As Rumored, Apple Gives Record Labels Variable iTunes Pricing In Exchange For Ditching DRM

from the it's-something dept

As was rumored last night by Greg Sandoval at News.com, it appears that Apple has worked out a deal with the major record labels (being confirmed as I type) where they will give up DRM (which is the direction they've been moving towards anyway) in exchange for variable pricing of music -- which they've been salivating over for years. This has been a major source of contention between Apple and the record labels. Steve Jobs has stood firmly by the $0.99/song price, while the record labels specifically wanted to be able to price hit songs at higher prices. The dropping of DRM is nice, but hardly that surprising, given that pretty much every other online download store has been going DRM free. This just puts the final nail in the coffin for music DRM. One nice tidbit: you'll apparently be able to upgrade your older DRM'd purchases to make them DRM free. That's a good (and slightly surprising) move.

As for the pricing, there's now three tiers: $0.69, $0.99 and $1.29. Hit new songs will go for the higher price while older, less popular songs will have their prices drop. The announcement isn't that surprising, but it is definitely a shift. What will be worth watching is how this impacts sales. It really may depend on how the record industry plays this. If (as seems likely) they put too many songs in that high priced level, it's going to lead to backlash. However, if they really embrace that lower price, it could encourage more folks to download music. I also wonder if it will push competing music download stores, such as Amazon.com to lower its prices even further as well.

While this definitely is a shift from the way iTunes has always worked, in the end, it's really not a huge shift. The industry was moving in this direction anyway, and killing off DRM was long overdue. The variable pricing is the type of thing that the big record labels will likely screw up, but in the long run is probably a good thing. The $0.99 per song fee has always been too high, and accepting variable pricing will eventually lead to those prices decreasing (not increasing, as the industry expects).


Reader Comments (rss)

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    Anonymous Coward, Jan 6th, 2009 @ 10:53am

    Mike, although they said you would be able to upgrade your current DRM tracks to DRM-free tracks, I didn't see where they mentioned it would be free which is what I got from your post otherwise it is nothing new as you can currently upgrade your DRM tracks to DRM-free tracks for I think $0.29 if they have the DRM-free track available.

     

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    David T, Jan 6th, 2009 @ 11:14am

    Better than free?

    I predict the future of music will be an unrestricted all-you-can-eat download service with a monthly fee. There isn’t much reason to pay piecemeal since you can get any song you want (and many you can’t get legitimately) in 2 minutes online. People wouldn’t be paying for the music, per say. Rather, they would pay for the maintenance of a huge music database (think terabytes) and sophisticated algorithms to find the stuff you like (think Pandora on steroids).

    Price it reasonably (say the cost of a popular video game subscription) and you have something better than free, a bit-torrent/usenet killer.

     

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      Anonymous Coward, Jan 6th, 2009 @ 11:18am

      Re: Better than free?

      I'm perfectly happy paying as I go. I have too many monthly bills as it is.

       

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      Anonymous Coward, Jan 6th, 2009 @ 11:52am

      Re: Better than free?

      This may come as a surprise, but I tried Napster for a few months, and then after I didn't use it for about 4 months, I cancelled the account.

      In retrospect, I probably would have been better off BUYING the songs instead of signing up for the unlimited music service. It would be interesting to analyze average customer lifetime, and CLV to see if this whole idea of "unlimited" works. I imagine there to be a large spike of customer churn 6 months out.

      I applaud Apple's new pricing! Kudos!

       

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      Doc, Jan 6th, 2009 @ 12:33pm

      Re: Better than free?

      Not really, E-music when it first started was that type of business model. Flat fee down load as much as you can/want. IT was great, but in time they found it wasn't making enough money for both the labels and them. Once the company was sold it has gone to a fee schedule which entitles you to X downloads in a month. Which is fine I've been a member forever and still have an older plan which new members can't get.

       

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      James, Jan 6th, 2009 @ 12:55pm

      Re: Better than free?

      I agree with you David, I've said this for years. It may seen nonviable to some, but once you realize when they have EVERYONE who normally might just be satisfied with FM broadcast doing it.. it suddenly clicks.

