)

jmorris42 (1458) | more than 8 years ago | (#14196610)

> Commodity pricing is based on the idea that supplies are limited.

Exactly. Which is why comparisons to a stock market, supply and demand, etc are all daft. Listen up people, copyright is all about providing the producer of a work an explicit MONOPOLY on reproducing (and public performance, not at issue here) the work. So anything other than seeking the absolute maximum return by picking a pricepoint to generate maximum profits is doomed longterm.

That IS the market functioning correctly as it is currently designed. Of course when one realizes the negative implication of this for society in general it leads to the notion that, just perhaps, we are granting a little too much in the social contract called copyright and that we might need to rethink it. Specifically I'd propose a drastic reduction in the time to ten years renewable with a non-trivial fee for a second ten year term and am open to discussing mandatory licensing of recordings as in done for composers now.

Not greedy (0)

Anonymous Coward | more than 8 years ago | (#14196326)

Who cares how many other people like the song. That shouldn't effect how much I pay for it. Supply and demand does not apply here, since supply is infinite. If anything, the more popular should be cheaper, since the expenses get recovered faster.

limits (5, Insightful)

Rudisaurus (675580) | more than 8 years ago | (#14196330)

If you're going to set a floor price, you'd better be prepared to set a ceiling price as well. Otherwise the model is both unfair and unstable because it's subject to unlimited inflation, which is just as unfair to consumers as unbounded deflation is to the artists and vendors. Either take both the upside and downside risk or ameliorate both.

Don't give them any ideas! (1)

Mayhem178 (920970) | more than 8 years ago | (#14196336)

Gee, there's a wonderful concept. Don't put it into their heads that the "flat cost" is a bad thing. "Graduated cost" works both ways, you know. Some songs will get cheaper (crappy ones, no doubt), but a LOT will get more expensive if their demographics get based on popularity.

not too much... (1)

estebanf (814656) | more than 8 years ago | (#14196339)

Isn't 99 cents too much to pay for music that appeals to just a few people?

Well, no... because you will only pay .99 for the songs that appeals to you!

However... (2, Insightful)

jnadke (907188) | more than 8 years ago | (#14196349)

Such a model cannot be accurately applied to the digital media market.

Busiesses are trying to offer products with a variable pricing scheme with a commodity that has infinite supply. It doesn't make any sense.

It barely costs them any more to sell 20,000 albums than 200.

but digital files aren't a limited commodity (0, Redundant)

mattkime (8466) | more than 8 years ago | (#14196351)

Even though more downloads seems to indicate more value and therefore justifying higher cost - these are digital files!

There is no scarcity!

The file has the same value to me no matter how many people download the file.

Re:but digital files aren't a limited commodity (1)

slashkitty (21637) | more than 8 years ago | (#14196428)

But, a song that is more popular is much more valuable to the music company.

$0.99 * # of downloads = total value (obviously though, only a % goes to the music company, but still)

They automatically make more money on more popular songs already. It doesn't need to be exponential growth!!!

Completely backwards (5, Insightful)

ivan256 (17499) | more than 8 years ago | (#14196358)

The record industry should hire a few economists. This is a great idea, but they've got the pricing completely backwards. The more popular songs shold get cheaper and the less popular more expensive. Why? That's easy.

The stock market works the way it does because supply is fixed and demand is the only variable. With digital music, the supply is infinite, and the demand is variable. Theoretically, that should mean that the songs could be free, except that the creation of the media has fixed up-front costs. That means that after a fixed amount of revenue is generated by a song, all additional revenue is going to be 100% profit. In order to make the maximum amount of money off any particular song, you want to increase it's appeal as much as you can through price lowering, while at the same time making sure you charge enough to recoup your costs before you break even, and as much as you can without pushing away customers after you break even. If there is a lot of demand for a song, you're going to make a profit on it, but you could potentially make even more money by lowering the price, because the drop in price could attract more than enough customers to make up for the loss in revenue. For songs without a wide acceptance, it doesn't work that way. You probably don't have many people out there who like the song but have price holding them back from a purchase, and the people that are buying the song are probably the ones that really like it and would be willing to pay a bit extra to have access to music that would otherwise be unprofitable to publish.

The only way charging more for popular songs is a good idea is if your goal is to punish your customers for being mainstream music listners, or if you have a complete lack of understanding of supply and demand. If the goal is to actually make money, they've got this plan completely backwards.

The allure of trend-setting (4, Interesting)

SeanDuggan (732224) | more than 8 years ago | (#14196433)

Not to mention that the idea of having songs go down in price as demand goes up will appeal well to peoples' egos. There will be people who will buy the early copies of a song for $2.50 each (I'm considering that an upper limit because I saw it as a proposed upper price somewhere) and consider themselves to be the "trendsetting elite." There will be those who will buy obscure songs that don't sell well for $2.50 each and feel it inflates their indy cred. People like me will hang around and see what seems good, then buy it for $0.99 or whatever the lower price is, and feel good about being thrifty in our patience. The music industry gets its extra money and most of the smart people will still be paying the low prices for their music.

Re:The allure of trend-setting (0)

Anonymous Coward | more than 8 years ago | (#14196607)

...and feel it inflates their indy cred.

Ahem...That's indie cred, thankyouverymuch.

</replacing my /. cred with indie cred>

Re:Completely backwards (1)

Root Down (208740) | more than 8 years ago | (#14196451)

...if your goal is to punish your customers for being mainstream music listners... (sic)

Hey - now you're on to something!

Re:Completely backwards (0)

Anonymous Coward | more than 8 years ago | (#14196484)


The only way charging more for popular songs is a good idea is if your goal is to punish your customers for being mainstream music listners, or if you have a complete lack of understanding of supply and demand. If the goal is to actually make money, they've got this plan completely backwards.


If that means the end of Britney Spear's career, I'm all for it.

