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U.S. Investigating Online Music Pricing

Zonk posted more than 8 years ago | from the at-least-its-price-fixed-low dept.

213

An anonymous reader writes "Times Online has a story about the U.S. Federal Government investigating whether the music labels are fixing prices for online music sales. 'The antitrust division is looking at the possibility of anti-competitive practices in the music download industry ... Mr Jobs suggested such a move would drive owners of Apple's iPod, the hugely popular digital music player, to piracy, a problem that has cost the music industry billions in revenues in recent years.'"

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clarify this paragraph: (4, Interesting)

yagu (721525) | more than 8 years ago | (#14843457)

From the fine article:

Mr Jobs suggested such a move [in reference (apparently) to greedy prices set by music companies] would drive owners of Apple's iPod, the hugely popular digital music player, to piracy, a problem that has cost the music industry billions in revenues in recent years.

I wonder, does Mr. Jobs actually believe this, or is this casual conjecture/repetition by the author?

Regardless, I'm still curious about and waiting for the definitve and objective study that shows real correlation, because I still don't believe it.

The biggest "cost" to the music industry over the last five years has been and continues to be their disdain for the consumer (e.g., the SONY debacle, protected "CDs") and their insistance on charging similar fees for songs even while the business model dramatically evolves (e.g., hugely cheaper distrubution channels).

Heck, if the music companies were found to be colluding by charging $15+ per CD years back (they were), what are the chances they are doing the same now when the per-tune cost remains the same as distribution costs drop?

My biggest fear though is the music industry gets "caught" and settles in similar fashion to their previous settlement, à la "giving away" free downloads (by the truckload) to local libraries, but restricting the downloads to non-selling tracks. Sigh.

Re:clarify this paragraph: (2, Insightful)

ronanbear (924575) | more than 8 years ago | (#14843526)

Actually, I think this is one instance where the music industry want to get caught. Then Apple's fixed price model gets ruled illegal and had to be changed. Record companies say sorry and immediately use their (untouched by this) cartel to jack up the prices on any songs that they think they can sell at a higher price. They want to lose this case but the real losers will be the customers. If you're still unsure just look around for the labels vigourously denying price fixing in online music. They'd be all over it if it was any form of media other than downloads.

Worst quote ever (5, Informative)

mcc (14761) | more than 8 years ago | (#14843538)

The full version of the quote, if you fill in the ellipsis, is:
Justice Department has launched an official inquiry into possible price fixing in the online music industry.

It is thought the probe will investigate allegations that music labels have colluded to fix the wholesale prices they charge online retailers such as Apple, which sells digital music through its iTunes website.

"The antitrust division is looking at the possibility of anti-competitive practices in the music download industry," a spokeswoman for the department said.

Last year, Steve Jobs, Apple's chief executive, accused the music industry of being "greedy" for wanting to raise digital download prices.


Mr Jobs suggested such a move would drive owners of Apple's iPod, the hugely popular digital music player, to piracy, a problem that has cost the music industry billions in revenues in recent years.
The way the slashdot article quotes this-- jumping right from talking about the justice department "launching a probe" to talking about Jobs complaining about "such a move"-- makes it sound like Jobs is objecting to the investigation.

In fact Jobs is complaining about the behavior being investigated, I.E., Jobs is objecting to price fixing.

Jobs has been vocal for a long time against attempts by the labels to try to forcibly raise online music sales.

Get the Message? (4, Interesting)

AKAImBatman (238306) | more than 8 years ago | (#14843549)

Indeed. The message seems clear enough to me: "Don't f**k with Steve Jobs."

The music industry tried to get greedy by forcing Jobs' to raise prices on music. He pushed back and told them it would kill iTunes. The music companies banded together and tried to force his hand. Now, suddenly, the justice department is interested in allegations of price fixing. Coincidence? I think not.

Re:Get the Message? (1, Funny)

bj8rn (583532) | more than 8 years ago | (#14843718)

Coincidence? I think not.

George W. Bush owns an iPod Shuffle. Coincidence? I think not.

Re:Get the Message? (3, Funny)

DigiShaman (671371) | more than 8 years ago | (#14843740)

Quick! Someone get "W" a video i-pod. Then we can tell the MPAA to f-off. :D

Re:Get the Message? (0)

Anonymous Coward | more than 8 years ago | (#14843767)

The message seems clear enough to me: "Don't f**k with Steve Jobs."

Indeed. You might end up with a Lisa on your hands...

Re:Get the Message? (0, Troll)

P3NIS_CLEAVER (860022) | more than 8 years ago | (#14843772)

Would it be unusual for a big company to file a complaint with the DOJ about this type of behavior? You are crediting Steve but I wonder if this is just business as usual for large companies.

Because Jobs has such pull with the Federal gov't? (2, Insightful)

Infonaut (96956) | more than 8 years ago | (#14843872)

Coincidence? I think not.

Given the fact that Apple lost its lawsuit against MS, the DoJ abruptly dropped its case against MS when Bush came in on his first term, and Al Gore is on Apple's board [apple.com] , I find it unlikely that Jobs has much pull with the federal government. That said, Apple is a major force in the tech economy right now, so the feds might be willing to give Jobs more of an ear than usual simply because he runs a high-impact, successful company.

Re:Get the Message? (1)

ePhil_One (634771) | more than 8 years ago | (#14843979)

He pushed back and told them it would kill iTunes.

I'm curious if he tried something more capitalistic, how it would work. Sell all the music for 99 cents, but give better placement to companies that agree to a smaller cut of the 99 cents, and drop any comapany that wanted more then 95 cents (or whatever they determine their minimum price is). Of course, I'm sure they are already selling the placements, you just have to tie it to compliance elsewhere.

They are all playing hardball, Jobs controls the biggest distribution, but if he loses too many labels one of his competitors could easily overwhelm him, at the same time the labels can't risk not having their products on the biggest online distributor. They will try to band together, but there's big rewards for the distributor that doesn't break.

Re:Worst quote ever (0)

Anonymous Coward | more than 8 years ago | (#14843963)

That's part my fault (I submitted the article) and part the Slashdot mod that reformatted my submission. I had closed the first quote and then opened the second, my use of the elipsis still wasn't technically correct but I wasn't trying to change the story or anything. I meant the quotes to be two highlights of what was being said and not to be tied together. The moderator also pulled my little commentary out from the end where I wondered aloud how it was a bit odd that there are price concerns when over 1000000000 songs have been sold via iTunes. Doesn't seem like the consumers share the concerns that the DOJ does here.