      You would basically have cheap, easy, unfettered access to whatever you want to hear (mostly) without the tons of commercials on FM, and better quality.. I'd liken it to satellite radio w/the need for special equipment.

      When something like this is affordable and easy, file-sharing becomes a moot point.

       

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        Anonymous Coward, Jan 6th, 2009 @ 4:40pm

        Re: Re: Better than free?

        I disagree. Perhaps a few Consumer Behaviorism classes are in need for you two. When dealing with the long-tail, all-you-can-eat just doesn't work. Put simply, Nordstrom Service can't compete with WalMart Prices. Trying to compare the two can be the issue of many debates. Those that shop at Nordstrom go there for the experience.

        Considering Apple has a 160M user advantage, I wish you luck in the new year with changing consumer behavior.

         

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      David T, Jan 6th, 2009 @ 12:59pm

      Re: Better than free?

      I think there is a misunderstanding about what people are buying in a subscription model. It's not the music. The music is free.


      What you get is a personalized music catalog delivered to the playback device of choice. Pandora has a great recommendation engine, but their catalog is limited and it's streaming only. What if you could tie the "music genome project" that predicted your own taste with unlimited push-to-your-device downloads?

      You can keep the songs, trade them, post them on the web, embed them into video of your toddler taking his/her first steps, whatever.

      You keep coming back because your subscription means the thousands of terabytes of music available is distilled into a catalog you actually want to listen to.

      We are reaching a point where there is so much media that it's going to become increasingly challenging to sort what we like and what we don't. Having a service the combines a massive database of content with a accurate recommendation engine that lets you keep what you like is worth paying for!

       

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      chris (profile), Jan 6th, 2009 @ 1:42pm

      Re: Better than free?


      Price it reasonably (say the cost of a popular video game subscription) and you have something better than free, a bit-torrent/usenet killer.


      fuck the database, just give me a pass that let's me do what i am doing right now, just legally. i call it "the piracy pass". i'd pay 20 bucks a month to not have to mess with private trackers and tunneling thru russia or getting my plug pulled and calling to get it switched back on (6 times and counting).

      the industries and everything could keep spying and snooping, and when i get busted i just show them my pass and we move on with our lives. they could even use their snoop data to demand their cut of the piracy pass profits.

      the systems are all in place, the technology is here and in widespread use, the people that want to get paid just have to come around to the idea.

       

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    Anonymous Coward, Jan 6th, 2009 @ 11:15am

    So, the songs that no one buys will drop from $0.99 to $0.69 each, reducing net revenue from those songs from $0 to $0.

    Then, songs that get popular will be raised from $0.99 to $1.29, in order to discourage people from buying 'the same old thing.'

    Leaving the bland middle to remain at $0.99, ensuring that easily 90% of iTunes' profit stream remains untouched.

    Sounds like Apple wins this round, too, leaving both customers and the *AA out in the cold.

     

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      Yolo Pants, Jan 6th, 2009 @ 11:24am

      Re:

      Leaving the bland middle to remain at $0.99, ensuring that easily 90% of iTunes' profit stream remains untouched.


      How much does Apple make from the sale of each song?

       

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    Anonymous Coward, Jan 6th, 2009 @ 11:21am

    Regarding post#3, I doubt they are charging $1.29 in order to discourage people from buying "the same old thing".

    More likely, they think newer/popular music is worth a premium and that people will pay more for it thus more $$$ for the record companiess.

     

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      chris (profile), Jan 6th, 2009 @ 1:48pm

      Re:

      More likely, they think newer/popular music is worth a premium and that people will pay more for it thus more $$$ for the record companiess.

      the popular mainstream stuff is what gets pirated most. check any tracker and the top 100 releases are the top 100 songs.

      the gold here is the back catalogue, which let's be real, will never see $0.69 but will stay at $0.99 and be drm free. at that point it might actually be worthwhile to buy a track or two if i need it in a hurry.

       

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    AnonCow, Jan 6th, 2009 @ 11:24am

    This proves how stupid the music industry execs are. Back catalog generates more revenue and moves more units than the handful of hits that they can package and overmarket to tweens. Dropping the price of back catalog to get a commensurate bump for "hits" is cutting off your nose to spite your face, but it is great news for anyone over the age of 15...

