Say That Again

by Mike Masnick

Edgar Bronfman Promotes Illegal Price Fixing For The Recording Industry

from the isn't-that-illegal? dept

Last month, when yet another article came out about how the recording industry was pressuring Steve Jobs to raise the price on some iTunes songs, we noted that putting pressure on Jobs to change the price sounded illegal to us. In fact, it sounds quite a bit like what the recording industry got slammed for doing with CDs a few years ago. The recording industry sells the music wholesale and it's the retailers who decide how to price it. So, if the recording industry is upset with how Steve Jobs is pricing music, then they should charge him more and let him make the decision. They should have no say in the final consumer price. Unfortunately, someone forgot to tell that to Edgar Bronfman, current head of Warner Music, who was heard whining about iTunes' pricing last week. If he doesn't like it, why doesn't he just up the wholesale price to Apple? Or, better yet, stop selling Warner songs to Apple for iTunes? The reason he doesn't do that is because he knows he'd lose out on plenty of sales. In other words: whine all you want, Steve Jobs has the power position on this one.

Of course, Bronfman (who has a history of spouting off when he shouldn't on digital music), couldn't stop there. He also channeled his counterpart at Sony, Andrew Lack, who earlier this year complained that it was somehow "unfair" that Steve Jobs could make money on both the iPod and digital music. Bronfman's quote: "We are selling our songs through iPod, but we don't have a share of iPod's revenue. We want to share in those revenue streams. We have to get out of the mindset that our content has promotional value only." Hmm. So, because for years and years you fought any kind of system for digital music distribution and even (yes, remember?) sued the original makers of digital music players, you now suddenly think you deserve revenue from those who actually did create something and did get something to market while you fought them the whole way? As for his claim that it's a "mindset" issue that makes music have promotional value, as we've been saying for years, content is always going to be a promotional good -- it's the very nature of the economics of content where the marginal cost of duplicating the content is zero. The price of that content will eventually get pushed down to zero, and the only real benefit is as a promotional good. That's not a bad thing -- if only the recording industry would recognize it. It means they can do much more embracing the promotional aspect of music. They may have missed out on their chance to get in on the iPod revenue stream, but there are plenty of other revenue streams out there supported by music as a promotional good. Somehow, however, you get the feeling that the old school record execs like Mr. Bronfman aren't going to realize any of this any time soon and soon we'll hear him whining about how musicians are making money while giving away their music? Is he going to start demanding a part of their revenue stream also for being more creative business minded than he is?

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  1. identicon
    todd, 27 Sep 2005 @ 6:59am

    No Subject Given

    I thought, though, that they had contractual revenue sharing deals with Apple -- 50% of the sale price.

    So raising costs is possible -- when the contract expires. But it is also hard when Apple is now a force in the "retail" industry. Sure, we can raise price, Mr. Record Exec, but if we do, sales will fall so we can only offer you 30% of revenue, as we still have fixed and variable costs to cover. So would you like 50 cents or 45?...

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