What I want to know. (-1, Troll)

Anonymous Coward | more than 8 years ago | (#14843697)

Is if I should screw this new chick even though I've got another girl on the side who thinks we are together, regardless of me telling her repeatedly we are not a couple.

Now if I do the new chick then the other chick will bail, and she is a nice consistent piece of ass, but the new chick is hot and only 22 (I'm 30). I haven't screwed a 22 year old in like 3 years.

Any advice?

Re:What I want to know. (0, Offtopic)

windex (92715) | more than 8 years ago | (#14843766)

Commit suicide. Then you don't have to choose, and two new losers will gain access to untapped ass resources.

Re:clarify this paragraph: (2, Interesting)

Chosen Reject (842143) | more than 8 years ago | (#14843741)

Whether or not Jobs personally believes that it would drive people to piracy is moot. He has to know that that is what will get the RIAA's attention. So if he says that it will drive users to piracy, and others believe him, then the RIAA wouldn't attempt it, because then people will see that the RIAA wants people to pirate songs so that they can sue them. Again, this things might not be true, but it's all how it looks.

Jobs says they will pirate if prices are fixed, people believe it, the RIAA does it anyway. Regardless of whether or not any of that happens, if the RIAA complained about piracy after they fixed prices, people would say "Jobs told you so. It is your own fault."

all I know.. (1, Informative)

Anonymous Coward | more than 8 years ago | (#14843492)

Is I've worked on productions where the label buys up copies of their cd to go platinum.....

how did everyone get so damn crooked????

Re:all I know.. (1)

tbone1 (309237) | more than 8 years ago | (#14843569)

how did everyone get so damn crooked????

The real question is: between golf and income tax, how can people stay so damn honest?

Don't (1, Insightful)

RedHatLinux (453603) | more than 8 years ago | (#14843496)

fucking bother, the last thing we need is the government making a production out of an antitrust or price fixing case only to issue some limp dick fine, which proporitionally is less than what I pay for a speeding ticket.

Re:Don't (2, Funny)

CMiYC (6473) | more than 8 years ago | (#14843634)

... but say "limp dick fine" on the radio or TV and you owe the FCC $500k.

I Smell The RIAA... (2, Insightful)

mpapet (761907) | more than 8 years ago | (#14843497)

I don't even have to RTFA to see that one.

At what point does what the RIAA is doing constitute breaking some kind of law? Anti-trust maybe? Anyone have some insight into this?

Its called price fixing (2, Insightful)

blibbler (15793) | more than 8 years ago | (#14843669)

and it creates a monopoly-style pricing situation.

Imagine if Intel and AMD got together and agreed to not sell CPUs for less than $500. Suddenly you would have to pay much more for a computer, and Intel and AMD would get much higher profit margins. As long as they keep to this agreement, people who want to run an x86 computer, don't have a choice but pay the extra.
The reason the prices are so low for most CPUs at the moment is because of the competition between those two manufacturers.

The suggestion is that the large music companies, rather than trying to compete against eachother on price, have an (informal?) agreement on what they will sell their music at, somewhat above their actual cost.

One important difference is that music companies don't compete on price as much as they compete with their "artists". No matter how low a britany spears album is priced, I won't buy it.

Re:Its called price fixing (1)

TimTheFoolMan (656432) | more than 8 years ago | (#14843824)

Or, imagine Microsoft and some PC manufacturers agreeing to always bundle Windows with every machine, regardless of whether a consumer wants to buy it or not.

Wait...

Tim

Re:Its called price fixing (0)

Anonymous Coward | more than 8 years ago | (#14843981)

Why would someone imagine that when thinking about price fixing? That has absolutely NOTHING to do with price fixing.

Wait...

This is Slashdot, where the comprehension of simple ideas is near nonexistent.

You, sir, are a stupid fucking faggot.

Re:Its called price fixing (1)

TheRaven64 (641858) | more than 8 years ago | (#14844287)

Imagine if Intel and AMD got together and agreed to not sell CPUs for less than $500

Then IBM would resurrect its line of x86 CPUs and sell them for $3-400. The trick with price fixing is to make sure that your price is something the market will bear (if only just), and sufficiently low that you keep the barrier to entry in your market sufficiently high. 99p/track is very low from the perspective of a small-scale band. If you are only selling a few hundred tracks, it is difficult to break even (not counting live performances). If you are in a large music label, however, you make a large profit since your investment is fairly constant irrespective of your sales.

how low a britany spears album is priced (1)

dpilot (134227) | more than 8 years ago | (#14844352)

I dunno... If it gets cheaper than skeet, and fits in the launcher.

PULL!!

Re:I Smell The RIAA... (1)

hkgroove (791170) | more than 8 years ago | (#14843994)

I don't know if it is the RIAA they would go after. Record Labels, or more appropriately, Executives could be indicted on conspiracy and price-fixing charges if it can be proven the Executives met to discuss an agreement on a fixed price to raise revenue / profit for all applicable parties. Though, that's my non-lawyer way of interpreting.

If it's true, it sounds awfully familiar to Eichenwald's The Informant, which is about a price-fix scandal in the 90s (also with far reaching political ties).

Re:I Smell The RIAA... (1)

geekee (591277) | more than 8 years ago | (#14844067)

"I don't even have to RTFA to see that one.

At what point does what the RIAA is doing constitute breaking some kind of law? Anti-trust maybe? Anyone have some insight into this?"

Steve Jobs says all songs are worth $0.99, and it's the record labels that are being investigated for price fixing? I think we already know which monopoly is setting the price.

Re:I Smell The RIAA... (4, Insightful)

hkgroove (791170) | more than 8 years ago | (#14844183)

Steve Jobs says all songs are worth $0.99, and it's the record labels that are being investigated for price fixing? I think we already know which monopoly is setting the price.