     

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    Anonymous Coward, Jan 6th, 2009 @ 11:45am

    I don't see how this is really a benefit for the major labels in the long run. First, it proves yet again that the entertainment industry's claims that DRM is necessary are fallacious and erroneous at best, outright lies at worst. Second, tiered pricing seems silly. Lowering the price on tracks nobody really buys doesn't due much, and upping the price on hits is equally pointless. Compensation for DRM removal serves no purpose as people who would pirate have already found a way to bypass the DRM anyways, and while it increases revenue, that is likely to be offset by people who will search out alternatives to the higher priced music.

    The end result? Hit sales are likely to take a slight decrease, mid range and bottom artists are likely to see a slight increase, and revenue is likely to take a mild but not substantial increase all while giving the consumer what the labels have been fighting against for a decade and making them look as stupid as they really are.

    Sorry but until they come down in price, and I'm certain I can play AAC on any music player or device as easily as Mp3s, there is no reason for me to but from iTunes.

     

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      Monarch, Jan 6th, 2009 @ 11:51am

      Re:

      Isn't AAC the DRM format? Or am I missing something here? I thought removing the DRM would mean they will sell MP3 and not AAC?

      If they are keeping AAC and just removing some form of DRM on the AAC format, I still will not purchase songs from them, as my Sandisk player doesn't play AAC format, so in perspective, AAC is still DRM.

       

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        jonnyq, Jan 6th, 2009 @ 12:08pm

        Re: Re:

        AAC is an open format that they add DRM to. You can have an AAC file without DRM. It's a pretty good format as far as they go. Similar to ogg, it can be compressed or uncompressed.

         

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          jonnyq, Jan 6th, 2009 @ 12:28pm

          Re: Re: Re:

          Oops... looks like I lied. I meaned "lossy or lossless" instead of "compressed..." and I was wrong: it's only a lossy format like MP3.

           

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            Killer_Tofu (profile), Jan 6th, 2009 @ 1:08pm

            Re: Re: Re: Re:

            Now Jonny, I would by no means call it a lie when you so readily point out your own mistake and correct yourself. I would simply call it making a mistake. Go easy on yourself eh?

             

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            cowardly anonymous, Jan 6th, 2009 @ 1:10pm

            Re: Re: Re: Re:

            You also forgot to mention that AAC can easily be converted to mp3. In iTunes, all you have to do is set your import settings to encode mp3s, then whenever you right click on a non-mp3 song, there's a menu option to "Create mp3 version". So really, the mere fact that the iTunes store sells AAC is not a real reason to not buy from there if you're just using mp3s anyway (especially since AAC is better quality than mp3). The fact that even the (now old?) iTunes Plus songs weren't of good quality (ie. CD) is good enough reason.

             

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        hegemon13, Jan 6th, 2009 @ 1:35pm

        Re: Re:

        No, AAC is a semi-proprietary, less-universally-supported format. But it is, in itself, not DRM in any way shape or form.

        BTW-If your Sansa supports Rockbox, then it can play non-DRM AAC. Just Google "rockbox."

         

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    Vincent Clement, Jan 6th, 2009 @ 11:50am

    Apple and price fixing go hand in hand.

     

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    diesel mcfadden, Jan 6th, 2009 @ 11:52am

    re: anoncow #7

    Presumably they'll tune the prices of anything in their back catalog that's selling to maximize revenue. All back-catalog titles do not need to be priced the same. $1.29 for anything with good demand. $.69 for those without.

     

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    Anonymous Coward, Jan 6th, 2009 @ 12:34pm

    Monarch, AAC is supported by most players these days including the Zune, ipod, Walkman, PSP, DS, PSP, Wii, PS3, various cell phones, etc...It is an improvment to mp3 that has better compression tech with a smaller file size. I believe the newer Sandisk players support AAC as well but I could be wrong...maybe you could download a firmware update that with allow AAC.

     

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    Hulser, Jan 6th, 2009 @ 1:54pm

    How this relates to a la carte cable pricing

    "The variable [iTunes] pricing is the type of thing that the big record labels will likely screw up, but in the long run is probably a good thing."