Re:Completely backwards (2, Insightful)

Darius Jedburgh (920018) | more than 8 years ago | (#14196501)

The above comment needs to be modded up. The profit a company earns is the product of profit per item sold and the number sold. Increasing price increases profit and decreases sales. The goal is to find the price that maximizes the product of these numbers. But determining that maximum is a non-trivial task and depends on the relative rates of change of the sales and profit as a function of price. Without other information we cannot tell, a priori, whether 99c is above or below the optimum. There are some rules of thumb as the poster above suggests. But in practice the way to find out is to try varying your price either way and assessing the market's response. Eventually you may be able to build a model that makes reasonable predicitions but as Apple have been selling everything at a flat rate so far there is no data to even make a start.

Re:Completely backwards (1)

ivan256 (17499) | more than 8 years ago | (#14196601)

But determining that maximum is a non-trivial task and depends on the relative rates of change of the sales and profit as a function of price. Without other information we cannot tell, a priori, whether 99c is above or below the optimum. There are some rules of thumb as the poster above suggests. But in practice the way to find out is to try varying your price either way and assessing the market's response.

These are exactly the types of things that dynamic digital sales software should excel at. Small variations combined with real-time curve fitting in an online marketplace should be able to rapidly narrow in on the price that would generate the most revenue.

If this article were written by an economist instead of an economic journalist, it would probably have contained that insight. Of course, the guy is a crappy journalist too. Otherwise he would have realized that he should have solicited input from actual experts instead of pulling that entier article (void entirely of references and quotations) out of his ass. Usually I like Slate, but they should be ashamed of having published this shit.

Re:Completely backwards (2, Interesting)

l3prador (700532) | more than 8 years ago | (#14196660)

But is charging your customers more to be early adopters really what they want to do? The way songs become widely accepted is that many people listen to them and play them for their friends, or recommend them to their friends like that (and also through distribution channels like TV and the radio, where the song is basically played for the listeners for free). Would it really be to their advantage to construct a initial barrier to widestream acceptance?

You smoke the rock (0)

Anonymous Coward | more than 8 years ago | (#14196366)

"Isn't 99 cents too much to pay for music that appeals to just a few people?"

No. If it appeals to you, it has worth. A song is easily worth .99 cents.

If I made 6 dollars an hour, I would easily work 10 minutes to have a song by a band that appealed to me forever. Just because they aren't popular doesn't mean it should cost less

99 cents a song is fine.... (0)

Anonymous Coward | more than 8 years ago | (#14196371)

...it doesn't matter whether they are a well known act or not, they already going to get less money than a well known act. I think it should actually be inversely done. The small guy gets 99 cents a song. The big guys, when they break a certain barrier, should have the price drop. The first million songs are 99 cents, then the next million are 75 cents, then the next million might only be 50 cents. This would entice more and more people to buy into popular songs making the charts. The trend setter type would buy it on opening day, and the rest of us buy it a little later.

Nothing wrong with flat rate pricing (2, Insightful)

Tyger (126248) | more than 8 years ago | (#14196376)

I don't see a problem with flat rate pricing. Why should what the song is worth to other people matter to how much it's worth to you? If I like a song, it's worth the same to me no matter how popular it is.

Re:Nothing wrong with flat rate pricing (0)

Anonymous Coward | more than 8 years ago | (#14196467)

I agree that flat rate pricing is best. I wouldn't pay much more than $.99, anything higher and I'll just go back to downloading music illegally. One thing I've been wondering, and its never addressed in this debate, is where does the extra money go? If a popular song is $3 where does the extra $2 go? I really don't want to pay more for songs if the record company gets all the extra profits.

Doesn't make sense... (1)

Beatbyte (163694) | more than 8 years ago | (#14196387)

Basing your price on other people's taste makes it seem like you're buying the music for someone else.

If YOU like a song enough, it's worth $0.99. Just because other people don't like it doesn't mean it's not worth $0.99 to you.

$0.99 is already unfair (2, Insightful)

hafree (307412) | more than 8 years ago | (#14196388)

"Isn't 99 cents too much to pay for music that appeals to just a few people?"

I don't think so - as long as the music appeals to YOU, why should you expect to pay any different?

That view is shared by millions of consumers who believe the record companies have been gouging them for years

Records cost $6, tapes were $8, CDs which cost even less to produce cost $15, and now an 18-song album will cost you $18 to download. How come the less it costs to produce the media, physical or virtual, the more it costs? If anything, music shoulc cost less, not more. It's not like the artists will actually see any extra revenue anyway...

Oh yeah, that's what we need (0)

Anonymous Coward | more than 8 years ago | (#14196391)

Prices for music to fluctuate like stock? Somebody explain this one to me. It's not exactly a supply and demand commodity. It's not like said online music vendor can suddenly run out of 1's and 0's and become unable to provide another copy to the consumer. It's like giving the music industry a legal way to price fix their product - all they have to do is jurry rig the numbers and make it look like some new carbon copy of a band's new single is selling like hotcakes.

I don't care who likes what I like... (0)

Anonymous Coward | more than 8 years ago | (#14196392)

...so why should that have any effect on what I pay? All that matters--the basis for my perception of value--is that I like it.

stocks vs song comparison not good (2, Insightful)

ptr2004 (695756) | more than 8 years ago | (#14196393)

1) The stocks offered to public by a company are limited.

2) These can also be traded again in the stock market.

3) You cannot get free stocks from a P2P stock market.

Hence the mathematics and economics for stock isn't applicable to songs

Welcome to Capitalism... (1)

camusflage (65105) | more than 8 years ago | (#14196397)

Isn't 99 cents too much to pay for music that appeals to just a few people?