What on Earth are you talking about? iTunes is one company with a set price - they set the price there because it's affordable for consumers. Price fixing usually happens at level outside of the common view. In this case: Sony, Virgin, Arista (whatever other shitty labels) are being investigated because there is speculation they are meeting to set the base price of their product in order to make more money.

iTunes might have an agreement with Sony for $0.25 per song, while Virgin iTunes has to pay $0.28 per song (Yes, numbers I'm pulling out of my ass). iTunes still sells each for $0.99 . The idea here is that the labels are potentially meeting to rise the price up to an agreed upon price (say $0.60 per song - another number straight from my ass) to increase their bottom-line and force iTunes to raise their end-user price as well. This would give more viability for consumers to go back to buying CDs at the artificially high prices and not be able to save money when buying online.

Drive them to Piracy? (0)

Anonymous Coward | more than 8 years ago | (#14843513)

Yes, of course, because simply by being an Apple product owner, we can truly be assured the person is not normally anti-corporate and/or given to illegal substances!

I say, good chap, surely the girl in tie-dye and cargo pants at the Genius Bar is an optical illusion.

The problem isn't pricing the problem is copyright (2, Insightful)

argoff (142580) | more than 8 years ago | (#14843517)

I think the reality is that anti-trust problems and pricefixing problems are pretty much pre-destined anytime you have a monopoly, and when you have a government granted monopoly on copying and distribution (copyrights) it is a money back guarantee.

It always amazes me to see all these people who are in-dignified about this when it's their own belief system in copyrights that pre-destined this to begin with.

Copyright Paradox (1)

Nymz (905908) | more than 8 years ago | (#14843996)

That is sort of odd, how some people complain about the negative effects of extreme copyrights (protectionist laws) but then think the solution is yet... more protectionist laws.

That would be like passing legislation to make OS requirements (like no bundling), because you hate MS, but then those very regulations in effect limit competition, thus turning MS into a real monopoly.

MOD PARENT DOWN. - come on folks! (-1, Flamebait)

mumblestheclown (569987) | more than 8 years ago | (#14844129)

I think the reality is that anti-trust problems and pricefixing problems are pretty much pre-destined anytime you have a monopoly, and when you have a government granted monopoly on copying and distribution (copyrights) it is a money back guarantee.

Absolute and total RUBBISH.

Economics 101: even if I have a monopoly on, say, pineapples, I can not arbitrarily set the price of pineapples to whatever the heck I want and expect people to pay for it.

Reason? A little something known as substitute goods.

If the price of pineapples is too expensive, I buy coconuts. Or grapes. Or apples. Or lemons. Or anything else.

Ah, but the slashdot-esque wanker conspiracy idiot replies: "the RIAA owns the whole orchard!"

DOUBLE RUBBISH.

Even if we were to accept the highly highly specious argument that there are no substitute goods for "music" (in other words, people don't say "music is too expensive, i'll watch a movie / read a book / surf the net / go to the theatre / play with my cat", all of which actually are true and invalidate your nonsense argument further), the fact is that the internet has made self-publishing easy and virtually costless.

If the RIAA manage to extract $20 for a CD or $.99 a song from your neighbor despite the fact that you can put your own music for free or for $.10c on the net then MORE POWER TO THE RIAA. It's called MARKET POWER. It means that they have invested the time and effort to make their product worth what the market is willing to pay. You and I may not like sylvia browne's shite books or britney's shite music, but they have managed to convince the market that they are worth paying over the odds for them.

The basic economic phenomenon here has NOTHING to do with copyrights - save your juvenile rant for another day and another thread and learn some basic economics before you around proclaiming your ignorance in six foot high letters.

Re:The problem isn't pricing the problem is copyri (1)

Tiger4 (840741) | more than 8 years ago | (#14844248)

Copyright isn't the problem. Copyright is what allows creative people to believe thier stuff won't get pirated as soon as it is exposed to the public. If you think DRM and licensing is a nightmare now, think what it would be like if there were no legal framework for ti to work within. Content owners could and would demand any kind of onerous restrictions to be sure they didn't get reamed by their own customers.

The problem (among others) is high price. By demanding high prices in the face of easy alternatives, copyright owners are encouraging piracy. Most folks would be happy to get a legitimate copy of something, and therby help the creator, if the price was "fair". You never see anyone go to a library and copy a whole book, even though it would be marginally cheaper than buying the same book at some local store. And the reason is the margin is so low that the benefit of a properly bound book is worth the extra few dollars. DVD and CD manufacturers need to take a lesson.

By the way, ever notice that the retail price of a CD and of a DVD are about the same? We know the music CD has far less data on it, and costs less to produce at the studio to stamping plant stages. Even if unit sales of each are comparable, the CD should be cheaper, probably by a factor of 10 or more (CD studio cost ... $1M , DVD studio cost ... $30M). Music people have no one but themselves to blame for piracy. It is just payback for the gouging they do on a regular basis, even at WalMart.

Put people in Jail this time (0)

Anonymous Coward | more than 8 years ago | (#14843522)


fining them (and by proxy the customer) doesnt work
you need to hurt them in order to provide an incentive not to do it again

in the old days it was fear of death, but thesedays punishhment for a C*O is a million dollar parachute and a life in consulting and greater luxury that you will ever see,
strip anyone caught of their assets (including their families assets) and they will soon think twice before treating their customers with such contempt

might work for politicians too, though a long range rifle and a steady hand would probably be more effective

Obviously (5, Funny)

lucabrasi999 (585141) | more than 8 years ago | (#14843534)

Obviously, all of you just DON'T understand. In order to properly make a recording, not only to you need musicians and a producer; you need lawyers, agents, marketing reps, and dozens of other various hangers on. Without this huge support staff, then how else could you justify charging so much for a recording?

Easily... (1)

davecrusoe (861547) | more than 8 years ago | (#14843560)

... execs drive big cars (read: hummers) and man, it takes a lot of $ to fill those tanks...

Re:Easily... (1)

lucabrasi999 (585141) | more than 8 years ago | (#14843575)

Don't forget, those Execs each have at least ONE administrative assistant (back in the day, they were called secretaries). Think of David Spade in SNL (the recurring Dick Clark Secretary sketch).

Re:Obviously (0)

Anonymous Coward | more than 8 years ago | (#14843563)

That's irrelevent.

The wholesale prices for tracks are thought to range from 70 cents to 80 cents each.

Wholesale price includes all of that, anything on top of that is profit.

