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Apple Sets Tune for Pricing of Song Downloads

samzenpus posted more than 8 years ago | from the pink-lady-serenade dept.

396

PygmySurfer writes "Apple Computer on Monday revealed it had renewed contracts with the four largest record companies to sell songs through its iTunes digital store at 99 cents each. The agreements came after months of bargaining, and were a defeat for music companies that had been pushing for a variable pricing model."

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It makes me feel all good inside... (5, Funny)

crazyjeremy (857410) | more than 8 years ago | (#15241894)

The music industry's big four - Universal, Warner Music, EMI and Sony BMG - were not immediately available to comment ... The issue has occasionally become acrimonious, with Mr Jobs last year publicly labelling the industry "greedy". However, several music executives privately acknowledge that they have little leverage over Mr Jobs.
Heheheh... I dunno, but ANYTIME a big guy saves the little guy money, and greedy corporate america gets told to "stuff it" and HAS to listen... It just makes me feel all good inside.

Re:It makes me feel all good inside... (5, Funny)

0racle (667029) | more than 8 years ago | (#15241946)

several music executives privately acknowledge that they have little leverage over Mr Jobs

Perhaps someone should download the Imperial March from iTunes in honour of this.

Re:It makes me feel all good inside... (5, Insightful)

TubeSteak (669689) | more than 8 years ago | (#15242128)

They have leverage, they just aren't willing to use it.

If the 4 RIAA companies were willing to offer Non-DRM music, they could ditch Apple in a heartbeat.

They're stuck because the most popular music player has a DRM format controlled by Apple.

I bet the RIAA would love to see the iPod 'opened up' to support other DRM schemes. Then they could use a different distribution method... one that has variable pricing.

The Emperor & Darth Vader would destroy Apple & their music empire. Not because they're rebels, but because they didn't go along.

Re:It makes me feel all good inside... (0)

Anonymous Coward | more than 8 years ago | (#15242211)

Don't worry, I already ripped it from my 4 cd Sony Classic: Great Performances [amazon.com] music collection !!!

Re:It makes me feel all good inside... (2, Insightful)

physicsphairy (720718) | more than 8 years ago | (#15242068)

"Greedy corporate America" is on both sides of this issue.

Apple isn't looking out for you; Apple is looking out for Apple.

In fact, if it wasn't for the RIAA, Apple probably *would* be implementing a variable pricing scheme all on their own. Each song has its own unique demand curve and variable pricing would certainly allow Apple to optimize it's profit. (note that isn't necessarily bad for the consumer... many songs would be optimally priced at less than $0.99)

The only reason you see Apple on the other side of this issue is because RIAA is taking a peace of the pie. Apple also controls the ipod market which is complementary to the itunes market. But Apple gets 100% of the profit from the ipod market, and only part of the profit from itunes market (since they have to share with the RIAA). So they would naturally like to shift as much profit as possible to the ipod market, which means keeping lower prices in the itunes market.

In the end, if you're saving any money at all, it's only because Apple is every bit as cutthroat as anyone else. It's not because Steve Jobs is welling up tears because he thinks you might be overcharged for music from his company.

Re:It makes me feel all good inside... (1)

shawnce (146129) | more than 8 years ago | (#15242201)

Apple doesn't pay any money to the RIAA when a song is sold on iTMS. They pay the record company that holds the rights to the song (the one they licensed distribution rights from). The RIAA is a trade organization not a corporation....

Re:It makes me feel all good inside... (3, Informative)

Firehed (942385) | more than 8 years ago | (#15242204)

The only reason you see Apple on the other side of this issue is because RIAA is taking a peace of the pie. Apple also controls the ipod market which is complementary to the itunes market. But Apple gets 100% of the profit from the ipod market, and only part of the profit from itunes market (since they have to share with the RIAA). So they would naturally like to shift as much profit as possible to the ipod market, which means keeping lower prices in the itunes market.
The RIAA takes more than a piece. They end up with something around 70 cents of every single one of the billion plus songs sold (about 4.5c goes to the artist, presumably the rest to Apple).

Steve's a smart guy though. He knows 99c works. He's set a standard, and he probably wouldn't be able to charge more than that on anything, save the extremely popular supercrap that 12-year-old girls buy. He's taken a ton of would-be pirates and turned them into legal consumers. I think he's aware of the fact that selling less popular stuff at under 99c could boost sales (and yes, there would be a "correct" price point for every song, probably around the 50c range for most of the older or lesser-known stuff). But you can't take your business that's been touting "any song in the world, 99c" and say "well, except for x, y and z".

Every item has an optimal price point. With inelastic items like gasoline, you can pretty much charge whatever the hell you want and people will still buy it (begrudgingly, but they still need to get from a to b). Music is quite the opposite, and digital music downloads even moreso. Charge $x for a CD, Y people will buy it. Figure in all of the associated costs and you've got your optimal price point. With downloads, costs are almost nonexistant. At the rates of my host, it would cost me about nine cents in bandwidth for a four-meg track, and you can bet your ass that it doesn't cost Apple even a tenth of that. The same pricing curve still applies, except that supply is infinite and distribution costs are negligable. Charge more, less sales; vice-versa: find the point on the graph where sales * price is at its highest point and there's your ideal price.

Of course, things change with demand and whatnot, but just suppose that songs all start at 99c, and as sales decrease the price is dropped by a dime to as low as 29c. Sales will pick up a bit due to the dropped price. If sales seem to be picking up too quickly, bump it back up a level. Make some uber-algorythm to automate this and all you've gotta do is add new music to the store.