Uhhh, no.. That's what market forces are all about. It's about what it's worth to the people wanting to buy it. In fact, if it only appeals to a few people, it would stand to reason that it should cost MORE, not less. Granted, the more popular songs need to pay for things like bribes to Clear Channel, err, uhhh, I mean "promotional considerations", since payola is a thing of the past. Even so, the more niche something is, either the more cheaply it is made, the less its profit margin is, or the more it costs, simply because of the economy of scale.

Usually its the other way around (1)

DrRobert (179090) | more than 8 years ago | (#14196398)

I pay 11.99 for some popular cd at Best Buy when it comes out, because they know they will sell millions of them. I pay 18.99 or more for the obscure stuff that only a few of us want.

Re:Usually its the other way around (1)

harrkev (623093) | more than 8 years ago | (#14196652)

As a more extreme example, a Stephen King novel will be $25 or so hardback (and around $6 when it gets to paperback) -- and these will sell millions. It is not uncommon for textbooks to be $100 or more, and will likely sell a few thousand.

So, the lesson from the book industry is that greater sales = lower prices.

Problem (1)

renelicious (450403) | more than 8 years ago | (#14196403)

Song by big-name bands would cost more, and lesser-known acts would cost less (with a minimum of 25 cents.)"

I see a problem here, as 25 cents wouldn't even cover the cost of processing the credit card transaction. I think there are good ideas in the article, but sometimes people don't think all the way through things, or they don't have all the information they need. A credit card transaction often times costs merchants as much as 50 cents.

If you've used the ITMS, you'll have noticed that Apple batches your purchases for a day and then processes them all at the end to try to defray the credit card cost some. However I doubt the record company would accept not getting anything for a song because they only made enough to cover the transaction cost.

On a side note, this is also one of the biggest hold ups in micro payments. The cost of transaction processing is so high that places can't afford them.

Only if it's a buyer and seller's market (1)

chunews (924590) | more than 8 years ago | (#14196404)

Such an idea tied loosely to a metaphor like the stock market suffers from some problems: while the stock market is (supposedly) tied to intrinsic value, this model is tied simply to popularity - and the incentive is too great (read: their is no signficant drawback) for record labels to simply "pump and dump" their own labels. Although it would be great to have an organization like the SEC regulate the behaviors of the RIAA members! :)

Another drawback is that a stock market has both buyers and sellers - what value can be derived from an iTunes marketplace where buyers compete for a limitless supply?

Not that the model wouldn't work, but it sure doesn't have any easy analogs in the real world of markets and trading. That said, if iTunes would allow me to sell my used songs on their market, and cap a maximum IPO of song title quantities, I'd gladly give Steve Jobs a few pennies to offload my ex girfriend's Celine Dion albums (no URL link provided) and pick up a little microcap named Moxy Fruvus http://www.fruvous.com/ [fruvous.com]

ECON 111! (4, Interesting)

Inoshiro (71693) | more than 8 years ago | (#14196407)

" Isn't 99 cents too much to pay for music that appeals to just a few people?"

No, it's too little. If you put demand and supply as 2 linear equations on a graph, you'll see they're related.

Let's go through a simple situation: demand is x, and supply is y. Now since we have infinite supply (since this is a digital work), we're going to say that y is not supply, but rather money supply (since the money is the only limited part as far as the markets are concerened). As demand goes up, price goes down. If we were at the far-right, with maximum demand, price would tend to zero. If we were at the far-left, with only 1 person wanting the work in question, the price would tend to the total production cost! For 0, infinity (which is why if no one wants it, it won't get made).

You're not going to get a perfect relation due to effects outside the market's control (such as non-market copying), but you'll see that 99 cents is too little for something this is in low demand, and 25 cents is too much for something that is in high demand.

Should be an upper cap... (1)

JoeLinux (20366) | more than 8 years ago | (#14196408)

I say there should be an upper cap as well. I mean, how many times will someone download an old Indigo Swing album (besides me). So, that would be lowered.

Then, you have the throngs of "OMGIHAVETOBEPOPULAR" nausiating teeny boppers who will gladly part with her 1.50 for the latest BritneySync album. Let 'em. They will allow me to re-buy the Beatles Catalogue for cheap.

Of course, the only way that there will be trust in this is if Apple would open up the statistics/usages. That way there wouldn't be an overmind decreeing:

"This song shalleth be $2.25 due to popularity."

"They are all $2.25 now"

"Umm...yes-eth. Slum gullion is popular right now."

Are they really scrapping that much for change? (2, Interesting)

lpangelrob (714473) | more than 8 years ago | (#14196411)

Sheesh. The way music execs get their tights in a wad over $0.99 pricing, you'd think that those extra dollars would be doing something for the bottom line.

Make Apple tie their prices to inflation or something. At least then you'd have a reasonable excuse to raise prices, as opposed to what you have now, which is... nothing.

A good thing (1)

srblackbird (569638) | more than 8 years ago | (#14196417)

This is stimulating for artists: if they make bad music, they get little monney; if theu are good, then they will get a lot.

Re:A good thing (1)

mlylecarlin (552855) | more than 8 years ago | (#14196643)

This is stimulating for future Britney Spears clones. If they intentionally make artistic choices for popularity instead of quality, they will make money. If they intentionally choose quality over popularity, they risk being unpopular and unwealthy. It's not like you can't have both, but this idea encourages a slide in the direction of one, against the other.

conversely (0)

Anonymous Coward | more than 8 years ago | (#14196423)

Variable pricing for a product is normal, but what makes anyone think that the more it's downloaded the more it should cost? Any other commodity the cost falls with the scale of production, availability lowers value. By what twisted logic do more downloaded tunes become more expensive? I think if you look deeply at the psychology here you'll see why people have no respect for the music business. I like music that is unique and only I know about, it gives me more value as a 'bragging piece' to impress friends with (in my childish teenage way). In fact I would pay a premium for scarcity, to know that I recieved one of the only 1000 copies that were made available for download and that nobody else can get that tune now, (humour me here I'm half serious), why not? I'll pay you 100 bucks for you to give me the music then take it off the server, now anybody who wants to hear it must be my friend and visit me at my house :) The assumption popularity == quality == desirability == value is why the business is faltering so badly, it's just wrongheaded.

