Former Music Industry Exec Says Album Prices Should Be Drastically Lower
from the he's-onto-something... dept
Robert Katz was the first of a whole lot of you (really, this may be the story with the most submissions ever) to pass along the news that former Warner Music UK boss Rob Dickins is suggesting that the record labels lower the price of albums all the way down to £1 — about $1.60. He points out that, at a price like that, it becomes much easier for people to buy. With the prices today, he says there’s simply too much of a mental transaction cost to determine if people are willing to pay the much higher amounts. Not surprisingly, others in the industry complained about his suggestion, first mocking him for presiding over Warner when the prices were so high (true, but that has nothing to do with what he thinks now) and then someone else tossing out the obligatory misunderstanding of the difference between price and value:
“A piece of music is a valuable form of art. If you want the person to respect it and value it, it’s got to cost them not a huge sum of money but a significant sum of money.”
Yeah, so that’s not how value works, actually. And the problem, which Dickins appears to have figured out, but Jonathan Shalit who made the quote above has not, is that whether you like it or not (and whether it is legal or not), music today is already competing with free music online. So, it’s not a question of “value,” but of market prices.
Dickins seems to recognize the actual economics at play here, noting that by making albums so cheap, the number of sales would shoot way up, offsetting some of the price decline when it came to revenue and getting more people more interested in more acts, leading to greater revenue from alternative sources like concerts and merchandise. Of course, plenty of folks have been suggesting this same thing for years, but it’s nice to see an “insider” get it, even if he’s mocked by those who are still confused about these things.