And the RIAA becomes a problem again. Suppose that it worked out, as it roughly does, to 70c: RIAA, 5c: artist, 24c: Apple. Remove RIAA from the picture. 29c a track is remaining. Remove the RIAA, charge 49c a track, divide the extra twenty cents evenly between Apple and the artist. Sales shoot up more than twofold from the price drop in all likelyhood, the artists get FAR more money (three times as much even if the rate of sale stays the same), and Apple wins too. You've undercut the assholes and given more money to the people that deserve it, while simultaneously spreading the product to more people at less cost to them. Hell, Apple would probably be making so much extra profit that they could lose the CRAP and people using devices other than the iPod wouldn't hurt overall profits (assuming, of course, that a: people buy iPods for iTMS and not it being an iPod and b: they can be hassled to transcode from m4a to mp3/other)

Re:It makes me feel all good inside... (5, Informative)

Doctor Memory (6336) | more than 8 years ago | (#15242249)

With downloads, costs are almost nonexistant.

Now that's not even close to right.

You ever priced a Mackie? Studio time? A decent microphone? There are a large number of non-trivial costs to producing an album. No, GarageBand and a Shure mic from Sam Ash isn't going to cut it. If you want professional sound (i.e., something that will sell), then you've got to get some professional gear. And that takes professional amounts of cash. Sure, you can cut your distribution costs with on-line sales, and yes, distributino costs are significant. But to hand-wave the rest of the costs of production as "almost nonexistent" shows a shocking lack of common sense.

No "Uber-Algorythm needed (1)

CFD339 (795926) | more than 8 years ago | (#15242260)

Lots of folks in New Jersey and Las Vegas do it all the time. Its called book-making or handicapping. Tony Soprano types -- if there is such a thing that's even remotely close to what HBO portrays -- could probably rattle off such a process pretty quickly.

Inside truth behind variable prices (5, Interesting)

Anonymous Coward | more than 8 years ago | (#15242086)

Price as Signal

Forbes: "EMI Group boss Alain Levy said at press conference today that he believed Jobs would introduce multiple price points for iTunes music within the next year."

The story they're trying to tell you is that "older, less popular songs could be discounted, and in-demand singles could go for more than a dollar."

Let's think this through, because I think the recording industry is lying about why they want different prices.

Before I start with that, have you ever noticed that movie theaters charge the same price for all movies, whether they are Steven Spielberg blockbusters or crappy John Travolta religious quackery disguised as science fiction that nobody in their right mind would want to see?

Theoretically, when a super-duper-blockbuster comes out, like, say, Lord of the Rings, there's so much demand that the movie theaters just end up turning people away. Econ 101 says that they should raise the price on these ultra-popular movies. As long as the movie is sold out, why not jack up the price and make more money?

Similarly, when stinkers like Lesbian Gangster Yoga with Ben Affleck come out, the movie theatre is going to be pretty much empty anyway ... so Econ 101 says they should lower the price and try to get a few more bucks filling up the theater with price-sensitive moviegoers.

And indeed this is what the recording industry is telling you that they want to do on iTunes. But they don't do it in movie theaters. Why not?

The answer is that pricing sends a signal. People have come to believe that "you get what you pay for." If you lowered the price of a movie, people would immediately infer from the low price that it's a crappy movie and they wouldn't go see it. If you had different prices for movies, the $4 movies would have a lot less customers than they get anyway. The entertainment industry has to maintain a straight face and tell you that Gigli or Battlefield Earth are every bit as valuable as Wedding Crashers or Star Wars or nobody will go see them.

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

Here's the dream world for the EMI Group, Sony/BMG, etc.: there are two prices for songs on iTunes, say, $2.49 and $0.99. All the new releases come out at $2.49. Some classic rock (Sweet Home Alabama) is at $2.49. Unwanted, old, crap, like, say, Brandy (You're A Fine Girl) -- the crap we only know because it was pushed on us in the 70s by paid-off disk jockeys -- would be deliberately priced at $0.99 to send a clear message that $0.99 = crap.

And now when a musician gets uppity, all the recording industry has to do is threaten to release their next single straight into the $0.99 category, which will kill it dead no matter how good it is. And suddenly the music industry has a lot more leverage over their artists in negotiations: the kind of leverage they are used to having. Their favorite kind of leverage. The "we won't promote your music if you don't let us put rootkits on your CDs" kind of leverage.

And Apple? Apple wants the signaling to come from what they promote on the front page of the iTunes Music Store. In the battle between Apple and the recording industry over who gets to manipulate what songs you buy, Apple (like movie theaters) is going to be in favor of fixed prices, while the recording industry is going to want variable prices.

http://www.joelonsoftware.com/items/2005/11/18.htm l [joelonsoftware.com]

Re:It makes me feel all good inside... (1, Insightful)

samkass (174571) | more than 8 years ago | (#15242120)

This is my response every time some naive anti-DRM blogger decides it would be a good idea to "open" up FairPlay. If FairPlay was open, you wouldn't be getting popular songs for $0.99, that's for sure. If the record companies could pick up their cards and go home, they'd tell Apple "charge $6 or we'll only sell through Napster". The fact that Apple's music experience encompasses the "whole enchilada" is why we have reasonably priced music downloads instead of 20-second, downsampled $2 ringtones style pricing.

good job! (3, Funny)

clackerd (797052) | more than 8 years ago | (#15241897)

the shortsighted me says horray for only having to pay $.99 a song still. i don't listen to the farsighted me.

Re:good job! (1)

glaeven (845193) | more than 8 years ago | (#15242067)

ok, 99 cents a song: what happens when people download hundreds of songs? you end up spending hundreds of dollars on music and you dont realize it. Same thing with cell phones, you pay $2 for a 100x100 gif image? Either way, my brother has/had 15,000 songs, mostly NOT through iTunes, but you get the point...

Good to see leverage moving from the labels, (3, Funny)

benow (671946) | more than 8 years ago | (#15241905)

but big label artists are still being boned.

Re:Good to see leverage moving from the labels, (4, Insightful)

Quantum Fizz (860218) | more than 8 years ago | (#15241959)

But they're being boned either way, it's really the fault of the record labels, not Apple's. The record label doesn't need to put out as much overhead for physical media and distribution, (maybe advertising stays the same), but they're still taking the same cut they always have.

