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| | iTunes variable pricing sucks. |
I’ve recently spent an abnormal amount of time browsing the iTunes store. An artist I’m working with did an exclusive pre-release with the digital music retailer, so I’ve been scouring the iTunes charts several times daily. The album happened to be classified as Pop. I started to notice how many of the top Pop singles were priced at $1.29 instead of the traditional $0.99, and it reminded me that back in April, iTunes unveiled its variable pricing structure. Although I do purchase most of my music from iTunes, evidently I’m not probing the store for Katy Perry or Black Eyed Peas because if I had I would have been outraged in April, not July.
Now the original plan that iTunes unveiled months prior to April’s launch included a $0.69 price option for older songs, $0.99 for standard songs and $1.29 for top tier songs. They tried to spin it that this variable pricing was actually a cost benefit to the consumer. I dare you to try and find a song on there for $0.69 because I couldn’t. I know Steve Jobs and Apple tried to stay strong on the $0.99 prices for all music, and I commend them for that. But the major labels twisted their arms enough, and they finally caved. Shame on them. What makes Linkin Park and Lady GaGa more valuable than Metric or even Miles Davis? It’s art and every person has different taste. What makes them think people should pay more for one artist than another? If one artist is more popular, then he/she will sell more tracks and generate more money for iTunes and the record label. Simple as that. This is art, and because of the digital era, you can purchase this art a million times over at the exact same quality. I understand an original Picasso being priced higher, but that’s because there’s only one. If you buy the first mp3 of the new Linkin Park song, it has the same quality and value as the 1,000,000th track purchased. And don’t try to play the supply and demand card. The supply is unlimited when it’s in digital form, and there are no manufacturing or shipping costs involved. The cost of putting one song on iTunes that sells one copy is the same as putting one song on iTunes that sells a million copies. The way I see it, music is art and everyone has a different taste. iTunes shouldn’t tell us which songs have more value than others -- the sales and the consumers will decide that.
The other and more important issue is why are the major record labels trying to cash in this quarter on digital sales? With the economy the way it is, and more importantly the record business the way it is, we need a long term solution. Music is going digital, and it's inevitable that most music transactions (and I use the term loosely) will be done on the internet. However, it will be sometime in the future before the industry can sufficiently run on digital sales alone. CD sales are on the decline, but unfortunately the rise in digital sales isn’t enough to compensate yet. Most new releases are selling in the neighborhood of 30% digital, 70% physical. We’re in a phase where we still need to teach consumers to purchase music online.
It is common knowledge that the music industry is hurting because not only has it not adapted to changes in consumer behavior, but it has resisted it all together. Slowly things are changing, due largely in part to iTunes. We’re finally making progress with more digital sales than ever. So I ask, why on earth are you trying to mess with this!? Consumers are slowly changing to iTunes and Amazon to purchase music. The industry has had to work to convince people to purchase music for $0.99 in iTunes instead of downloading it for free elsewhere. Now we’re going to raise it 30% this early in the game? As mentioned before record labels can make more money from digital sales because there are fewer costs associated with distributing the music. Why get greedy and raise the prices this early in the model? What they’ve seen is fewer sales, as you can imagine. They may be generating slightly more revenue this quarter, but over the long haul, we’re still trying to bring people over to the digital world. Why scare them away so early? Are the major labels really still concerned with the bottom line this quarter? Is there anybody in this music business that is looking ahead to the future? Is there any record executive that has the balls to make a decision that might hurt their bottom line for 2009, but save their company in 2012? Apparently not.
| | Tags: itunes, music industry, record label, music, amazon, business, steve jobs, apple, pop |
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