    It seems to me that the same thing could be said for a la carte cable pricing. If the cable companies were forced to provide a la carte pricing, they'd screw it up in the form of overcharging for popular channels, but in the long run it would be a good thing for consumers overall.

    TechDirt's argument against a la carte cable pricing is that because cable content is an infinite good delivered over a medium that has a fixed cost, you aren't really being forced to buy content you don't want, you're getting the other content as a "freebie". But isn't the new iTunes pricing model letting the market work in a more natural way (and therefore giving consumer's more choice) in the same way that an a la carte cable pricing model would? In other words, if TechDirt is saying that a more natural market will be better for iTunes and its customers, why wouldn't it be better for the cable companies and their customers?

    (Admitadly, cable's bundling pricing model is different than iTunes' fixed .99 price per unit, but in my mind they are the same in that they are both corruptions of the free market system. In fact, bundling is more of a curruption, so if anything would have a greater chance of letting the free market work better and benefit consumers -- two things that are one in the same -- it'd be offering a la carte cable pricing.)

     

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      nasch, Jan 7th, 2009 @ 7:24am

      Re: How this relates to a la carte cable pricing

      But cable and iTunes are not the same. You don't have a dedicated pipe from Apple that is (or can be) delivering all the iTunes content all the time.

      It's interesting how there are people claiming both that cable should offer a la carte pricing like music services do, and that music services should offer subscription pricing like cable companies do, despite the fact that neither has ever been proven a big success (AFAIK).

       

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    Joe, Jan 6th, 2009 @ 3:08pm

    Charge to upgrade to DRM-less tracks.

    following up on #1's comment. From the apple site.
    --
    Now, you can choose from millions of iTunes Plus songs from all four major music labels and thousands of independents. With iTunes Plus, you get high-quality, 256-Kbps AAC encoding. All free of burn limits and digital rights management (DRM). So iTunes Plus music will play on iPod, Apple TV, all Mac and Windows computers, and many other digital music players. It’s also easy to upgrade your iTunes library to iTunes Plus. You don’t have to buy the song or album again. Just pay the 30¢ per song upgrade price. (Music video upgrades are 60¢ and entire albums can be upgraded for 30 percent of the album price.)
    --
    http://www.apple.com/itunes/whatsnew/

    So roughly, there is a 30% tax to remove the DRM (slightly cheaper/ more expensive depending on how they land in the new price scheme).

     

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    techdirtReader, Jan 6th, 2009 @ 5:35pm

    Great for consumers, bad for Apple?

    Seems like Apple lost on both points. Apple benefits with DRM. It locks in consumers to their devices. In the future, consumers will be able to ditch their ipod's without having to repurchase their musical libraries.

     

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      Anonymous Coward, Jan 6th, 2009 @ 6:25pm

      Re: Great for consumers, bad for Apple?

      I'm totally lost by your comment, but alas, it merely provides a level of enjoyment in knowing the ineptitude of some companies out there.

       

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      Anonymous Coward, Jan 6th, 2009 @ 6:45pm

      Re: Great for consumers, bad for Apple?

      In the past consumers could do that anyway... but perhaps you live in the 90s. The DRM did not lock users into iPods, but iPods definitely do pull users into iTunes due to the (almost) flawless syncing and user experience of the storefront and downloading interface. Amazon MP3 for instance has absolutely nothing comparable to iTunes downloading integrated with the device sync with two clicks...

       

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    cram, Jan 6th, 2009 @ 6:26pm

    When will the likes of Apple learn that music should be free, that you can't cling on to an obsolete model that focuses on selling infinite goods, when there are so many scarce goods to sell? They ought to learn some basic economics.

     

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      Anonymous Coward, Jan 6th, 2009 @ 6:36pm

      Re:

      No, No, No! Free, unrestricted access to music catalogs is not the answer. It's a wrong, and poorly thought out solution to a simple problem.

       

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      Anonymous Coward, Jan 6th, 2009 @ 6:55pm

      Re:

      I don't buy into the 'music should be free' argument based only on its infinite good status. Yes, the arguments are good that it should not be extremely high priced and artificially finite when the good is infinite once digital.

