Misplaced Blame Over iTunes Pricing
from the not-price-fixing dept
With the news coming out that, as expected, Steve Jobs wouldn’t back down and convinced the labels to sign new contracts that keep the price of songs at $0.99, some are wondering if that’s really a good thing. Mathew Ingram is the latest to suggest that, in doing so, Apple is also missing out on the ability to lower the price of some songs — and suggests everyone thinks the result is good because they hate the record labels and like Steve Jobs. In fact, he suggests that Apple is “price fixing” here. That’s not quite right. The concern over price fixing is whether or not the labels are having undue influence over the retail price — and perhaps colluding to set retail prices. As a wholesaler, the record labels should be able to set their wholesale price at whatever they want — and the retailer (in this case Apple) has the right to accept it or not. However, where the price fixing question comes in is that the labels should have no say in the final retail price — and Apple’s decision to set the retail price across the board at $1 isn’t price fixing, so much as a merchandising decision of the retailer.