What it will do, though, is lower the incentive for newer bands to sign with the big labels, and go with more indie labels, because the distribution will be the same (assuming Apple doesn't start doing dirty things like making labels pay a $1M fee to include their songs on iTunes or something like that).

Re:Good to see leverage moving from the labels, (5, Insightful)

Original Replica (908688) | more than 8 years ago | (#15241980)

big label artists are still being boned
So maybe they need to stop being big label artists. Easer said than done I realize, but if they can maintain and even use their fanbase to move to a more progressive indie label they will pave the way for artists who currently need the clout of a big label to get noticed. Once listening to bands on a Internet only indie label becomes trendy, then digital music will be all that we want it to be, right now there is still too much $$$ in the old corperate giants, because people still go for the big corperate product.

Re:Good to see leverage moving from the labels, (0)

Anonymous Coward | more than 8 years ago | (#15242113)

Exactly. What I don't get, though, is why so many people think that artists are getting screwed. Yes, *some* should get paid more (the creative ones), but they all signed a contract and knew exactly what to expect. Besides, if they're in it just for the money/fame, they aren't worth listening to/earning more anyway.

Re:Good to see leverage moving from the labels, (1)

c_forq (924234) | more than 8 years ago | (#15242264)

I don't get why people say tomato pickers should be paid more. They all agreed to do the job and knew what they were getting into. Besides, if they are just in it for the money/food, they aren't worth the support.

http://dominionpaper.ca/agriculture/2006/03/30/thr owing_t.html [dominionpaper.ca]

Re:Good to see leverage moving from the labels, (1)

Carthag (643047) | more than 8 years ago | (#15242129)

Call me a pessimist & an elitist, but I don't think it's ever going to change. The unwashed masses have always loved the, well, pedestrian. That's why it's called mainstream. Sure, maybe one day the big mediopolies will be gone, but people as a whole will still enjoy all the stuff that I think is stupid and mundane.

Re:Good to see leverage moving from the labels, (1)

mrchaotica (681592) | more than 8 years ago | (#15242297)

What does that have to do with anything? There's no reason why the "pedestrian" music can't be on smaller, independent labels too.

Re:Good to see leverage moving from the labels, (2, Interesting)

Abreu (173023) | more than 8 years ago | (#15242174)

Big label artists get boned by their label, not by Apple.

Seriously, their contracts are draconian, and in many cases an artist would get more money by "downgrading" to a smaller, independent label.

Now, they wont get MTV exposure, but a good band should be able to counter that by touring extensively and tirelessly (ask the Red Hot Chili Peppers or Soul Asylum about their early years)

Ha Ha (0, Interesting)

Anonymous Coward | more than 8 years ago | (#15241906)

/Big four record Labels "slip sliding away"

Variably priced songs would be a good idea (2, Interesting)

the_humeister (922869) | more than 8 years ago | (#15241914)

As long as older songs are less than $0.99, I wouldn't really mind. A dollar a song still seems a bit much. I'd rather just send the money to the artist instead. At least they get more money that way.

Re:Variably priced songs would be a good idea (3, Interesting)

alain94040 (785132) | more than 8 years ago | (#15241936)

The killer app, of course, would be a plug-in to iTunes that let's you publish songs on it, for some form of micro-payment. If you do that, you can bypass the music store and keep the same front-end that everyone has grown acustomed to. Alain.

Re:Variably priced songs would be a good idea (3, Informative)

malarkey (514857) | more than 8 years ago | (#15242227)

CDBaby has something similar to what you're looking for: http://cdbaby.net/dd [cdbaby.net]

Re:Variably priced songs would be a good idea (2, Insightful)

Anonymous Coward | more than 8 years ago | (#15242031)

As long as older songs are less than $0.99, I wouldn't really mind. A dollar a song still seems a bit much. I'd rather just send the money to the artist instead. At least they get more money that way.

I see this sentiment all the time here... Why doesn't it occur to anyone that this never would have happened? The labels were never fighting for the right to discount older songs, they wanted the ability to jack up the price of top 40 singles.

I don't know if this has anything to do with the reasoning or not, but you have to remember the only reason we see older CDs discounted or in remainder bins is because they are physical objects that take up shelf space. It's not because the music itself is dated, it's because it's not cost effective to store it if it's not going to sell. That's not the case for a music file, which of course can sit on the iTunes server indefinitely until someone gets a hankerin' to hear it.

Re:Variably priced songs would be a good idea (1)

SpryGuy (206254) | more than 8 years ago | (#15242092)

I wonder if the percentage going to the artists has changed. Already they were getting the short end of the stick (the smallest cut of the "Industry", "Apple", and "Artists").

I'd rather send my money to the artists too.

Re:Variably priced songs would be a good idea (0)

Anonymous Coward | more than 8 years ago | (#15242170)

I seem to recall an article which stated that the labels classed itunes and other electronic distributions as traditional phonographic albums, and therefore still charged the artists something like 20% for packaging and 15% for breakage. I'm not sure if that's from the retail or wholesale price, or if it's a figure taken out of the artists' nominal royalty.

Re:Variably priced songs would be a good idea (2, Interesting)

ral8158 (947954) | more than 8 years ago | (#15242110)

I don't want to sound like an asshole (And I am one, so it's hard for me to NOT sound like it :) ), but do you really think that the artist does all the work? In fact, that's what bugs me about the Downhill battle people (Not saying you are one), is that they say that the artist only gets $ .11 of the song, but really, the artist isn't the only person who does work. There are producers, editors, recording technicians, etc. And in the case of some artists, they don't even write the song. Then there is the whole idea that downloading a CD off of p2p and then sending a check for like, what, $5 or whatever you arbitrarily decide, to the artist is *okay*. It's not legal, and it's not fair. Even if you feel like you're being cheated, can you honestly say that it's okay to do that without the artist consent? That's like taking something out of someone's house, and leaving a check.