Books (Scientific/Engineering texts) (0)

Anonymous Coward | more than 8 years ago | (#14196425)

I must add that there is a similar story when it comes to books. Kluwer Academic Publisher is notorious for selling books which cost almost a dollar a page. And those technical books have a very niche audience and is not a Harry Potter best seller. What keeps the prices so high ?

I have lot of asian friends who go back to their home country and buy paper back low price editions. It is hell lot cheaper if an average text book costs $70-80. So even if these textbooks are widely used, the prices are still high.

Dover publications is lot more wallet friendly. They publish the classical texts in science and engineering for more affordable prices. (I am not a big sucker for hard bound books). These books may not have a big audience, but still are available cheap.

How is this market sustained ? Yes it is little offtopic.

Wrong way around... (1)

IainMH (176964) | more than 8 years ago | (#14196427)

Isn't 99 cents too much to pay for music that appeals to just a few people?

It's probably the wrong way around. People are smarter than that. They know about marginal cost and that less commercial artists still have to eat. £2.00+ is the going rate for high bitrate mp3s from DJ download sites such as XpressBeats [xpressbeats.com] and DJ Download [djdownload.com].

Not such a good idea for the little-known indies (1)

design by michael (924422) | more than 8 years ago | (#14196430)

What about the struggling indie artists who are trying to both make their music accessible and simultaneously make an honest wage with it? Offering their songs for $.25 isn't doing them any favors.

Rather, if you're going to offer a pricing structure (for indie artists who submit their music through sources like CDBaby), leave it up to the artists to decide what the selling price should be. In that regard, if an indie artist's priority is just to get their mp3's into the hands of other people, then sure they'd opt to sell for $.25. But if the artist is trying to make a living, a quarter per song sure doesn't go that far.

Winner-take-all (2, Insightful)

yardbird (165009) | more than 8 years ago | (#14196434)

One problem with this idea is that it increases the winner-take-all effect. That is, it encourages producers to chase big hits while ignoring niches (the "long tail" [wikipedia.org] mentioned in the article). It used to be selling a million was worth 100 times as much as selling ten thousand. Now it will be worth 400 times as much or more.

But that's a sociological objection. From a technical standpoint, I think it's neat!

Another weird line from the article:

But each obscure indie rock or klezmer song that gets sold for a quarter is almost pure profit...

How is that true? Seems like the profit margin would be much lower for these tracks.

Re:Winner-take-all (1)

crimoid (27373) | more than 8 years ago | (#14196621)

But each obscure indie rock or klezmer song that gets sold for a quarter is almost pure profit...

How is that true? Seems like the profit margin would be much lower for these tracks


Presumably because the cost of generating the original content would be so low.

Actually, "less popular" should be more expensive (0)

Anonymous Coward | more than 8 years ago | (#14196439)

Look at it from the merchant's point of view.

It takes a certain amount of manpower to convert a song and make it available in the iTunes store. Let's say it costs $100.

Once available, the actual purchasing/downloading of the song is automated, and has only a negligible cost.

Now let's say only one person (ever) buys the song once it's up. As the merchant, you'd like to be able to charge the full $100 to recover your costs.

The less popular a song is, the fewer people the cost must be distributed among, and the more the merchant must charge to recoup expenses.

Now obviously, this isn't the way the market works. My point is that the merchant has an economic incentive to deny that ridiculous statement: "Isn't 99 cents too much to pay for music that appeals to just a few people?"

just one problem with this model (1)

altoz (653655) | more than 8 years ago | (#14196441)

It's applying supply-demand economics... Except the writer forgets that there's INFINITE SUPPLY! You can "create" as many copies of the song from the supply song as much as you like via download. I suppose the only limiting thing is bandwidth but that's far, far less than 99 cents per 5 Mb.

Potential Weakness with the Whole Plan (1)

MBraynard (653724) | more than 8 years ago | (#14196455)

Is why pay anything for music at all when you can get unlimited amounts for a fixed price each month using Play for Sure.

And even if you don't want to pay for that and not rent the music, you can get songs at a variable price for the competitors at $0.79 or less. They just don't work with the Ipod - which really blows. Going off on a rant, it is so vastly inferior to other players like the DJ it is simply on the strength of it's design that people must like it. CAn't use it with gloves or cold hands. Hard to operate without looking at. With the Pocket DJ, it's very clear when you hit the skip/play/pause and volume buttons while running or biking or lifting. Not so with the Ipod where you can't even use the scroll wheel during the winter.

Popularity != Value (2, Interesting)

99BottlesOfBeerInMyF (813746) | more than 8 years ago | (#14196461)

Basically, he suggests that song prices be determined by market forces, just like stock and commodities markets.

While an interesting idea, I think this premise is flawed. Gold is not priced based upon how many people have bought it over the years, or even in a given year, but by how much people are willing to pay for it. Here's an extreme example. Suppose some very fringe singer produces a song called, "If you're not rich you're a stupid pussy" that appeals to to very wealthy elite and basically no one else. Perhaps this song names a dozen particular wealthy people and extolls their virtues. Say the total market for this song consists of about 500 people, but among those 500 people are individuals who would be willing to pay upwards of a thousand dollars a copy for the song and may buy a copies for relatives, friends, and even enemies they wish to taunt. According to a free market we could estimate the value of the market as 500 times and average of two copies per person times an average price of say $500. That gives us half a million dollars on a truly free market. Now consider the same market valued based solely on popularity and you get a song that is so unpopular the market is only worth a few dollars.