      I think individual prices for digital tracks are a fine model, and is a model that will work fine without DRM. The price point is the issue. The good needs to be worth the price being asked, and generally speaking CDs are not worth the price being asked for them. I buy lots of music at $0.99 per song, and will buy more when part of the albums are cheaper yet. Only people who listen to nothing but the latest pop culture hits are going to be worse off with this new DRM-free deal. I like to share some tracks with friends that are into a certain genre of music too, and having the DRM free to let me do that will increase sales of those albums to those friends. Apple has been doing very well at introducing people to new music with their free downloads, which almost always result in short term increase in album sales for the track that was free.

       

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      His Shadow, Jan 6th, 2009 @ 9:00pm

      Re: Likes of Apple?

      They ought to learn some basic economics. And you should learn some basic facts. Apple is not the reason for DRM: the music labels insisted on it. Apple understands their market implicitly, which why they rule in digital downloads. Apple made it work *in spite of* the labels constantly trying to shoot themselves in the face.

       

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        cram, Jan 6th, 2009 @ 11:43pm

        Re: Re: Likes of Apple?

        Perhaps you are new here. I wasn't talking about DRM at all. I was merely parroting Mike's favorite line whenever someone says infinite goods can be sold. It was supposed to be sarcastic, but then it fell on the wrong ears.

        FYI, Mike thinks music should be free but is strangely silent on how Apple makes tons of money selling what is essentially an infinite good, thereby taking his theory out into the back alley and shooting it in the head.

         

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          qez, Jan 7th, 2009 @ 12:02am

          Re: Re: Re: Likes of Apple?

          FYI, Mike thinks music should be free but is strangely silent on how Apple makes tons of money selling what is essentially an infinite good, thereby taking his theory out into the back alley and shooting it in the head.

          How is Mike silent about selling music? Amazon's Best Selling MP3 Album For 2008 Was Available Legally For Free

          That just proves Mike's point, be nice to your fans and they will pay no matter what. And by setting the music free you are getting more fans and being nice to them.

           

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          Peter Thomas, Jan 7th, 2009 @ 8:42am

          Re: Re: Re: Likes of Apple?

          So, iPods, iMacs, MacBooks and iPhones are infinite goods, are they? Cool, get me a few, there's bound to be a few lying around. They're infinitely reproducable!

          Oh, hang on, you were talking rubbish, weren't you? Darn!

           

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    techdirtReader, Jan 6th, 2009 @ 6:33pm

    to #28

    I'm lost by your comments too. Looks like we share some commonality. :)

     

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    Anonymous Coward, Jan 6th, 2009 @ 6:58pm

    @ techdirtReader

    If I had to venture a guess, I'd say music is best served attached to some sort of visual content. This could be that music you listened to while cranking out a 35 page document over a weekend while your significant other whined about going out, the music you listened to while waiting in traffic, or that which you listen to at a movie.

    But unless your some sort of a music director on a major production and need to "cast" music to some sort of content, there really is no "thrill of the hunt" in an all-you-can-eat strategy. If I was to venture a guess, most customers first fill their new PMP with music that they like, are familiar with, and probably want to become acquainted with an artist's full repertoire. They probably use all-you-can-eat services to listen to music they've already purchased in the past. Should they then "rent" music they already purchased?

    The end result of All-You-Can-Eat is similar to that of eating at a Chinese Buffet: the customer becomes inundated with lots of stuff. Some of it is good, some bad, all served with a lot of MSG (DRM), but nothing stands out because it lacks an connection to their personal reality.

    At the end of the day, an astute customer will end up going back to that one tasty restaurant that may cost more, but they are specialized in the area and push the art form forward. El Gaucho comes to mind.

    Put simply, Nordstrom Service can't compete with WalMart Prices. Trying to compare the two can be the issue of many debates. But those that shop at Nordstrom don't go there for the price but for the overall experience. "Yes" I want to buy this. But overall, considering that Apple has a 160M user advantage, I wish you luck in the new year with changing consumer behavior.

    The song which I was listening to while writing this can be acquired here.