(Again, not to be mean to you, just pointing out something. And I agree, one dollar a song is kind of stupid sometimes :/)

Re:Variably priced songs would be a good idea (1)

MooUK (905450) | more than 8 years ago | (#15242203)

On the other hand, some artists do do all that work themselves. Also, all these supporting roles will generally have been paid for in advance - often by the artists directly.

Its still too high, but.... (1, Funny)

nurb432 (527695) | more than 8 years ago | (#15241922)

Anything that pisses off the RIAA im all for :)

Re:Its still too high, but.... (3, Funny)

TubeSteak (669689) | more than 8 years ago | (#15242140)

I bet killing Ponies in the name of music piracy would piss off the RIAA.

How can you support killing Ponies!?!?

Re:Its still too high, but.... (0)

Anonymous Coward | more than 8 years ago | (#15242263)

Dude, after the April Fools version of Slashdot this year, I was ready to kill a few ponies.

I'm reminded of a song (1, Funny)

mboverload (657893) | more than 8 years ago | (#15241928)

I call you when I need you, my hearts on fire
You come to me, come to me wild and wild
When you come to me
Give me every song I need
Give me a lifetime of DRM and a world of corporate music
You speak of giving the artist his fair share like you know what it means
And it can't be wrong
Take my iMac and make it strong baby

You're simply the best, better than all the rest
Better than Napster, Any of pieces of crap I've ever used
I'm stuck on your heart, and hang on every song you sing
Tear us apart, fuck RealPlayer, I would rather be dead

In your threads I see the encrypted bits of every song and every book I play
In your interface I get lost, I get washed away
Just as long as I'm here in your crappy GUI
I could be in no better place

You're simply the best, better than all the rest
Better than Napster, Any of pieces of crap I've ever used
I'm stuck on your heart, and hang on every song you sing
Tear us apart, fuck RealPlayer, I would rather be dead

Each time my Mac bombs I start losing control
You're walking away with my music and I can't get it back because I can't download the song again
I can feel your restrictions even when I'm asleep
Oh baby, don't give me any rights

Re:I'm reminded of a song (1)

tktk (540564) | more than 8 years ago | (#15242003)

Thank you for the parody. Although we have no idea what the original song is, please remit to us $200,000.

-RIAA-

Re:I'm reminded of a song (1)

Metabolife (961249) | more than 8 years ago | (#15242056)

Dear [name]: It has come to my attention that you have made an unauthorized use of my copyrighted work entitled [name of work] (the "Work") in the preparation of a work derived therefrom. I have reserved all rights in the Work, first published in [date], [and have registered copyright therein]. Your work entitled [name of infringing work] is essentially identical to the Work and clearly used the Work as its basis. [Give a few examples that illustrate direct copying.] As you neither asked for nor received permission to use the Work as the basis for [name of infringing work] nor to make or distribute copies, including electronic copies, of same, I believe you have willfully infringed my rights under 17 U.S.C. Section 101 et seq. and could be liable for statutory damages as high as $150,000 as set forth in Section 504(c)(2) therein. I demand that you immediately cease the use and distribution of all infringing works derived from the Work, and all copies, including electronic copies, of same, that you deliver to me, if applicable, all unused, undistributed copies of same, or destroy such copies immediately and that you desist from this or any other infringement of my rights in the future. If I have not received an affirmative response from you by [date give them about 2 weeks] indicating that you have fully complied with these requirements, I shall take further action against you. Very truly yours, (you can fill in the rest)

Re:I'm reminded of a song (0)

Anonymous Coward | more than 8 years ago | (#15242266)

You couldn't post a link to the mp3?

Too expensive (0, Troll)

steveg (55825) | more than 8 years ago | (#15241940)

$0.99 is far above my threshhold for a lossy, DRM-laden song. I realize that as long as Apple has to pay the record companies on the order of $0.70/song, the price will never become reasonable. Considering the low distribution cost to the record companies, they could sell these at half the cost and make a LOT more money -- on volume.

But that's not gonna happen.

Re:Too expensive (5, Insightful)

djrogers (153854) | more than 8 years ago | (#15241981)

$0.99 is far above my threshhold for a lossy, DRM-laden song. I realize that as long as Apple has to pay the record companies on the order of $0.70/song, the price will never become reasonable. Considering the low distribution cost to the record companies, they could sell these at half the cost and make a LOT more money -- on volume. But that's not gonna happen.

I don't think so. See, you represent one end of the bell curve we'll call 'cheapskate' and the fact is, no matter what the price were set to, someone will fall further along that curve than you and claim that everyone is missing out on huge profits by not dropping the price in half.

The reality is that given the enormous success of the iTMS, it seems that Jobs et all were spot on with their pricing model (which one would assume was arrived at after much research). Reality check - nobody sells a BILLION of anything that's outrageously overpriced...

Re:Too expensive (2, Funny)

MooUK (905450) | more than 8 years ago | (#15242060)

"Reality check - nobody sells a BILLION of anything that's outrageously overpriced..."

Oh, I dunno... everyone's favourite large software company seems to manage it regularly.

Re:Too expensive (1)

spiritraveller (641174) | more than 8 years ago | (#15242069)

Well, emusic is the second largest online retailer of music after itunes, and they sell music for around 21 cents a song. Granted, they have a use it or lose it subscription model.

But that's a pretty big pricing disparity, especially considering that itunes sells much of emusic's library at 99 cents per song with no value added... unless you consider DRM an added value.

Re:Too expensive (1)

1000StonedMonkeys (593519) | more than 8 years ago | (#15242176)

And you sir are at the other end of the bell curve we'll call 'sucker.' You've spent hundreds of dollars on music that you're going to have to burn track by track to CD just to play on a device/program that's not made by Apple. I suppose you could use something to crack the DRM, but it must feel pretty bad to spend hundreds of dollars only to have to break the law to use what you just bought.

Of course, paying Steve Jobs gives some people a religious sort of high. To each, his own.

It's all about simplicity (4, Insightful)

El Cubano (631386) | more than 8 years ago | (#15241947)

(note: I am not an iTMS customer. I don't even own an iPod)

Everything I have seen/heard/etc about the iTunes store is that it is simple.