This same principal applies to the opposite end of the spectrum as well. What is someone makes a funny, six second long song that billions would like to own, but no one wants to pay more than a quarter for. The market price may be 25 cents for optimal sales, but based on popularity would price this song at $10, which no one would want to pay, especially as the price would continually rise.

I just don't think this is workable or desirable.

See a WebSphere Podcast on SOA and win an iPod (-1, Offtopic)

Anonymous Coward | more than 8 years ago | (#14196462)

There are six short WebSphere podcast to choose from that cover SOA from intro to advanced topics. This is the latest technical information on SOA and is well worth the time(12-15 minutes) to see, especially if you are lucky. Do you feel lucky today? Register and view one of the SOA podcast and get a chance to win one of 30 Apple iPods [jupiterweb.com] that will be given away. View one Podcast by Dec.31 and get your chance to win.

How about no? (1)

bogie (31020) | more than 8 years ago | (#14196464)

How about since the cost of distribution is nil, songs cost .25 max and crappy music costs .10?. That seems fair and logical to me. Especially since they are insuring that I can't resell my music once it's in digital form.

See you get all of these people supporting the idea of tiered pricing and now we'll see every song on the next Green Day album going for 2.00. Meanwhile the "cheap" price will now be .99.

I honestly like tooling around the Itunes store and listening to samples. But .99 let alone 2.00 for a less than CD quality file than has DRM to boot isn't my idea of bargin. But what do I know?

Good plan (1)

Voxxel (147404) | more than 8 years ago | (#14196470)

People are already confused about buying digial music with the multitude of incompatible devices, stores, and formats. Let's add another variable into the mix with changing prices. That's completely stupid. Jane just wants to buy music, not try to figure out how Suzy got X for Y price.

Does he understand the stock market? (4, Informative)

thebdj (768618) | more than 8 years ago | (#14196472)

The reason prices rice and fall on the stock market is because people buy and sell certain stocks causing the prices to either rise or fall respectively. If a stock is not bought or sold it could maintain its price point (though this doesn't happen too often since people are almost always buying and selling listed stocks). Without a "sell" model, how would you lower the price on music? You would have to implement a sort of timed decline in pricing, which would have to lower prices not on some hard constant but at a good variable rate to maintain interest before the one hit wonder becomes worthless, again.

There are also cases of insider trading which occur on Wall Street. In order to regulate this the SEC monitors the trades and activities of stocks. This means that someone at Apple would have to do a similar job on a model based like this. If no one was monitoring the purchases properly then I am sure you would see big labels paying individuals to purchase songs in order to raise the price. If a song were popular enough they could quickly drive up the price forcing people to pay $1.59 a song instead of getting the lucky starting price of $0.99 a song, or whatever it might be.

Let us not forget that the industry is already fairly well dependent on a supply and demand style. Obviously some people are willing to pay $0.99 for less popular songs, while others might be willing to pay more. The true magic here is that Apple found the perfect price point to appeal to both side, which keeps the pricing and market simple for the users to follow.

Tiered pricing schemes make a bit more sense because they would not be affected by spikes in song purchases or by the temporary decline of a song or by the aforementioned conspiracy. However, they also have their own set of problems. You would quite effectively remove some purchases by raising the songs price. Fewer people would be willing to pay $1.49 or more for the song they were willing to pay $0.99 for. At the same time you might find a few people who are more willing to pay $0.79 or $0.49 for a song then they were to pay $0.99, but I highly doubt the $1.49 songs could outpace the $0.79 or $0.49 songs.

Let us trust Steve's decision for now. I am sure the folks at Apple had enough sense to ask some economists to look at the system and analyze the effects that a tiered system would have. Going on this assumption, it would be safe to say that $0.99 songs are here to stay (so long as the RIAA continues to play nice).

Similar Model... (2, Funny)

jnadke (907188) | more than 8 years ago | (#14196473)

If such a model were applied to Operating Systems, Windows would cost $200 and Linux would be free... Oh wait, it is. And like the music distribution model, the higher priced stuff is crap.

perspective (1)

subl33t (739983) | more than 8 years ago | (#14196480)

"Isn't 99 cents too much to pay for music that appeals to just a few people?"

You can't be serious. It depends on the listener what music is worth. Beauty is in the ear of the beholder.

Anything by Albinoni (or any other dead baroque composer) is worth vastly more than the latest Jessica Simpson pablum.

99 cent maximum (1)

yamla (136560) | more than 8 years ago | (#14196486)

Sure, I'm all for this. A minimum of 25 cents per song. A maximum of, what, 99 cents? Yeap, that would work for me.

They didn't mention the maximum price they were planning to charge but I assume this is just an oversight.

What about economy of scale? (1)

openfrog (897716) | more than 8 years ago | (#14196487)

The more a song gets downloaded, the more it would cost

The reasoning is upside down. Cost per item goes down with increase in number of item sold, which allows to sell cheaper, which allows to sell more.

price fixing scheme? (1)

digitaldc (879047) | more than 8 years ago | (#14196490)

Since millions of tunes sit on servers waiting to be downloaded, the vast majority of them quite obscure, sellers would benefit because it would create increased demand for music that would otherwise sit unpurchased. If a single climbed to $5, consumers couldn't complain that it costs too much, since they would be the ones driving up the price.

Consumers couldn't complain? Why, because they have no choice but to download 'unpopular' music?

Also, what if a company was able to figure out a way to artificially inflate sales or download figures? You say it couldn't happen? I am not so sure. Who would be checking these statistics anyway? The RIAA? The guy in the Slate article talks as if the Stock Market is essentially a fair model, but for whom? Is there a limit as to how high a song could go? 99 cents may be a better price after all.

I would say that driving up the prices of the most popular songs will only provide an incentive to download these songs for free elsewhere.