Re:Obviously (1)

PrescriptionWarning (932687) | more than 8 years ago | (#14843654)

or instead of the artists becoming just another name on the list of sales, they could actually produce good music. If you've ever been to a good local band's show(or a local of somewhere else), you'll wonder how some of these other idiots ever get a CD at Best Buy. the answer comes from the whole monetary requirement to get that done.

Re:Obviously (1)

gEvil (beta) (945888) | more than 8 years ago | (#14843801)

This post is far more insightful than funny...

That's alot of free downloads... (2, Insightful)

MLopat (848735) | more than 8 years ago | (#14843550)

So for what your government is spending your money on in running this inquiry, customers could sure have alot of free downloads. How much will this investigation cost? $10mil, $20mil? At the end of the day, you're getting screwed both ways -- paying for your music, and paying a government that keeps changing the copyright policies in the US to favor large corporations.

Fair practices require obligatory licensing. (3, Interesting)

Errandboy of Doom (917941) | more than 8 years ago | (#14843551)

If you want to stop anti-competitive practices, digital distribution needs to adopt the rules of radio:

Download services should have the right to sell any digital recording now, and compensate artists afterwards. There should be nothing "exlusively on iTunes" (or eMusic for that matter).

Opening competition prevents unfair business practices (to some extent, anyway, worth a shot!).

Re:Fair practices require obligatory licensing. (1)

99BottlesOfBeerInMyF (813746) | more than 8 years ago | (#14843605)

If you want to stop anti-competitive practices, digital distribution needs to adopt the rules of radio: Download services should have the right to sell any digital recording now, and compensate artists afterwards.

Well, that might help with fair use if the RIAA can't specify what DRM is used, but I doubt that will ever fly. Also, this doesn't really address the abuse at hand, price collusion. What does it matter if Apple or Apple and 15 other places sell the song if the price of the song at all these places is artificially high?

Re:Fair practices require obligatory licensing. (1)

colanut (541823) | more than 8 years ago | (#14843711)

While I think I get your point. I'm not sure the statement:

If you want to stop anti-competitive practices, digital distribution needs to adopt the rules of radio

is a good way to start. Radio has never been a good place to look for healthy competition. However, the licensing strategy you are rightfully pointing out is to license all tracks equally to whoever is willing to sell. I think is noble but might not work the same way as licensing air play.

A limited time exclusive is often a pretty good promotional tactic especially because it is subsidized to raise brand (co-brand) awareness.

The sticky part is that there is collusion among the content owners (and artists are no longer the owners) over pricing, who can and can't sell and with which DRM.

I find it interesting that I can price/feature compare small and indie label music on iTunes vs Bleep and make a choice between cheaper or drm free/higher bit rate. I don't know if that can be done with major label music.

Re:Fair practices require obligatory licensing. (1)

kthejoker (931838) | more than 8 years ago | (#14844232)

Actually, radio is great for healthy competition, in broad strokes. Here in Austin we have at least 5 or 6 all-Spanish-speaking stations. I imagine there are quite fewer of those types of stations in North Dakota.

Of course, due to the limited spectrum of radio, our choices within whatever tastes we may have (rock, hip hop, jazz, etc) are fairly limited, and limited markets tend to reward major players over independent labels. LUCKILY digital distribution doesn't have this limit, and thus every possible flavor of content provider is possible in a distribute first model.

The key is that in a distribute first model, where any song can be played by any radio station, competition becomes less about content and more about the model of providing content (i.e. do you like the DJs on this or that station, which station has better promotions, which station skews slightly older/younger/harder).

The same is true about online music distribution models - Napster gives you access but you don't own, Rhapsody and eMusic offer more indie label stuff, iTunes has the iPod, Yahoo! Music is like your personal radio station, etc etc the list goes on. And, if a true distribute first model were enacted, hopefully some more competitors could spring up, because they wouldn't be beholden to the specific burdens of any given label. More models, more choice, better market.

Mod the grandparent up.

Re:Fair practices require obligatory licensing. (1)

Rocketship Underpant (804162) | more than 8 years ago | (#14844016)

"Download services should have the right to sell any digital recording now, and compensate artists afterwards."

Interestingly, that's the law in Russia. As a result, Russian paid-download sites do a booming business, and the customer sometimes even gets to pick the encoding format.

Re:Fair practices require obligatory licensing. (1)

jaydubscott (897863) | more than 8 years ago | (#14844315)

That would work fine, until the record label said "Hey we're charging you $50 for each song that you just sold for $.99"

This raises an interesting question (-1, Offtopic)

Anonymous Coward | more than 8 years ago | (#14843552)

WHY ARE NIGGERS SO FUCKING SMELLY? GOD!

Lameness filter encountered. Post aborted!
Reason: Don't use so many caps. It's like YELLING.

Re:This raises an interesting question (0)

Anonymous Coward | more than 8 years ago | (#14844075)

so blind people can hate them too!

Investigation is the interest of RIAA (0)

Anonymous Coward | more than 8 years ago | (#14843555)

The most benefit investigating online music pricing would go for large labels, who have been trying to set different prices for different tracks, against Apple's 1 song 1 price model. It is in the interest of the big labels to be able to force Apple to sell certain song more expensively. If not with distribution negotiations, then with government initiated investigation.

Yeah, right... (3, Insightful)

hellfire (86129) | more than 8 years ago | (#14843559)

This administration has already proven it's unwilling to pursue anti-trust litigation. They managed to bury the single most important anti-trust suit of our time to date, and microsoft is still doing what they do in the US, while the rest of the world cracks down on them.

Personally I think this is just that, an investigation, with little backbone or political will to see it come to court. It would detract from their "war on terrorism" and listening in on all their warrentless wiretaps.

The free market is injured right now. (1)

CyricZ (887944) | more than 8 years ago | (#14843727)

Indeed. Their attitude towards Microsoft, Sony, and the recording industry highlights how truly un-free market the Republicans (and Democrats) are.

While the free market is a truly remarkable beast, it at times does fail. Even the most diehard libertarian recognizes that fact, and accepts that sometimes extramarket forces are needed to correct such failures.

Corporations are often considered a free market aberration. They allow for monopolistic and oligopolistic situations to arise, and such situations are often not good for any market. We end up seeing situations where one company (or a small group of companies) can basically hold an entire industry hostage, not to mention wronging their customers repeatedly.