     

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    Anonymous Coward, Jan 6th, 2009 @ 8:22pm

    Monarch - as a few other pointed out AAC is not DRM, it's a file format like like MP3 is, There are others formats as well like MP4, OGG. The DRM is added on top of AAC, just like it can be for MP3s. The difference is that AAC wasn't/isn't always as widely supported as the MP3 format.

    As for an all-you-can-eat style service, I agree that it sounds good in theory, but isn't really practical in most cases. Like someone else said, eMusic used to work this way, and they eventually had to change to a pay as you go to stay in business. There is absolutely nothing wrong with this model. I was, until recently (had to drop my subscription for financial reasons) a member on one of the "grandfather" plans. For about $200 a year I got 90 tracks a month. That's 1080 tracks a year. If you figure that on average an album is about 12 tracks, that would come out to 90 albums a year. 90 albums a year for $200 sounds like a reasonable deal to me.

     

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    cram, Jan 7th, 2009 @ 3:02am

    Hi qez

    Perhaps you are also new here. Go back in time on Techdirt and all you'll see is thread after thread of how music should be free, making money off infinite goods is not a good model, etc, etc, ad nauseaum.

    Mike's always been talking about making music available free and focusing on making money off scarce goods. His theory is that if it costs next to nothing to copy a song, its price would be driven to zero (basic economics, which he's very fond of teaching). So all artists should GIVE AWAY infinite goods and SELL scarce goods to stay in business.

    But now he's suddenly singing a different tune. Actually when it comes to iTunes, all he has had to say was in the long term it wouldn't last - because there's precious little he can say about his theory vis-a-vis Apple, when Apple is busy destroying it by SELLING infinite goods (music) AND scarce goods (the iPod).

     

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      qez, Jan 7th, 2009 @ 4:41am

      Re:

      Perhaps you are also new here.

      No, I'm not.

      Mike's always been talking about making music available free and focusing on making money off scarce goods.

      Yes, Mike does say that music should be free and money should be made from scarce goods. But I have never heard him say that you couldn't/shouldn't sell the music as well. The business model just shouldn't be based on selling these infinite goods.

      But now he's suddenly singing a different tune. Actually when it comes to iTunes, all he has had to say was in the long term it wouldn't last - because there's precious little he can say about his theory vis-a-vis Apple, when Apple is busy destroying it by SELLING infinite goods (music) AND scarce goods (the iPod).

      Music is not yet free, at least if you want it legally. So of course Apple are selling it. But when the economic realities force the artists to set the music free, then things are different for Apple.

       

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    Twinrova, Jan 7th, 2009 @ 4:17am

    Apple scores -200 on this move.

    I'm going to upset many Apple fans, but to hell with it. They deserve to be smacked anyway for being idiots.

    If anything, this move definitely pushed me further away from a company I didn't like to begin with. To know they're in bed with the recording/music industry adds insult to injury.

    Even at $0.69/song, it's STILL TOO MUCH for a near $0 distributable valued good. While many (morons) out there feel a song is worth $0.99, it stuns me to believe they actually think this goes back to the artist.

    It doesn't. It never has. It never will.

    All this news did was to enforce the business model of Apple: Screw over the consumer by overcharging for technology that's been around for years.

    But, you can't convince sheeple of this, as they continue swooning over the latest ad/news by this company.

     

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    cram, Jan 7th, 2009 @ 8:31am

    "Perhaps you are also new here.

    No, I'm not.


    Sorry, my bad. You did sound like someone new here to me.

    "Yes, Mike does say that music should be free and money should be made from scarce goods. But I have never heard him say that you couldn't/shouldn't sell the music as well."

    What? I thought Mike's position on this was clear: Keep the infinite good, which is the music, free, which in other words means don't try to make money from sales of the infinite good. He wants everything that is infinite to be free, be it music, literature, movies, newspapers.

    "The business model just shouldn't be based on selling these infinite goods."

    But Apple just destroyed that theory: they are making good money from selling an infinite good. Of course they sell scarce goods too; actually everything from Apple is at a price. And they seem to be a success. I'd like to know how does that fit in with Mike's Grand Unified Theory of Free.

