March 3, 2006
DOJ Investigates Music Download Pricing
The Department of Justice is serving subpoenas to media companies over possible collusion of digital music pricing. This comes on the heels of New York Attorney General (and gubernatorial candidate) Eliot Spitzer's own investigation of the same issue. Here is one version of the story from the BBC.
Basically, there is concern that the labels could collude to set prices for digital downloads. Many a music executive laments the Apple deal where songs are prices at 99 cents or thereabouts. The regret is ceding pricing to Steve Jobs, who called the music industry "greedy" when they made noise about setting higher per-song prices. Apple recently sold it's billionth song on iTunes. More background context is that the contract between the industry players and Apple is up for renewal. A new wholesale pricing structure, however, affects all download and subscription services.
The music industry has a spotty record (no pun probably intended) when it comes to pricing. Predictions were some 10 or more years ago that CD pricing would converge with that of tapes to around $10 (See "CDS at 10: Altering music industry's track // Counting up the costs" USA Today, Tuesday, August 3, 1993). That was at a time when list price was $16.98 for new catalog single discs. Current catalog price is $18.98 for similar product. This upward pricing trend is blamed on costs of promotion and royalties, etc. But there was also the matters of colluding on CD prices when the industry was spanked by the FTC and the most recent payola scandal that his Sony (they of DRM debacle fame) and others. So why trust the industry when it comes to digital song pricing? Why, indeed.
Legal digital downloads has certainly changed music distribution and variable pricing may be in the future for consumers. But it should not come through cooperative marketing practices. Pity the industry on one count: through downloading they cannot make consumers by the same music over and over again by repackaging greatest hits compilations and re-shuffling tracks every couple of years. On the other hand, by tying downloaded music to hard drives, we may have to pay twice to replace music when a computer crashes. No wonder the pirate sites have a big following. Let the subpoenas go forth.
March 3, 2006 | Permalink
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