That is why those who truly support the free market do support government intervention. The market has failed, such failure is obvious, and thus it does require some help to get working again. Unfortunately, it is doubtful we will see the current administration, let alone any in the near future, taking the necessary actions.

Re:Yeah, right... (1)

gEvil (beta) (945888) | more than 8 years ago | (#14843828)

Indeed. They'll look into and conclude, "Nothing to see here. Move along." This will in turn buy the music industry about 10 more years before another investigation can even be launched...

Re:Yeah, right... (0)

dpilot (134227) | more than 8 years ago | (#14843885)

You just have to twist your brain a bit to understand the current administration's logic with respect to anti-trust, etc.

In my best Stephen Colbert imitation...

These so-called "monopolies" got to their current positions by being successful. Shouldn't our society reward success? Anti-trust litigation is essentially punishing success. So are progressive tax rates, for that matter. These are IMPORTANT matters, and NEED to be fixed. In that light, this administration has done a good job.

Move the fuck on. (0)

Anonymous Coward | more than 8 years ago | (#14843906)

This story IS NOT about Microsoft. Jesus, not everything at Slashdot revolves around Redmond, most, but not all. Sure, most of Slashdot's ad money comes from Microsoft, but this ISNT a Microsoft web site. Move the fuck on.

Oh please. (4, Insightful)

Fahrvergnuugen (700293) | more than 8 years ago | (#14843573)

"piracy, a problem that has cost the music industry billions in revenues in recent years"

Please, lets not jump to conclusions like this, ok?

Re:Oh please. (1)

spud603 (832173) | more than 8 years ago | (#14843587)

No kidding. The jury is still *way* out on that point.

Re:Oh please. (1)

hotdiggitydawg (881316) | more than 8 years ago | (#14844135)

+1 Amen Brother

Not fixed low (2, Insightful)

77Punker (673758) | more than 8 years ago | (#14843584)

$1/song as iTunes charges (I think) is hardly a good price. $12 for 12 songs is the price of an average CD. The best deal I ever got was "The Essential Clash" with some 40 (good) songs for $13. iTunes can't deliver that.

Re:Not fixed low (2, Insightful)

dreamer-of-rules (794070) | more than 8 years ago | (#14843646)

It's much cheaper to pay $1 for "War" if you never plan to get anything else by Edwin Star. There's lots of artists that it's worth getting only a couple songs from. For entire albums I go to CDBaby.com-- I'm boycotting the big labels.

Piracy isn't an option for me. It's illegal, and it keeps the major labels in power by keeping their music popular and gives them a leg to stand on in court.

Re:Not fixed low (1)

petsounds (593538) | more than 8 years ago | (#14844023)

I think what the parent poster is insinuating is that Apple is doing price fixing too. Not every song is worth $1.

Re:Not fixed low (1)

Maxo-Texas (864189) | more than 8 years ago | (#14843685)

Agreed. Songs from allofmp3.com sell for about 30 cents a piece.

If I pay a buck a license I want them to record that license for the rest of my life and let me redownload the song for free once a year to whatever media I'm using at that time.

Re:Not fixed low (0)

Anonymous Coward | more than 8 years ago | (#14843837)

$1 doesn't seem so bad, I paid about $12 for my copy of Jethro Tull's Thick as a Brick on cd, and that has only one song!

Re:Not fixed low (2, Funny)

kidcharles (908072) | more than 8 years ago | (#14844132)

I agree, it's too much money, and for a compressed version at that. Basically the music industry has said: "Hey, we've reduced our distribution costs considerably, and to celebrate we're going to give you your music with lower fidelity and DRM tacked on for the same price as you used to pay. Enjoy!"

ijoij (-1, Offtopic)

Anonymous Coward | more than 8 years ago | (#14843586)

http://www.herbalvirility.co.uk/

What?! (0)

Anonymous Coward | more than 8 years ago | (#14843594)

You mean to tell me that $0.00 isn't enough?

Billions you say? (5, Interesting)

MrPeavs (890124) | more than 8 years ago | (#14843599)

"piracy, a problem that has cost the music industry billions in revenues in recent years.'"

I don't buy it one bit. I always find comments/stats like this to be funny. How does that go again, 76.34% of stats are made up?

Whos to say that Redneck Billy Bob would really have paid for that Britney Spears album that had the song that he pirated? Or that your great aunt Ethal, really would had bought that Iron Maiden album from that song she pirated?

I think these numbers are grossly exaggerated and most likely, just made up. How are you to statically calculate a loss of a non-material product that you are "assuming" someone "would have" purchased legally?

The RIAA and MPAA need to get knocked off their little soap box and stop preaching their bullshit. It isn't like they aren't making enough money as it is, those fat cats pockets just keep getting bigger. Not to mention, established artists are not hurting either. The people that are getting hurt buy this are the struggling artists, that the music industry is already raping as it is. But do you hear these stuggling artists bitching, no, most of them are not. Most of them realize the more people that can hear the music, the more fans they are going to get. True fans that will buy their albums and support them.

Re:Billions you say? (1)

brufleth (534234) | more than 8 years ago | (#14843878)

Exactly! Their gorilla logic enables them to make up any value for "cost" that you want.

It might surprise some them to learn that people take things that are free that they otherwise might not pay for.

new lower pricing model (4, Insightful)

digitaldc (879047) | more than 8 years ago | (#14843609)

Do you think online music is priced fairly?

No, and here is my suggestion:

0.20 cents for each 128 kbps song
0.40 cents for each 256 kbps song
0.60 cents for each 320 kbps song
0.80 cents for each lossless song


The better the audio quality, the higher the price.

Re:new lower pricing model (1)

2nd Post! (213333) | more than 8 years ago | (#14843683)

Shouldn't price also be concommitant with download size?

So if a lossless song is 5x bigger than a 128kbps song, shouldn't it be approximately 5x more expensive?

The lossless song should, at your rate, bet at least $0.99

My own take is, after making my own DVDs and selling for a smattering of profit:
$0.50 128kbps
$0.75 256kbps
$0.99 320kbps
$2.99 lossless

This doesn't follow that 5x pattern because I've included profit margins in each price category.

Re:new lower pricing model (1)

gEvil (beta) (945888) | more than 8 years ago | (#14843846)

You know, you're absolutely right. I should spend 30 to 40 bucks to get an album's worth of music as lossless downloads. Hmmm...On second thought, I'll just go out and buy the CD for 13 bucks...