People like simple. That's it. Why do companies not get this? How many people's VCR clocks blink 12:00 becuase (to them) it is too hard to actually set it?

Now, Apple is on to something with their pricing model. It is simple. Sure, some older songs are probably not worth as much and some newer songs might be worth more, but overall it is a good balance. It's simple. They would likely lose more revenue by going a variable (and more complex) pricing model than they do by not squeezing those last few cents out of the most popular songs.

Re:It's all about simplicity (1)

v1 (525388) | more than 8 years ago | (#15242241)

You've got a good point. If the pricing model were variable, and you wanted to buy a few songs, you might get caught up looking for cheaper songs, and maybe cringe when one of the ten you were looking for was the $2 variety. Then you'd be upset. Also this would make you a lot more mindful about how much money you were spending since it involved more thought to buy, and the more you think about spending, the less you spend. Also, it's easier for people to be unhappy over a bad deal than it is for them to be pleased by a good deal. So it is to Apple's benefit to level the playing field to keep things simple and unbiased.

It all comes down to one thing ... (2)

ScrewMaster (602015) | more than 8 years ago | (#15241961)

for the time being, the labels need Apple more than Apple needs the labels. Now, if Apple begins to bank too heavily on the iPod and neglects their other profit centers, that might change. But for now, Apple has a lot of leverage, which just goes to show why the music industry has always fought to maintain control of distribution.

How Is This A Defeat? (-1, Flamebait)

sfled (231432) | more than 8 years ago | (#15241966)



There were negotiations. Each party got what they wanted, or the negotiations:

a) would still be going on or
b) would've broken down.

Sheesh, what kind of 'take a 100% of the pie', 'win at all costs' kind of BOOB wrote that idiotic headline?

Re:How Is This A Defeat? (1)

devilsammo (530260) | more than 8 years ago | (#15241998)

Not all negotiations result in COMPROMISE (which is what you've described). I can negotiate with no leverage whatsoever, get nothing, lose everything and still have negotiated. Cheers, Sam

The labels wanted a variable price rate. (1)

khasim (1285) | more than 8 years ago | (#15242047)

So they could charge more money for the hottest, newest songs.

They lost on that.

And they couldn't pull their catalogs from iTunes because that would hurt their sales.

When they can't afford to pull their product and cannot get concessions on the price, that is "losing".

Re:How Is This A Defeat? (1)

jaseparlo (819802) | more than 8 years ago | (#15242163)

In problem solving/negotiation, you have compromises, in which the issue ends but nobody actually gets exactly what they wanted, a win-win, in which both parties get what they wanted (usually by understanding the actual things each party is after and finding a lateral solution instead of the midpoint) , and a shafting, in which one party gets what it wanted and the other thinks it has compromised. Music giants have wanted tiered pricing for a long time, and have succeeded in implementing it in some services. we know they wanted that and they concede they didn't get it. So they have compromised because they stil want the revenue they were getting. We don't know for sure what Jobs/Apple went into negotiations looking for, but the fact that they didn't even cop a price rise from three years ago suggests that they probably got a lot closer to what they wanted.

Huzzah (4, Insightful)

mgabrys_sf (951552) | more than 8 years ago | (#15241979)

After the Sony DRM debacle, I've ruled out CD-based media altogether.

Say what you will about Apple DRM, but at least it's honest - and doesn't attempt to sabotage my CPUs. Good to know my pricing hasn't gone haywire in the near-term. For those who think that variable pricing is the way to go (except for whole albums) check out the raging success story that is google video. They're pay model is so - easy to understand - and easy to work with - no one I know is using it.

I'd say that's a ringing endorsement for keeping it simple.

Re:Huzzah (-1, Flamebait)

Anonymous Coward | more than 8 years ago | (#15242012)

Say what you will about Apple DRM, but at least it's honest

"We retain the right to change the DRM rules at any time."

Yes, they're honest all right. They tell you upfront that they're going to screw you.

Re:Huzzah (0)

Anonymous Coward | more than 8 years ago | (#15242045)

Shh. You are not allowed to speak ill of Apple on slashdot. DRM is perfectly OK if Apple does it.

Re:Huzzah (1)

mgabrys_sf (951552) | more than 8 years ago | (#15242066)

Yes it's amazing how screwed I am. I buy music for a simple price, download it, and can run off as many CDs as I want to send it to multiple CPUs and players.

That's how I use the product - and Apple in it's latest move - is keeping said product as unchanged as possible. If you're going to troll for legal scare-BS why not take a look at the legal agreements on any of the products YOU think are so great?

Oh - and here's a spiffy hint - the blather of a legal department is just that until it's challenged in a court of law. There's a lot of sloppy agreements and licenses out there that have nothing in the way of precident. For all intensive purposes - they're merely legal "wish-lists".

Hey - I got a great idea - perhaps the "free the world from Apple DRM - before it kills us all crowd" could use a good screw? I'm guessing I'm onto something. All anti-DRM activists to Las Vegas for prostitutes! Not only help Nevada's economy but perhaps Slashdot would actually lose some redundant clutter. This is utterly impossible of course - but I can always dream.

Re:Huzzah (2)

manual_overide (134872) | more than 8 years ago | (#15242215)

gah!!! INTENTS AND PURPOSES

if i see it wrong another time, i'm gonna go nuts!! Sheesh! Do you really not know? Doesn't for all "intensive purposes" sound ridiculous to you?

Re:Huzzah (1)

MooUK (905450) | more than 8 years ago | (#15242077)

They tell you up front that they *can* screw you. Apple's record SO FAR seems to be good, however.

relative pricing (4, Insightful)

wall0159 (881759) | more than 8 years ago | (#15241986)


We hear so often that variable pricing is good. I think it's interesting that newly released music is commonly considered more valuable just by virtue of being new. This particularly applies to covers, rehashes, etc.