Wrong way around (1)

Shishberg (819760) | more than 8 years ago | (#14196496)

I'd actually argue that it should be the other way around.

Songs are like processors, software and pharmaceuticals in that they have a very high development cost but almost zero production costs. In theory, the company that makes them could just sell a fixed number at a fixed price to recover costs plus some profit margin, then drop the price to virtually nothing. In practice the price starts high and drops off over the first few months/years/whatever.

iTunes should make songs cheaper as they become more popular.
From the buyer's perspective, however, Apple's 99-cents-for-everything model isn't perfect. Isn't 99 cents too much to pay for music that appeals to just a few people?
No, it's too little; if you want to support that music (arguments about profits not reaching the artist aside for now) then you should be willing to pay more to encourage an as-yet unpopular artist and help them on the path to greater recognition. On the other hand, 99 cents or 25 cents or 1 cent (must not... make pun about... 50 Cent...) will make no difference to a band that has just sold its three billionth album.

I know economists out there will argue with me about supply and demand; and I don't necessarily disagree with that, but I'm not sure that it's the dominant force when supply is essentially infinite.

Digital supply and demand (2, Interesting)

stonedonkey (416096) | more than 8 years ago | (#14196509)

The more a song gets downloaded, the more it would cost.

Right, because supply and demand dictates that... oh, but this is digital media. There will never be a physical shortage of that song.

From the buyer's perspective, however, Apple's 99-cents-for-everything model isn't perfect. Isn't 99 cents too much to pay for music that appeals to just a few people?

Right, because rarity typically dictates that something should cost more, so... oh, but this is digital media. There will never be a shortage of that song.

Yes, you have to pay for the bandwidth, the infrastructure, the yadda yadda and et cetera. It costs money to provide the media. Granted. And I personally think that $1 for a copy-protected, sampled audio file in a proprietary file format is ridiculous, but that's another can of worms. The point is that pricing by popularity when supply is not an issue reeks of greed, just as Jobs says.

Redundancy (2, Funny)

Anonymous Coward | more than 8 years ago | (#14196514)

Wow every single post here is redundant except one!

encourage the pirating of the more popular music? (1)

cyberworm (710231) | more than 8 years ago | (#14196519)

If you're not the first one to own a song, you're going to have to pay the penalty for not being as cool as the other kids. Great.....

Beyond that, it seems like you get paid more if the music is good, because you sell more of it. If only a few people like a song, dosen't make it good or bad. This is art, and it's subjective. Don't punish both the artist and the fans by decreasing the value of the music, or price them out of the market altogether (respectively).

Another thing I see, is that if the price goes up with the popularity of a song, wouldn't that just encourage people to pirate the more popular music even more. I mean "hey, that guy only paid fifty cents. Why should I have to paya dollar?!?"

Just my two cents. Care to boost my share?

Sell music (1)

Ced_Ex (789138) | more than 8 years ago | (#14196527)

As long as they allow everyone who has ever purchased the song to sell back to the market I am ok with this idea.

It shouldn't be limited to iTunes being able to sell. Since I purchased my copy, I should also be able to sell it back, or to anyone that would want to buy it.

Buy low, sell high.

What about option contracts? Damn.. this can get out of hand.

Commodity pricing? or profit/loss level setting (1)

CodeShark (17400) | more than 8 years ago | (#14196530)

Given that a "mega hit" artist costs more to sign and promote, it seems fairly obvious that a "recording artist promotion company" has to break even. That said, presumably the sheer number of downloads that a mega-hit artist's songs would receive, even $.99 a song seems like it would offer sufficient profit margins, given that the only post-production expense is bandwidth. If not, then flexible pricing will happen

That said, if I become a content provider and am releasing songs via my own small "private internet label", do I want to be locked into 99 cents per song? No, I don't. I might want to offer the songs for a minimal price to build following, but not be locked into that price long term, because if one of my groups or artists turns into a "mega hit" artist, I need to cover my bandwidth expenses and then presumably enjoy a reasonable profit.

The real problem is this: I don't want my offerings to be perceived as low value, or be locked out of participating in an iPod type setting because I don't want to go along with the rest of the industry's pricing structures. Or am I missing the point here?

Not a true market if I can't sell too (5, Insightful)

Millard Fillmore (197731) | more than 8 years ago | (#14196535)

Not only is there no scarcity in this model, as several comments have already made clear, but there is also no way for a consumer to enter the market as a seller. If it were a true, market driven exchange, I would be able to take the track I bought for 25 cents when I liked Indie Band X, and sell it on the exchange for $3.00 when it becomes popular. I could then compete with the recording studio, who might be offering the track at $3.25.

But this won't work, again because of the fact that there is NO REASON for the price to go up as demand increases.

So, to review, we have a market for a commodity that isn't scarce, with a single seller, artificially fixing prices based on volume alone. Where's the market force in this?

Okay, but... (1)

stavromueller (934803) | more than 8 years ago | (#14196539)

I feel bad that the online msuic sellers have to take a hit for greedy record companies (no, actually I don't) and probably wouldn't mind paying a teired fee for music (since I rarely buy any anyway), but I think there should be caps. 25 cent minumum, as well as, say, a $1.50 maximum.

Equal Value without Scarcity (1)

Josuah (26407) | more than 8 years ago | (#14196540)

The stock market is based on the idea that one item is worth more to someone than it is to someone else. But the only reason the price fluctuates is because there's a scarcity of the item. If everyone could buy as many shares of Google that they wanted, without having to require someone else to have lost that share, then the whole system would fall apart. So I don't think the stock market model can apply to a commodity that is essentially of unlimited number. Plus, the value of an item is equal to all owners of that item. Person X and person Y who both own one share of Google will end up earning or losing an equal amount of money from a given point in time.

