December 27, 2005
Spitzer looks at digital music price fixing
While I was semi-vacating, this interesting story broke: New York Attorney General Eliot Spitzer is investigating whether the music industry violates antitrust laws in the way it prices music downloads, and Warner Music Group has been subpoenaed, along with two other labels:
Music industry sources said the current probe appeared to center on whether the Big Four music studios -- Warner, Sony Corp.'s Sony BMG Music Entertainment, EMI Group and Vivendi's Universal Music -- colluded to set wholesale pricing for song downloads.
Could Apple, whose iTunes Music Store dominates the digital download landscape, be drawn into the probe?
The investigation also could be related to the studios' upcoming licensing renegotiations with Apple, maker of the wildly popular iPod digital music player, for its iTunes music store, the sources said.
Apple could not immediately be reached for comment. But in September, Apple Chief Executive Steve Jobs called the music industry "greedy" for considering hiking digital download prices and warned that the move could drive iPod users to piracy.
The studios have indicated that they want to institute variable pricing at the iTunes store, which now charges 99 cents a song.
Spitzer's already smacked Warner around once this year, winning a $5 million settlement in his payola probe.
My questions are these:
If Jobs is fighting industry moves to have variable pricing, and almost all commercial music download sites are selling songs for 99 cents, exactly who's controlling the pricing? The music stores? The music labels? Or a conspiracy consortium of all the players? Or is the market actually dictating these prices?
Let us know soon, Mr. Spitzer, mmm-kay?
Posted by Dwight at December 27, 2005 07:04 AM
Comments
We all know who is controlling these prices. It's those greedy men and women on Wall Street.
Posted by: Ricky at December 27, 2005 07:56 AM
At a dollar a song, that would price an analog LP record at about $13-14. With its greater capacity, that would price a CD at roughly $20. This with far lower sonic quality (lower sampling rate, cheesy compression, etc.), and absolutely no production costs; cheap really. And far, far lower marketing cost. Yet despite the too high price and lower costs - there are no price "wars", no competition, no "sales" events, and/or low ball competition taking advantage of the high profit margin.
Like Jack Sparrow said: "take all you can and give back nothing"! These "angels" are doing that real well as a group! All the while prosecuting mothers for "illegal downloads" and crying wolf about music "pirates". Makes you wonder who the pirates really are...
Posted by: rick roberts at December 27, 2005 08:35 AM
I much prefer paying 99 cents for a song I want to paying $14 for an album which has only 4 or 5 songs I really want. And though it is true that the MP3 format has lower quality, my ears can't detect the difference. My best argument in favor of MP3, however, is it's freedom from copy-prevention technology. That's a 99-cent bargain.
Posted by: Joe Marcom at December 27, 2005 10:12 AM
I still prefer to get my music on CD, but iTunes got most of my music
dollars this past year. Getting a single track off an album is the distinct advantage of downloading. Then there's: "I can get it now for $10, or wait for Amazon to deliver a package..." Instant gratification is a powerful incentive to buy at iTunes.
Then there's the hassle of the strange things the labels are doing to CD's. Sony's Rootkit is the worst example. The various formats that give computer CD players fits are also annoying.
I've been happy with the audio quality of iTunes, my ears were never golden. Heck, I'm listening to the internal speakers on my PowerBook now.
It's interesting that the AG is looking to rein in the music labels, but payola isn't terribly interesting -- it's stupid. Does Broadcast Radio still influence what we buy at the record store? I can't remember the last time I tuned in an FM station to listen to music, it's been awhile (actually in Denver - the Neo-Radio movement offered promise, but the format hasn't been tried in Houston). Some years ago, it seemed to me that the marketing suits took over radio programming and I stopped listening.
NPR is still cool, though. See
www.npr.org and click on the music button on the left side of the page. You'll have to listen online to get the good stuff in Houston, since our NPR affiliate only does classical.
As for price fixing, I think Apple set the market price and has control, for the moment. I won't be spending more than 99 cents for a track any time soon.
Posted by: Rick Roberts at December 27, 2005 11:54 AM
In the US WalMart has 88 cent pricing but you have to pay sales tax and put up with limited selection. Best deals are the Russian sites where they are 8 - 20 cents per song and you can get 192K lame or higher quality MP3s - thank a cheap ruble and a different rights system. The British eMusic also has a more limited selection but better pricing than American sites and offers 50 free downloads to try'em.
This Christmas NPR had a great selection of free concerts and music.
Posted by: Gary Denton at December 27, 2005 09:28 PM