Re:relative pricing (2, Interesting)

TubeSteak (669689) | more than 8 years ago | (#15242168)

We hear so often that variable pricing is good. I think it's interesting that newly released music is commonly considered more valuable just by virtue of being new. This particularly applies to covers, rehashes, etc.
I think the idea is that 'older' music has already payed off its producers for whatever effort they put into it.

New music is worth more because the artist/label hasn't gotten the payoff yet.

"New" music might not be worth what they're charging, but until they've gotten their money back, there is no reason to drop the price.

The problem... (0, Insightful)

Anonymous Coward | more than 8 years ago | (#15241989)

is that people think the iTunes Music Store is somehow "sticking it to the RIAA." Nothing is further from the truth. While the RIAA may be accepting some losses, their goal is simple: to use companies like Apple to transfer music into a different medium, not a physical one, but one stronly resembling IP. Music no longer is something you can buy and physically own, it's something you can "license" to listen to on expensive (and DRM-secure) MP3 players of the future.

I'm sorry, but $.99 is still way too much for a compressed, restricted pop single from an artist I don't even want to listen to.

Re:The problem... (0)

Anonymous Coward | more than 8 years ago | (#15242024)

Is it too much for a compressed, restricted favorite song for which you're too cheap and lazy to go down to Tower Records and buy an album for $20?

No?

Retard.

Re:The problem... (0)

Anonymous Coward | more than 8 years ago | (#15242159)

It's too much for anything Tower Records or the iTMS has to sell (most probably, anyway), but that's personal preference. Whether or not you choose to do so is your own choice, but what I said is what I believe. Actually, let me rephrase myself in accordance to what I think:

I wouldn't receive a compressed, restricted song from the RIAA if you paid me.

Re:The problem... (1)

ParanoidCowboy (670365) | more than 8 years ago | (#15242096)

$0.99 might be too much for a song, but the going rate for a Coldplay single/EP is $12.99 for three songs. That's a whopping $4.33 per song. Compare that to the list price of a pop single from five years ago. The reason that this a victory for all parties involved (the music companies included) is that with non-variable pricing, people are more likely to acquire music legally and the industry of downloadable music will continue. Imagine how many customers the itunes music store would have if the new Coldplay album was as expensive as the in store version, or at least, closely priced. How many people would be willing to give up many of the rights that come with cd ownership (ability to control digital audio format, quality, and portable player compatibility) for an inferior product? The reason the iTunes store works so well now is that people are willing to loose those rights or take the $.99 hit to avoid the wrath of the RIAA. Downloadable music only works because at the end of the day, the loss of quality and control is worth the convenience and the cost.

Re:The problem... (1)

AnalystX (633807) | more than 8 years ago | (#15242149)

"I'm sorry, but $.99 is still way too much for a compressed, restricted pop single from an artist I don't even want to listen to."
You mean there is a price you WOULD pay for a pop single from an artist you don't even want to listen to?

The reason this is good news... (1)

SvnLyrBrto (62138) | more than 8 years ago | (#15242199)

... is not so much that it's taking *money* away from the RIAA/metallica (that can come later), but that it's taking some degree of *POWER* away from the RIAA/metallica. It used to be that the music cartel held all of the cards, so to speak, and technology companies got boned (See the old-school incarnation of Napster.) But online music and iPods are not going away. And Steve Jobs just wrested that much more CONTROL away from the RIAA/metallica types.

A few years down, Apple is going to represent a larger and more important part of the sales pie. That will give Jobs more leverage than ever against the RIAA. He'll be able to, in effect, say to them: "These songs WILL be sold at $.99, or you will NOT be sold through iTMS." And iTunes will have grown that much more that the threat will stick.

And once Jobs has the power and control wrested from the RIAA/metallica, THEN you start diverting the greater share of the money away from them and into Apple's hands....

cya,
john

jobs is the man (0, Redundant)

tehwebguy (860335) | more than 8 years ago | (#15241993)

his secret? he just said, "no"

What about expanding the customer base? (2, Interesting)

AK__64 (740022) | more than 8 years ago | (#15242002)

Side note: what is Apple going to do about the French lawsuit?
 
I'm glad to see that Mr. Jobs got his way and the labels are forced to continue with the current pricing model. I'd like to see some expanded quality options, however. How does Jobs feel about selling the same song at a higher price if it's higher quality or lossless?
 
I don't own an iPod, and I still buy my music the old-fashioned way. Well, the kinda old-fashioned way. Involving a shiny disk.

Server-side storage (2, Interesting)

Runesabre (732910) | more than 8 years ago | (#15242005)

What I want from a music download is for them to track what songs I have licensed/paid for and store that on their servers so I don't have to worry about keeping track of my song collection. I don't want to have to worry about whether I have a backup copy of 300 songs when my harddrive goes on the fritz and I don't want to have to spend a weekend figuring out what I need to save off and what can be erased when I decide to upgrade machines. I don't want to have to worry about how many times I've burned a song to CD. I don't EVER want to have to worry about having to re-purchase a song because I've lost my copy.

That's when I'll get involved in a music download service.

Re:Server-side storage (2, Insightful)

osssmkatz (734824) | more than 8 years ago | (#15242046)

I don't understand. You want them to track your music. That sounds like D(R)M to me.

Napster already does what you request. Any tracks you purchase can be redownloaded simply by pressing a button for free. Any tracks you rent can be redownloaded as long as that subscription is current.

Of course, if Napster no longer has a license (contract) for that song, you are out of luck.

--Sam

Re:Server-side storage (1)

mrobin604 (70201) | more than 8 years ago | (#15242137)

Mod this up!

Wow, what a concept! A digital download music service that actually adds value beyond plain ol' CDs, rather than providing an inferior product to them.

Maybe someday the labels will wise up and do something like this...

Re:Server-side storage (1)

wall0159 (881759) | more than 8 years ago | (#15242226)

eMusic does this, and does it without DRM. They sell mp3s (LAME --alt-preset standard), and keep track of what each customer has downloaded. Songs can be re-downloaded for free, and they also use these data to make recommendations (via people with similar taste, etc).