To answer the question, is a less popular song worth $0.99? It certainly is to the person who is buying it at that price. By the proposed logic, a song which perhaps I do not like at all would be priced much higher than what I am personally willing to pay for it. Perhaps I am willing to pay $1.99 for a song by Orbital, but only $0.25 for a song by Norah Jones. My prices for those items are inversely proportional to their popularity. To make them proportional to popularity might result in less income (although perhaps more sales) for Orbital and vice versa for Norah Jones. I'm not an economist so I don't know the right math to apply here.

So maybe you want to try personalized pricing. That's only going to invite major consumer backlash as people discover they're being charged more for a song than the person sitting next to them. Best case scenario is some sort of trading community where song purchases are traded so that everyone can buy their songs at $0.25. And now you're back to the original flat-pricing scheme. Worst case scenario is everyone drops iTMS because now Apple is being evil and greedy.

Nope. (1)

Red Flayer (890720) | more than 8 years ago | (#14196542)

"Isn't 99 cents too much to pay for music that appeals to just a few people?"

No. Especially if you're one of those few people.

If you don't think it's worth $0.99, then don't buy it. No one is forcing you to accept the terms of sale.

Who loses? The seller, by not pricing the good at the ideal price to maximize profits.

Sure, you could argue that fans of the music lose, since they don't have the option of buying it at a lower price... but that's how the market works. Someone offers a price, and people choose whether or not to purchase at that price. If the seller wants to, they can adjust the price. It's a little trickier with a middleman who controls pricing, but look at it this way -- if you choose not to pay $0.99 for something you think is worth only $0.25, well you won, since you didn't overpay for that song.

99 Cents is Cheap For Me (4, Funny)

SomeoneGotMyNick (200685) | more than 8 years ago | (#14196547)

Isn't 99 cents too much to pay for music that appeals to just a few people?

I like listening to classic Yes. It appeals to a few people. Due to the average Yes track length, at 99 cents a track, whole albums only cost me about $2 or $3 each.

Whatever you pay for it (1)

ezpei (461814) | more than 8 years ago | (#14196555)

is what it's worth. End of story. Doesn't matter if there is infinite supply or only one buyer.

And this isn't about recouping costs of production, but recouping marketing costs. I am fairly certain there will be a high correlation between marketing costs and demand and, thus, increased prices for heavily marketed songs.

If no one will pay more than $0.25 for Einsturzen de Neubauten, so much the better for their fans. If people want to pay $5 for R. Kelly, well, what can you say about people who like R. Kelly anyway?

Anyway, there is no intrinsic fair price for anything other than what the market (i.e. buyers) reflects. Otherwise, we would all be shorting GOOG with impunity.

I, for one, would be happy to buy some songs below $0.99 as a result of my eclectic taste, particularly since I only use iTunes for one-off songs not rippable from my or my friends' CDs.

RIAA buy back my music?! This is awesome! (0)

Anonymous Coward | more than 8 years ago | (#14196564)

Hey I love the idea of stock pricing model for music. That means if I buy a song that isn't popular and it suddenly becomes POPULAR then I can sell it back to someone ELSE via iTunes.

And you might just strike it rich if you BUY ALL the copies of the music from the iTunes store!

(but I think this isn't exactly how it will shake out...) more like the RIAA will make more and more than they ever have before. Here's a thought....just SELL MORE MUSIC.

Improved model (1)

horn_in_gb (856751) | more than 8 years ago | (#14196572)

I do think the idea of tiered pricing makes sense, as long as the max is still the appropriate 99 cents. I personally would buy more music if it was priced as cheap as 25 cents! If I was browsing the iTMS, and saw some track that looked interesting, at 99 cents I'm unlikely to buy it (because I can't afford to just throw dollars away on frivolous purchases). On the other hand, if it's only 25 cents and by some indie artist, sure, I'll toss a quarter out to give it a shot.

Some people have mentioned that the price of microtransactions is too high for 25c pricing (the record label wouldn't get anything with a 25cent price). But if apple added up all your purchases, say, over a month, and then charged you one bill, all of a sudden the concerns over credit card transaction prices would go away. Since most people who buy from the iTMS buy more than once, I don't think this would be problematic.

Another Commodity (1)

ehaggis (879721) | more than 8 years ago | (#14196574)

Could we create two markets and arbitrage between them? It seems a bit crass, but this is what would be. Perhaps we can purchase / sell options on various songs. "I would like to purchase a "put" on the latest CD by so and so, I know it will flop."

Say No to RIAA Spin (1)

mpapet (761907) | more than 8 years ago | (#14196575)

No!

A million times no!

This premise is flawed. RIAA members want more than whatever they get out of 0.99 per track for as many tracks as possible.

Stories like this attempt to justify their position.

Just Say No!

Another pricing issue (1)

AndyG314 (760442) | more than 8 years ago | (#14196576)

Since things bought online are done via credit card or paypall, the fees charged by paypall or the credit card company must be covered. These will add up signifigantly if the cost of the items is very cheap (i.e. 25 cents). That is probbly part of why it is dificult for companys to go much lower than a dollar a song.

market forces? (1)

phlegmofdiscontent (459470) | more than 8 years ago | (#14196577)

It's obvious that market forces just don't apply, no scarcity, blah blah blah. I'm not likely to pay 99 cents for the latest Britney Spears single, and I'm sure as hell not going to buy it if it's 5 bucks just because it's popular. On the other hand, it might help out lesser-known bands. I'm more likely to buy a 25 cent song from an unknown than a 99 cent song from the same unknown. In fact, since the music I like is not that popular, I'd stand to save a metric fuckton of money, that is, if I were inclined to buy music at all. As far as I know, it's hard to improve on 0 cents per download.

Old Fogie Math (1)

no_pets (881013) | more than 8 years ago | (#14196587)

Guess I'll be showing my age here but I still buy CDs and then create my own digital copies of them. A CD is usually 8-18 tracks with a great fold out with band bios, photos, etc. and, of course, the CD actually becomes my backup media for the music I payed for.