Re:new lower pricing model (1)

ConceptJunkie (24823) | more than 8 years ago | (#14844104)

Better yet, I listen to groups that routinely create 20-30 minute epics. I love the way everyone assumes a "song" or "track" is 3 minutes of music.

Re:new lower pricing model (1)

gEvil (beta) (945888) | more than 8 years ago | (#14844342)

Don't get me wrong, if I could get Ornette Coleman's Free Jazz or The Orb's Blue Room in lossless format for 3 bucks each, I'd consider it a bargain. At 40 minutes each, though, they'd probably be priced considerably higher.

Re:new lower pricing model (1)

Renraku (518261) | more than 8 years ago | (#14843829)

My suggestion is to get some high-quality music in the first place. This Britney Spears stuff isn't going to cut it..

Re:new lower pricing model (1)

Kjella (173770) | more than 8 years ago | (#14843902)

Here's the problem: Take Apple's current 99 cents. Deduct what the label is getting (Why on earth should they decide to charge you less? Charity?). Deduct the fixed costs + marginal cost per artist Apple has with iTMS. The remaining ten cent is what you have left to play with when it comes to delivery. So your 128 kbps song costs 90 cents, and the lossless one 110 cents. Big fscking whoop.

The problem is, your plan is a microscopic change in delivery and a huge slash in prices, given how many are willing to buy 128kbps today, I'd say 80%. It makes absolutely no sense from a business perspective. It's like saying to Microsoft "First, we start by cutting your prices by 80%, because I think that'd be a fair price." Newsflash: Prices are not set to cost, prices are set to what the market is willing to pay. You don't want to pay 99 cents, but enough people do. "Not fair" != "Not the price I want to pay."

Re:new lower pricing model (1)

stalebread (920322) | more than 8 years ago | (#14843977)

here is my suggestion:

0.20 cents for each 128 kbps song
0.40 cents for each 256 kbps song
0.60 cents for each 320 kbps song
0.80 cents for each lossless song

If the entire music industry followed those rules, it would still be price fixing. The prices need to be determined by the market, meaning that music companies should be competing with each other. Since online music prices are inflated, this would almost certainly drive the prices down.

Re:new lower pricing model (0)

Anonymous Coward | more than 8 years ago | (#14843983)

Or you can buy used CD's from a store like secondspin.com [secondspin.com] (no I'm not affiliated other than being a satisfied customer) for $6 or $7 and get the real deal. Then you can record to any format you want, lossy or lossless, to your heart's content.

Sure they are used, but still in very good condition (some appear brand new), and the selection is incredible for a used CD store. With such a great service available (and that's not the only one), I just don't understand why anyone would buy lossy tracks over the internet for more. Is the itunes store really that convienient?

Re:new lower pricing model (1)

thatkeith (916250) | more than 8 years ago | (#14844309)

This does remind me of AllofMP3.com's pricing structure: 2 US cents per megabyte, with a decent range of quality (hence relative size) options. As you say, the better the audio quality, the higher the price. But there it effectively equates to playback time rather than to tracks.

Irony (3, Interesting)

Datasage (214357) | more than 8 years ago | (#14843627)

Record Industry Buiness plan

1. Fix your price at a point higher than what the market wants.
2. Find comsumers who priate your music because they dont want to pay set price.
3. Extort said persons for more than they would ever spend in a year for music.
4. ???
5. Profit

They got it pretty good, they make money of those who acutally buy thier songs and make money of those who dont.

variable pricing can be a good thing (5, Insightful)

microbrewer (774971) | more than 8 years ago | (#14843656)

Chris Anderson the Editor in Chief and the Author of the soon to be released Long Tail Book posted this on his blog last year why the labels need variable pricing and the fixed priced model is flawed and the reason that Steve Jobs opposes it is because hes in the business of selling iPods and the sale of iTunes music is only a secondary part of his business .

Could the labels actually be right?

Ipod_although it's tempting to assume that the evil record labels are once again trying to gouge us, there's some sense in their latest efforts to get Apple to abandon it's one-size-fits-all pricing model. A New York Times article over the weekend reported on the ongoing struggle between the labels and Apple over its fixed $0.99 price point. The labels would like to sell most new music for more--$1.49/track?-- while older or more obscure tracks could go for less.

There's plenty to like about variable pricing. For starters, it's almost always the most efficient way to maximize markets of disparate goods and customers. As Barry Ritholtz puts it:

        It's a basic rule of economics: goods that have elastic demand (i..e, non essential) are highly price sensitive. Further, any item easily available for free (albeit illegally) will have an even bigger response to price increases.

Apple has argued that single-price simplicity was necessary in the early days of the service, when people were just getting used to paying to download music. But now, after 500m tracks have been sold, we're clearly past the early adopter phase. So what's the right pricing model going forward?

Most accounts of the dispute between Apple and the labels have focused on the industry's efforts to raise prices, which are undeniably a big part of their plan. No surprise there. The research we've been doing for the book shows that within the bulk of the online music business--the top 100,000 downloads--only 3.5 tracks on the average CD sell. So the record labels are getting less than $3 in revenue (wholesale) from albums when the music is sold by the track. That's less than half the wholesale price of a CD (although with none of the physical costs of making and distributing a CD). The shift from an album model to a track model is indeed an alarming thing for the labels, and it's easy to see why they'd want to raise retail prices online as a result.

But there's more to the story that that. The labels may be evil, but they're not (all) stupid. They--to say nothing of many of their artists--also see the virtues of dropping the price for lots of their music, too. For decades they've been playing with CD pricing models that range from cut-price classics to top-dollar boxed sets, and when freed of the overheads of traditional retail, they're likely to experiment more, not less. Although some of the more vocal commentators have encouraged Apple to hold the line at $0.99, there's a strong argument that introducing variable pricing might ultimately lead to a more consumer-friendly outcome.

The reason is simple Long Tail math: there's a lot more music in the Tail than there is in the Head, and labels are generally more willing to experiment with discount pricing outside of the top 1,000 than they are with their hits. Those niches represents most of the music available today, measured by number of titles, and because they're only modest sellers individually they're less likely to create channel conflict with CD retailers, who tend to only stock the hits.

