alerts us to an LA Times report saying that Apple's variable pricing for iTunes is set to launch on April 7th
(a week later than initially planned). More interesting, however, are the reports that many music industry veterans are quite worried about this, and believe that Apple and the major record labels are making a big mistake in that it's going to piss off and annoy fans, just at a time when they should be embracing fans and giving them more of a reason to buy. The fear is that adding that extra $0.30 to many tracks will add in enough of a mental transaction cost ("is this song really
worth that extra $0.30?") that it may harm sales. Some, like Ted Cohen (former EMI exec, who's now been pushing his former colleagues to finally enter the 21st century) worries that it's going to backfire in a big way:
"This will be a PR nightmare. It is for the music industry what the AIG bonuses are for the insurance industry."
And the manager of Nine Inch Nails noted something similar:
"Wouldn't it make sense to try to price it cheaper instead of squeezing the handful of people who are still willing to pay for music?"
Oddly, the LA Times article claims that the new pricing scheme is "true to supply-and-demand economics," but, as Gizmodo notes
, that's not true at all. The supply
is infinite. So if it were true to supply-and-demand economics, the price would be free. The actual price is based on an artificially limited supply and a made up demand.