I actually find eMusic better to use than iTunes, because it's geared toward people discovering new music, rather than being 'told' what's cool.

But no, eMusic doesn't have the latest Britney pop ditty... ;-)

Stop complaining (3, Insightful)

Anonymous Coward | more than 8 years ago | (#15242010)

You guys can stop complaining about .99 being too much. It's obviously far out of Apple's hands. I think we should put our hands together than thank Steve for fighting The Man. (And don't stay Steve is The Man... because he is, but he damn well isn't, too)

To all the naysayers, Ha. (1)

Warlock7 (531656) | more than 8 years ago | (#15242014)

Now most of them are changing their tunes. They were saying before that Apple couldn't/wouldn't stand up to the labels over their pricing plan. Now they're all saying that $0.99 is just too much. Well, good luck finding the singles of the sam quality for less. Why not just admit that Apple has a good thing with the iTunes Music Store?

Re:To all the naysayers, Ha. (0)

Anonymous Coward | more than 8 years ago | (#15242070)

Well, good luck finding the singles of the sam quality for less.

It [limewire.com] isn't [sourceforge.net] really [edonkey.com] that [bittorrent.com] hard. [emule-project.net]

Err.. you mean for less, like free, right?

Re:To all the naysayers, Ha. (2, Informative)

MooUK (905450) | more than 8 years ago | (#15242181)

Actually, with many of those options, finding examples of a good quality isn't always simple.

No big surprise here... (2, Insightful)

Ritz_Just_Ritz (883997) | more than 8 years ago | (#15242028)

The big labels had absolutely no leverage unless they were willing to "go on strike" and cut Itunes off altogether. Given the numbers that Itunes has been pumping for the labels, the result (after the requisite bluster) was a forgone conclusion.

However, you can bet your ass that the labels are colluding to cut Apple out of the pie after getting a very public caning.

Cheers,

Re:No big surprise here... (0)

Anonymous Coward | more than 8 years ago | (#15242071)

They Blinked [slashdot.org]

Nice call. Now I don't expect a big Q2 bonus or anything, but baby needs a new pair of shoes... :)

Still sucks for artists. (3, Informative)

PAPPP (546666) | more than 8 years ago | (#15242044)

At last count, the breakdown of where that $.99 goes is (on average):
Apple - $.35
Label - $.53
Artist - $.11
And thats only after the label reclaims whatever they claim they spent in production costs.
See http://www.downhillbattle.org/itunes/ [downhillbattle.org] for details.

Re:Still sucks for artists. (0)

Anonymous Coward | more than 8 years ago | (#15242099)

How is that Wal Mart can charge .88 while iTunes is at .99? Is it a lesser quality? As far as I can tell they have all the big label artists too.

Re:Still sucks for artists. (2, Informative)

MindStalker (22827) | more than 8 years ago | (#15242187)

Umm because Walmart takes out $.24 instead of $.35 duh.

Either way I once bought an album off walmarts online site and realized that it was missing almost 1/3 of the songs (sure it listed the song before I bought but I didn't realize what was on it till I compared later to itunes). Called and complained they told me to stuff it essentially. Never buying from them again.

Depends on your Label.... (0)

Anonymous Coward | more than 8 years ago | (#15242250)

My label (being owned by me) gives me a 100% share of (what Apple gives us) in iTunes sales. The artist should have known what they were getting into when the signed on the dotted line.

Of course the labels told me to "GO AWAY!", which is why I founded my own label...

Good. (2, Insightful)

Transcendent (204992) | more than 8 years ago | (#15242073)

Considering supply/demand, there is absolutely no reason a song should cost more because it's popular (besides bandwidth costs). It took absolutely no more effort on the RIAA's part or any Label's part to create it, and it can be distributed theoretically to an infinite amount of people from a single copy. It would have been a purely artificial inflation that's tantamount to price fixing.

Re:Good. (1)

AnalystX (633807) | more than 8 years ago | (#15242193)

You're right, but you could have left out the parenthetical: "(besides bandwidth costs)" because bandwidth has nothing to do with song popularity. A song is a song is a song. It isn't like more popular songs are any larger in file size on average than unpopular songs.

Re:Good. (1)

colinrichardday (768814) | more than 8 years ago | (#15242237)

Wouldn't a more popular song have greater demand?

Serves right - Profit Maximization does not always (5, Insightful)

unity100 (970058) | more than 8 years ago | (#15242083)

... maximize profits.

Profit Maximization and its importance is taught in econ classes, and the sales crowd give it a rather exagerrated importance, but the fact that the 'market' is in fact people which have a tendency to behave according to their own choosing and not as mindless drones of the 'invisible hand' is not.

They always go for getting the maximum profit achievable with a given or minimum quantity of sales. The very thought at the end does not deliver what they want to get indeed :

If you make an easily obtainable/copyable product overpriced, you pump up piracy, or at the least unwillingness to buy your products in the target crowd.

How many of us would think 'well, its just nothing, let me get 5-10 songs tonight' if the price per song was $5 or $10 ? or would any of us get a 'cheaper' song because the song we wanted was priced much higher ? is it that simple that we are going to get the 'best obtainable' from the songs provided ? a sheer stupidity scratch for the marketing crowd ? yes .

Not only the 'profit maximizing' concept actually hampers the profits, but it also shatters market reach and market control - which is something priceless in most respects. Sell a song for just $0.10, and youll get hordes of people buying songs because 'its just nothing' in price - youll become a net standard.

Sell them for $5, and youll get piracy.

allofmp3.com (0, Redundant)

TheGratefulNet (143330) | more than 8 years ago | (#15242087)

I WISH people would 'get' that they don't HAVE to support DRM and the evil record companies.

allofmp3 (russia) does pay fees to artists (based on russian law, essentially a radio play fee for each downloaded song). but YOU get to decide if it has compression or if its flac or wav or whatever. all files are properly tagged and seem quite high quality (I've spent a few hundred $$ on that site - and I'll probably spend more, too).

when the cost of a WHOLE ALBUM is about a buck or so, why on earth would I pay 10x that for DRM versions??

boggle.

even if the itunes store was to price-match - it still has evil DRM. I will never ever buy any song that has DRM in it.