Imagine, for starters, that Apple introduces a three-tiered band of pricing: $1.49, $.99 and $.79 (that would no doubt soon expand to include $.49, but below that the transaction costs of credit card processing and the like start to loom large). Tiered pricing--gold, silver, bronze--is still pretty simple for consumers to understand, yet it introduces a valuable new dimension of demand creation.

Rhapsody, for instance, saw demand triple last year when it cut prices in half, to $0.49. And the average usage per customer in the all-you-can-eat subscription services is typically 5-10 times that of the pay-per-download music stores, such as iTunes. Add to that the potential of free music, which Apple has already paved the way for with its broadcast service and could easily be extended to music licensed under Creative Commons, and you could grow grow the user base of the commercial music services manifold.

Once iTunes allowed variable pricing, I imagine labels would do pretty much what they already do with CDs: set a range of wholesale prices depending on age, popularity and target market. Some labels will unwisely try to jack up all their prices and will eventually suffer lower overall revenues as a result. But smarter labels will experiment with all sorts of pricing variations, from lower prices for bands they're trying to break to volume discounts for packages of older music, and even higher prices for special reissues and repackaging for hard-core fans. That's already what they do in the CD world, where even standard retail prices range from around $9 to $18.

Apple may think it's protecting us from record label avarice with $0.99, which may be true in the short term. But long term, one-size-fits-all pricing is just constraining the economics of the industry and holding back the market. If Apple introduced variable pricing, it's not hard to see how the average price might actually fall in a year or two, thanks to the number of titles in the discounted niche/back catalog categories vastly outnumbering the more expensive hits.

As long as prices can go down as well as up, I'm confident that market forces will eventually reveal the right set of models. And I'm even more sure they will confirm that no one model is right for everyone and every song.

Posted by Chris Anderson

http://www.thelongtail.com/the_long_tail/2005/08/c ould_the_label.html [thelongtail.com]

Re:variable pricing ... people will just wait. (3, Interesting)

fahrbot-bot (874524) | more than 8 years ago | (#14843930)

Music and movies are commodities and need to priced as such. Their respective inductries need to realize this.

The problem with this variable pricing, based on the product's age, is that many (most?) people will simply wait until the price of the item drops to purchase it. Just like DVDs.

How many people now skip seeing a movie in the theater and buy the DVD? How many of those wait 6 months after the DVD release for the price to come down?

The movie industry still mainly counts only the opening box office receipts as the guage of a movie's success. Who's to say the music industry doesn't do something similar.

Re:variable pricing can be a good thing (1)

pxuongl (758399) | more than 8 years ago | (#14843953)

the average price of music won't go down with variable pricing. let's say that 90% of all music downloaded is popular and new music and that the other 10% are older tracks and less listened to stuff, while the total of all music offered sits at a 10% popular music to 90% are older tracks ratio. and let's assume it's $0.50 for older tracks and $1.50 for popular and new tracks. under a straight weighted average and your assumption where "it's not hard to see how the average price might actually fall in a year or two, thanks to the number of titles in the discounted niche/back catalog categories vastly outnumbering the more expensive hits", then the average price of a track would fall as more music is being added. That price would be, under the above assumptions, $0.60 a track. all and good right? no, not right. what makes a difference is not how many tracks are available for download, but what the average price is when u weight it on -what's- being downloaded. So, if 90% of all music downloaded is popular music, at $1.50 a pop, and the other 10% is the not so popular stuff, at $0.50 a track, then the average price per track goes up... or, with the above assupmtions, $1.40 per track. and do you honestly think that music that's popular, irregardless of age, will be relegated to the bargin bin at bargin bin prices? why would an -any- executive lower the price on -any- product that's selling a million units a year for the 10 years at the same price?

Re:variable pricing can be a good thing (1)

ronanbear (924575) | more than 8 years ago | (#14844275)

Could the labels actually be right?
Of course they could. But they aren't. There's a small problem with that interpretation of the long tail argument. The labels make enough money from 99 cent downloads already on popular songs and they say they want to make more money by selling more copies of less popular songs for less money.
They could easily do that already. If they told Apple that they wanted to make some songs cheaper and leave popular songs the same there wouldn't have been so much of a problem. They'd still make all that money from the long tail. This way they could increase their revenue from the long tail. Instead they have their hearts set on increasing prices and offering a carrot of dropping prices on their most worthless songs. They aren't even pretending that average prices will drop.
They don't care about customers and anyone who thinks they do are naive. Hell if they think their price model is so great they should try it on the other music stores and see how well it does. Oh wait they know that it won't work unless they force all the big stores to do things their way.
There's nothing good about variable pricing except that a large number of CDBaby artists would be able to sell all their songs for less money and hopefully grow a larger fanbase.

billions in revenues? (0)

Anonymous Coward | more than 8 years ago | (#14843674)

you mean "billions in potential revenues"

The prices must be fixed! (2, Insightful)

Anonymous Coward | more than 8 years ago | (#14843709)

No more cd media costs.
No more cd container costs.
No more printed liner costs.
No shipping costs.
Drastically reduced distribution costs.

And it ends up costing me more than ever to download a wrapped physical CD worth of music that has been shipped to a retail location.

Something is not right here.

Re:The prices must be fixed! (1)

pxuongl (758399) | more than 8 years ago | (#14844005)

No more cd media costs.
No more cd container costs.
No more printed liner costs.
No shipping costs.
Drastically reduced distribution costs.
Profit on cd-r tax
Profit on cd-burner tax
don't forget cd levies on every cdr and every burner sold, which we all pay irregardless of whether music or private person data is being burned onto them.

Re:The prices must be fixed! (1)

VoxCombo (782935) | more than 8 years ago | (#14844194)

In the US, the royalty is only on specially marked "music CD-Rs". This is the only kind which will work in component burners (eg, burners that don't need a computer that are just for music). The kind you use in your computer does not include a royalty, nor does the burner in your computer.

...Wait a Damned Minute... (1)

Mekkis (769156) | more than 8 years ago | (#14843736)

...Didn't I remember reading an industry publication about the fact that iPod/iTunes users are actually less likely to engage in piracy than non-iPod/iTunes user? That the rate of piracy amongst iPod/iTunes users is estimated at between ~5% to ~15%, while non-users are estimated around ~60%?