I still prefer to get my music this way, but that's not the point. I get up to 18 songs and all the "extras" for $17.99 (actually less) if I buy at the mall (which I never do). So, at about a $1 per song plus the cost of backup media and the fun band bio foldout I really don't know why people would pay much more than 99 cents per tune anyway.

Torn (1)

Koupwassu (936670) | more than 8 years ago | (#14196599)

Seeing as my musical tastes tend to lie outside the mainstream this would mean that the majority of what I would buy would save me money. At the sam time, the reasoning is flawed. People will buy what they like. The model pioneered by iTunes is ala carte music. The buyer is not forced to buy an inferior (to them) product because they buy a song at a time. The $ 0.99 price takes into account royalty, credit card transaction, and infrastructure costs. A lower price would make a break even venture turn into a cash blackhole. The offset of the higher priced songs would need to be enormous to make financial sense. The author argues if 99-cents is too much for a song you want. Is $1.99 for a song too much? A tiered price structure like the one proposed would cause more "popular" (not better quality to some subjective buyer) songs to go more than $1, maybe $2. By pricing evenly across the board, it remains pretty fair. Possibly a more "fair" price structure would involve a minimum price for all songs (the break even point for Apple) then a scale or graduated growth based on song length or production costs.

Hostile Takeover! (0)

Anonymous Coward | more than 8 years ago | (#14196619)

If the music industry adopts a stock market model, does that mean that bands can now be owned by majority shareholders?

Just think...Slashdotters could organize a hostile takeover of bad bands and shut them down. Voila, no more Kelly Clarkson albums!

It is all a rip off. (1)

plebeian (910665) | more than 8 years ago | (#14196625)

I am still waiting for the cost of CD's to become cheaper then tapes like the Recording industry promised. Now it is more expensive to buy the songs individually without any media...... WTF??? It does not cost any more to pick up a guitar now then it did back when I bought tapes; and I am supposed to pay up to 5 times as much to get the right to listen to the same music. Yah Right!!! P.S I would not be so pissed if my money went to the bands. Instead it goes into talent-less corporate executive's pockets..

Make it *really* like the stock market... (1)

chiphart (791140) | more than 8 years ago | (#14196628)

...and allow people to sell their music back when the prices go up.

Interesting that it keeps the rich rich, poor poor (0)

Anonymous Coward | more than 8 years ago | (#14196632)

Hmmm... so if you're a small-selling artist, you'll make even less than before. And bigger artists will make more than before. It would really exaggerate the long tail, since the drop off would be even steeper.

Yup, sounds custom made for the RIAA.

Although, I suppose, the counter is that people would vote with their checkbooks, but how likely is that? "Well, johnny, I couldn't afford Britney Spears' latest, so here's 3 CDs by artists you've ever heard of". Hmm.... no. Although, considering the weird-ass music I listen to, I'd be saving money.

Music Industry Needs to Adapt (1)

burningion (936461) | more than 8 years ago | (#14196633)

I've never bought a song from iTunes or Napster or any other online music store. It just does not make economic sense. With iPods holding at least 5,000 songs, filling up an iPod would cost $5,000. Having all my music portable just is not worth $5,000.

The music industry has become too greedy, taken too much advantage of me as a consumer. They think that just because they spent $20 million dollars on a music video and promotion I'm going to be willing to pay $20 for a CD. It just isn't happening. I buy CD's because I want to be entertained, want to hear a story told through music. Not because I saw an awesome music video.

The music industry just needs to get back to fundamentals. Focus on gathering talent and then letting the talent speak for itself. For too long they've been resting on the idea of throw money at slight talent and let the promotion do the rest of the work. Once there are artists worth paying for online I'll be happy to pay. Not $20 for the cd, though, and not $15 for mp3 format. There just isn't enough value there to justify the price. Plain and simple.

A true Music Stock Market (1)

Btile (835436) | more than 8 years ago | (#14196638)

What would be cool is if the consumer could re-sell music back to the open market to allow for speculation. This way if you are an early adopter to a band you can make some extra cash if they hit it big. Or at least get a quarter back if you get sick of the song or find that the song really sucks.

Consumers Paying for Mistakes (1)

sdtke212 (936671) | more than 8 years ago | (#14196645)

That idea is completed ridiculous. Tierd pricing? Unreal. I'm not even going to go talk about suppy and demand, but that idea is crazy. I'm not a big fan of buying cd's or downloading singles for $.99 per song because it seems like these days, you need a different type of mp3 player for each site. If I pay for something, I want to be able to use it how I want to, not how the company wants me to. But off that, the recording industry is now making the consumer pay for all of their mistakes. Pay for them failing to recognize new markets emerging with the speed and dominance that they have (i.e. Internet). If you want to go buy a new cd, look at spending around $20 or so, maybe a little less. How much can it actually cost to produce a cd from one of today's top artists? Contrast this with how much a brand new DVD costs if you were to purchase it on the first or second day of it's release .. around $15 at Wal-Mart. I cannot see a feasible comparision on the price it costs it produce a blockbuster movie to a music cd. Yet the music still costs more. Maybe if the greedy bastards controlling the price of the music would ease up and take to see that music is not worth that outrageous price that they charge, sales would increase. While piracy obviously contributes to losses running into millions of dollars, I would bet that a near equal amount of money lost can be attributed to the recording industry fail to act on new markets and see a potential for profit early on, before piracy erupted into the large scale market that it is now.

Well... (1)

Shads (4567) | more than 8 years ago | (#14196654)

> Isn't 99 cents too much to pay for music that appeals to just a few people?

Not to those "few people".

Yes, to the "mainstream" who it doesn't appeal to... .99 is to much... so would 15c or 1c. If you don't like it.. it's not a deal at any price.
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