Re:allofmp3.com (1)

Llywelyn (531070) | more than 8 years ago | (#15242124)

How, while one is in the US, does this differ legally or ethically from downloading from a P2P network?

Re:allofmp3.com (1)

MKalus (72765) | more than 8 years ago | (#15242151)

Does it matter where the artists get paid? I can travel to Russia buy a CD there (or to Germany, UK etc. etc.) from the US and nobody (besides the *IAA) would tell me I broke the law by buying the media in another country.

Re:allofmp3.com (1)

AnalystX (633807) | more than 8 years ago | (#15242219)

"Does it matter where the artists get paid?"

Apparently.

Re:allofmp3.com (1)

AnalystX (633807) | more than 8 years ago | (#15242274)

"allofmp3 (russia) does pay fees to artists"
When you can quantify how much the artists are getting paid, you might have a case. If you're only paying $1 for an album and iTunes albums cost $10-$12 with $0.11 going to the artists [slashdot.org] , there's a big discrepancy in what the artists must be getting. Besides the obvious difference, allofmp3.com must be taking some cut of that, and their overhead is probably more expensive than Apple's since they're working on a smaller scale. At the end of the day, I bet that artists are either getting screwed by allofmp3.com, or they're getting screwed by allofmp3.com. Do you see the two possibilities?

Too bad only 4 years (4, Interesting)

suzerain (245705) | more than 8 years ago | (#15242088)

It's too bad the contracts are only for four years...so we'll see this whole senseless charade again soon enough.

I had thought Apple might try to secure a longer term deal with the labels (maybe agreeing to a pcrice increase with inflation or something). My plan at Apple would be:

(1) Negotiate long-term deal with the labels (10 years or more).

(2) Spend the next year either inking a deal with Apple Records and the Beatles, winning the lawsuit, or buying them outright.

(3) Convince one or two BIG artists to sell directly themselves with Apple as the distributor. Offer them like 50% of the proceeds of sales, and sell through the iTunes Music Store exclusively, with possible physical distribution at Apple Stores.

(4) Other smaller artists take notice, and an Apple label (maybe not named 'Apple' if the Beatles situation can't be won) suddenly begins to gain momentum, and fuck over the labels in the process (which would make me rather happy).

(5) Profit.

You could throw another step in there, since Jobs is Disney's largest shareholder. Apple and Jobs could buy Disney outright, and gain some record distribution and music IP themselves, which they could immediately market at a different standard than the labels who "won't play nice". Then they could sign artists to Buena Vista Music or whatever.

I know, I know, the prospect of Apple having this kind of media control is a bit scary. But personally, I don't fear it because I believe all music and video is destined to be free ("pirated", if you want), anyway...but I would sure like to see someone (Apple would be fine) bend those record industry jerks over and do to them what they've been doing to us for the past 40 years.

I feel so much better after a nice diatribe...

4 Years in this business is a long time (1)

hepstah (970474) | more than 8 years ago | (#15242279)

Ten years is an eternity in this business. Four years ago, barely anyone bought music online the way they do now. Not to mention that inflation would erode $0.99 over that period significantly, and there's a great chance that we won't even buy media that way in ten years.

So much for the same old line... (0)

Anonymous Coward | more than 8 years ago | (#15242093)

So much for the tired old line that I've heard way too often:
"If Apple gets into power they will abuse it just like Microsoft."

I can't wait for those people to admit they were dead wrong.

Re:So much for the same old line... (1)

MooUK (905450) | more than 8 years ago | (#15242173)

As yet, they don't seem to have abused it. That doesn't mean they won't.

Nor, of course, does it mean they will.

Fewer Songs in Future? (1)

johkir (716957) | more than 8 years ago | (#15242094)

I wonder if the record companies will release fewer songs to Apple in the future, just so they can charge $1.99, or $2.49, or $n+1 later, on their own bitc...er, affiliates elsewhere.

Why just music? (1)

Flimzy (657419) | more than 8 years ago | (#15242131)

I know it would still be a bit overpriced, but I would at least consider paying $0.99 for a downloadable copy of The Last Samurai in HD, or the latest edition of Microsoft Office if Apple would add movies and software to iTunes, too.

The RIAA doesn't mind iTunes (4, Insightful)

TorKlingberg (599697) | more than 8 years ago | (#15242182)

People make it seem like iTunes is on our side against the big record companies or something. It's not. If the RIAA companies really disliked iTunes, they could stop iTunes from selling their songs any time. The RIAA likes iTunes. Sure, they would like to make even more money from it, but they make plenty now as well. All this "fighting" between Jobs and RIAA is just a show.

To make it simple, Apple and RIAA are in bed with each other. They just can't decide who's to be on top.

99 Cents? (0, Redundant)

Igasagu (953986) | more than 8 years ago | (#15242186)

Pay money for music? People are still doing that?

If you all want money to.... (1)

Statecraftsman (718862) | more than 8 years ago | (#15242192)

go to the artist, then look for sites that offer a larger cut to the artist.

I don't know of any at the moment but it can't be that hard to setup a site that allows the consumer to download with payment and the artist to setup a simple pay-per-click marketing campaign. I'm sure the artist can get more than 0.11 cents out of the dollar.

Go Apple! (-1, Offtopic)

Anonymous Coward | more than 8 years ago | (#15242210)

Way to stand your ground and come out on top!

Next, how about you make a car-- get all those greedy bastard oil companies in line. :-)

Oh GOD they're FUcking us again! (-1, Troll)

Anonymous Coward | more than 8 years ago | (#15242225)

APPL is fuckig us again
over and over and over and over and over and over and over and over

IN THE ASS!
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