This sounds to me like the RIAA is throwing a tantrum and wielding its legislative power to force Apple to increase prices on iTunes like they've been bitching about for the past year or two. "What? 99 cents a song? That's not enough of a profit margin for us! We want to charge people $2.50 per song!" So they claim "price fixing" and "unfair pricing" so they can have an excuse to sue Apple into allowing them to dictate the sale prices.

Problem is that the RIAA is keeping to an obsolete sales scheme. Increasing prices for music downloads decreases the incentive to buy and increases the incentive for piracy. The whole effing point of iTunes is to provide a sales forum where prices are low enough that users consider the risk/benefit ratio to be in their favor (i.e., buying versus piracy).

Dog in the manger syndrome, anyone?

Not payign for less quality. (0)

Anonymous Coward | more than 8 years ago | (#14843743)

I will never pay to download a lossy file. Sadly some of the russian sites offer a large amount of lossless files. While the legal ones don't

Copyright price fixing (0)

Anonymous Coward | more than 8 years ago | (#14843831)

Of course they are price fixing. The Copyright is the price fix!

The Copyright Act of 1790, An Act for the Encouragement of Learning, by Securing the Copies of Maps, Charts, and Books to the Authors and Proprietors of Such Copies, was modeled on the Statute of Anne (1710). It granted American authors the right to print, re-print, or publish their work for a period of fourteen years and to renew for another fourteen.

Sonny Bono Copyright Term Extension Act of 1998 extended protection from life of the author plus fifty years to life of the author plus seventy years.

That means a work can be price fixed for 140 to 300 years, compared to the original 28 years.

Every time you walk into a Barnes and Noble or Borders, everything on all those shelves is just information that is artificially inflated to a length of time longer than the US has existed.

Fixing of 'Online' Music Pricing?! (1)

segedunum (883035) | more than 8 years ago | (#14843850)

Bloody hell, there's price fixing of all music! When you buy a CD at any given store, how often can you get it cheaper than anywhere else?

I wouldn't be suprised if this was initiated by Microsoft because their WM stuff is having a hard time............ *Puts tin foil hat firmly on*

If they are going to investigate music pricing.. (1)

bill_kress (99356) | more than 8 years ago | (#14843870)

Why not look at CD pricing? They have been fixing this crap for decades. Why do we NEVER see market aberrations? We should see the occasional new CD come out for $5.00, right? Everyone involved would still make money, so you'd figure there would HAVE to be a label out there trying to undercut the others this way--at least an ATTEMPT.

umm (1)

BitterAndDrunk (799378) | more than 8 years ago | (#14844086)

I bought the second Black Rebel Motorcycle Club CD the week it came out for $5.99

Unfortunately, it was worth every penny.

how about this (0)

Anonymous Coward | more than 8 years ago | (#14843927)

how about music companies offer downloads at the prices they would like to offer downloads. and if we do not like the price, we do not buy. seems simple enough. it's not like we are talking air or water here.

A system that understands... (1)

drumt (952010) | more than 8 years ago | (#14843941)

www.allofmp3.com... 192kbps for $.012USD Life is good!

what?? (1)

O_at_TT (953533) | more than 8 years ago | (#14843962)

You mean to say that setting the price of a song at 99 cents, regardless of duration, regardless of who the artist is, regardless of how popular it might be as long as it comes from a major label is considered price fixing??

[shocked] No! Way!

Oliver / http://www.treasuretunes.com/ [treasuretunes.com]

Complete bullshit. Apple is price fixing (0)

geekee (591277) | more than 8 years ago | (#14844015)

Record labels want to stop price fixing of online music. The want spearate pricing for each song, depending onit's popularity. Apple is the one that thinks every song should cost $0.99, and want to force all record labels to take their cut from this revenue.

My thoughts (1)

Widowwolf (779548) | more than 8 years ago | (#14844018)

You know anyone who really looks at the situation, it is obvious that the RIAA is wanting these investigations to happen. If they get their way, they can force itunes to either use tiered pricing or not and lose lots of money.

Ever since i was young, CDs have been outrageously priced, and when all you wanted was 1 to 2 songs off an album, you are still paying what 3-4 dollars for a "single", 1 song remixed 4 times(and shitty remixes at that) or every once in a while they throw you a good track other then that single.

Personally I do not hear the difference between Lossless and 196 bit rate songs. I am no audiophile and yes i use my ipod with my white headphones. They are comfortable. Plain and simple. If they want to do tier pricing, all done by bit rate, I almost guarantee a lot of people will not be buying lossless, just in cost factor

If this goes through, I do not believe you will see any songs at less then $0.99 , you will just see popular songs go up in price. The one truly sad thing about 1 tier pricing like this is any Independant artists songs are going for the same price all the rest of the crap is there for..

If you go through every CD you own right, how many songs out of the total do you like, and will listen too. Even on my favorite bands soundtracks, there are 2-4 songs i don't like. This is why they want to make more money..Now you don't have to buy the whole caboodle, so they need to make all their xtra profit somewhere.

The other problem is Amounts of sales from Albums. The RIAA cant just buy up stocks up CDS to get their artist recognized anymore Like they used to. You know what happens to those CD's? Most of the time, they are either given away or resold at concert venues.

DOH EXCUSE ME??? (1)

Spy der Mann (805235) | more than 8 years ago | (#14844210)

Mr Jobs suggested such a move would drive owners of Apple's iPod, the hugely popular digital music player, to piracy, a problem that has cost the music industry billions in revenues in recent years.

OK let me fix that for you.

Mr Jobs suggested such a move is a problem that has cost the music industry billions in revenues in recent years.

THERE! :D (Don't thank me, it was my duty)

David and Goliath? (1)

buckyboy314 (928081) | more than 8 years ago | (#14844301)

While I do respect this action, I find it disappointing that it was instigated by Apple as opposed to an independent consumer. It is now up to companies with lots of clout (e.g. Apple in this case, Google in expanding the public domain against ownerless copyrights, and Microsoft in decrying Sony's rootkits) to uphold the greater good! More and more, money==power.

Wholesale vs retail. (1)

no_opinion (148098) | more than 8 years ago | (#14844328)

Note the labels set wholesale pricing, not retail pricing. This means Steve Jobs is the one who determines tracks will be $.99. There are, in fact, different price points for the same music if you go to other legitimate download stores. For example, Walmart.com charges $0.88 for the same tracks iTunes has.
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