    "Music is not yet free, at least if you want it legally. So of course Apple are selling it."

    Even the music that IS free is being sold in infinite form (eg: Reznor). A lot of people are selling it. And a whole lot of people seem to be buying it. And they seem to have no problems paying for musivc, unlike Mike and his fanboys.

    "But when the economic realities force the artists to set the music free, then things are different for Apple."

    Reznor's own example disproves that statement. The economic reality has already forced him to gove away his music, but that has not changed anything for, in this case, Amazon, which seems to have raked in the money from sales of those very MP3s he gave away for free.

     

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      qez, Jan 7th, 2009 @ 9:17am

      Re:

      What? I thought Mike's position on this was clear: Keep the infinite good, which is the music, free, which in other words means don't try to make money from sales of the infinite good. He wants everything that is infinite to be free, be it music, literature, movies, newspapers.

      He has never said that make money only from scarce goods. Some of us are willing to pay for the infinite goods as well. But if you let the infinite to be free you will increase the market for the scarce good.

      But Apple just destroyed that theory....I'd like to know how does that fit in with Mike's Grand Unified Theory of Free.

      The theory you mentioned is about how content creators should set free their content. Apple is not content creator and it doesn't sell its own content. So Apple hasn't destroyed any theory.

      And they seem to have no problems paying for musivc, unlike Mike and his fanboys.

      Show me where Mike has said that nobody should pay for music? Or that is somehow wrong to pay for it?

      Reznor's own example disproves that statement. The economic reality has already forced him to gove away his music, but that has not changed anything for, in this case, Amazon, which seems to have raked in the money from sales of those very MP3s he gave away for free.

      You take Reznor as an example that Mike is wrong? :D Dude, Reznor is proving Mike's point.

       

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    cram, Jan 7th, 2009 @ 6:49pm

    hi qez

    "He has never said that make money only from scarce goods. Some of us are willing to pay for the infinite goods as well. But if you let the infinite to be free you will increase the market for the scarce good."

    Mike's has always been urging people to make money only from scarce goods, it's at the heart of his theory. The fact that a sizeable number of people are actually willing to buy what essentially costs zero to produce flies in the face of his theory.


    "The theory you mentioned is about how content creators should set free their content. Apple is not content creator and it doesn't sell its own content. So Apple hasn't destroyed any theory. "

    I think you misread me. Mike says infinite goods cost zero to reproduce, therefore the model relying on sales of infinite goods will fail (which is why he wants content creators to set content free and make money from "t-shirts"). Apple has clearly demonstrated that this model can work if applied correctly. Ergo, it destroys Mike's theory.

    "Show me where Mike has said that nobody should pay for music? Or that is somehow wrong to pay for it?"

    Mike has always said music in its infinite form should be free and no one should be expected to pay for it. He wants musicians to make more money, but not from the sale of the music in its infinite form. You can see it all around Techdirt. It's central to his philosophy.

    "You take Reznor as an example that Mike is wrong? :D Dude, Reznor is proving Mike's point."

    Dude, I think you are misreading me agan. I was just disproving your statement. You said things will be different for Apple once economic reality forces artists to free their content. I say, that reality has already forced Reznor to free up his content. But Amazon has only benefited from it.

    So, even if all artists free up their music, the likes of Apple and Amazon will likely continue to benefit, as people will keep purchasing music in its infinite form. And that drills a hole in Mike's precious theory.

     

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      Mike (profile), Jan 7th, 2009 @ 7:06pm

      Re:

      Mike's has always been urging people to make money only from scarce goods, it's at the heart of his theory. The fact that a sizeable number of people are actually willing to buy what essentially costs zero to produce flies in the face of his theory.

      No, this is 100% wrong. I have urged people to base their business models on making money from the scarce goods. If you *can* make money from the infinite goods, more power to you. But the point is that if you are *relying* on selling the infinite goods to make your revenue, you're going to be disappointed, because the economic reality is that selling infinite goods is simply a bad long term business strategy.

      Mike has always said music in its infinite form should be free and no one should be expected to pay for it.

      No, no, and no again. Cram, you really ought not put words in my mouth. I have never said it "should" be free. I have said that the economic reality is that eventually it *will* be free.

      He wants musicians to make more money, but not from the sale of the music in its infinite form. You can see it all around Techdirt. It's central to his philosophy.

      Again, you get it wrong. I guess I haven't been clear at all. Sorry about that.

       

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      qez, Jan 7th, 2009 @ 9:31pm

      Re:

      It seems we have been talking about different things :)

      To me Mike's theory is for content creators. So I have been talking about them. And you have been talking about the distributors, like Apple.

      I do agree with you that Apple and Amazon will keep making money from these infinite goods in the future as well. But only if they provide convenience for their customers.

       

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    cram, Jan 7th, 2009 @ 8:16pm

    Hi Mike

    Thanks for the response.

    "No, this is 100% wrong. I have urged people to base their business models on making money from the scarce goods. If you *can* make money from the infinite goods, more power to you."

    That's exactly what I wanted to know from you. Thanks for clarifying.

    "But the point is that if you are *relying* on selling the infinite goods to make your revenue, you're going to be disappointed, because the economic reality is that selling infinite goods is simply a bad long term business strategy."

    I guess we'll have to wait and watch. Bceause at the moment, it does seem to be paying off, especially with digital music sales on the rise. And the guys who are making money are companies like Apple, which sell music only in the infinite form.

    "No, no, and no again. Cram, you really ought not put words in my mouth. I have never said it "should" be free. I have said that the economic reality is that eventually it *will* be free."

    No Mike, I'm not trying to put words in your mouth. That's just my understanding of your ideas. Maybe I was mistaken. And as Reznor's MP3 sales indicate, even if the music is eventually free, people will still line up to buy the infinite good.

    "He wants musicians to make more money, but not from the sale of the music in its infinite form. You can see it all around Techdirt. It's central to his philosophy.

    Again, you get it wrong. I guess I haven't been clear at all. Sorry about that."

    I think you are more concerned about musicians breaking free from the shackles of labels, than how they make their money.

    Cheers

    Cram

     

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    His Shadow, Jan 7th, 2009 @ 8:45pm

    Call a Waaambulance...

    winrova on Jan 7th, 2009 @ 4:17am I'm going to upset many Apple fans, but to hell with it. They deserve to be smacked anyway for being idiots.

    Yes, yes. What a rebel. Bashing Apple is such a rad move. It's not like people haven't been doing it for 25 years. That sound? That's my eyes rolling.

    But let's move past your insipid false bravado and see if you have something substantive to say...

    If anything, this move definitely pushed me further away from a company I didn't like to begin with.

    Nope. Nothing here but whining.

    To know they're in bed with the recording/music industry adds insult to injury.

    What injury, Whiner? The injury done to consumers by a company that provides seamless integration of audio and video purchases, downloads, transfer, viewing and listening across a varied product line?

    Oh, The Humanity!

    Even at $0.69/song, it's STILL TOO MUCH for a near $0 distributable valued good.

    Good Gravy you are one of Those People.

    Servers, network storage and access, software development, licensing agreements, advertising ...

    Guess what? All that stuff costs money.

    And what is all this carping about Apple anyway? Guess what, Putz? The prices and agreements and whether there is DRM or not are SET BY THE LABELS!

    While many (morons) out there feel a song is worth $0.99, it stuns me to believe they actually think this goes back to the artist.

    Don't be such a putz. The artists signed agreements, the Labels enforce them. Everyone gets their cut. It's not Apple's fault that the Labels are predatory and artists are easily manipulated.

    Apple made digital downloads easy and affordable and got the customer base large enough to make it worth the industries time to participate. From Day One they did not want DRM. It was forced on Apple by the labels to get content online. That's it, that's all. All your gosh-i'm-such-a-rebel Apple bashing is not only pathetic, but misplaced.

     

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    Travis, Feb 5th, 2009 @ 3:13am

    lala.com

    I stopped using iTunes long ago. I'd use it for searching and as my media player but recently I've been using lala.com and I'm not looking back. Music is DRM free, $.89 (or $.10 for a 'web song'), listen to the entire cd before purchasing, music discovery, the list goes on.

     

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