Econ 101: Study Shows That If Record Labels Lowered Prices On Music, They Would Sell A Lot More

from the profit-maximization dept

Having talked with a bunch of music execs recently, as well as a few different companies that do analytics in the music space, one thing became clear: unlike most other industries, record label execs tend not to be particularly data or analytics-driven. Let's just say they didn't get into the recording industry because they were good at math. There are a few exceptions, obviously, but getting many industry execs to think logically and examine data isn't particularly easy. This isn't that surprising, given how many examples of actions by big record label execs that make little to no sense when thought about analytically.

Yet another study has come out suggesting that the industry has pricing all wrong, pointing out that the increase in sales from dropping the price of music would increase profits. And yet what has the industry been trying to do? That's right: trying to raise the price. The study suggested that the "optimal" price for music might be closer to $0.60 per track. That still seems way too high to me when you look at how people flocked to services like Allofmp3.com, but in general I think the basic concept makes sense. You can maximize revenue by dropping prices, but it doesn't seem like many record industry execs have realized that.


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  1.  
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    Ima Fish (profile), Jan 29th, 2010 @ 5:44pm

    "unlike most other industries, record label execs tend not to be particularly data or analytics-driven"

    Mike, you should know better than anyone, the reason why the labels do not act like other industries is because their industry is not based upon any free market competition. Their industry is based upon an ever expanding government granted monopoly.

    And the labels do not even compete against each other. That's the unique feature of selling music. If someone really likes a particular song, they're not going buy a different song they don't like, merely because it's cheaper. Utility and pragmatism, weighing the objective pros and cons simply are not factors when deciding to like or buy a song.

    So it's nonsense to talk about various labels competing with each other when you can only buy what you want from one.

     

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    lavi d (profile), Jan 29th, 2010 @ 5:59pm

    Broken Record

    I've said it many times before and I'll say it again:

    If CDs were about $5/ea I'd buy 10 a month, probably forever, just rebuilding all the music I used to have on vinyl.

    I like physical CDs because I like having a product to hold in my hand, I can't imagine ever buying a download.

     

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    Brian (profile), Jan 29th, 2010 @ 6:10pm

    But but...

    The higher the price the more value it has and therefor songs must be priced higher to give them more value, everybody who took Imaginary Economics 204 knows this!

     

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    Hephaestus (profile), Jan 29th, 2010 @ 6:33pm

    Saving the record Labels ....

    The article is so obvious and the solution is also. Amie street has a floating price that is determined by the market. If no one wants it the price remains low. If alot of people want it the price rises.

    The record labels would survive in a smaller more efficient form if they adopted the Amie street pricing model. I do not believe they can because of contractual obligations to their artists, and possible price fixing agreements between the labels. The fact that they think lowering the price devalues their product, based on the mistaken assumption that keeping the price high will cause more solid product sales.

     

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    e100, Jan 29th, 2010 @ 7:09pm

    Really Idiotic Artist Association

    In reality it cost them significantly less to distribute on-line and they are not passing any of that savings on to the consumer.


    For $15 I get a package, case, artwork and a CD with around 15 tracks of music on it.

    That $15 includes lots of hidden costs:
    1. The electricity for the lights in the store I bought it from
    2. The stock clerk who put it on the shelf
    3. The Cashier who I paid money too.
    4. The Manager who runs the store.
    6. The truck driver who delivered the product to the store.
    7. The diesel fuel used in the truck.
    8. The factory workers who pressed the CD
    9. The raw materials used to make the CD, case, artwork
    10. The artist who made the art work.
    11. The people who made the machines to make the CD's
    12. The inventor who has patents on the various technology used to make the CD, cases etc.
    13. I could go on but I think you get my point.

    If I download 15 tracks @ 99cents each thats $14.85

    Why does it cost the same to get a download as it does to get a physical product?

    Who in their right mind would pay the same amount of money, for less product?

    Only idiots would think that such a business model will last forever.

     

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    Nate (profile), Jan 29th, 2010 @ 7:30pm

    Re: Really Idiotic Artist Association

    Who in their right mind would pay the same amount of money, for less product?

    I generally agree with what you say, but you forgot to take convenience into account. By downloading I don't have to pay for the gas to go to the store and I save time by not having to drive into town. Is all that still worth the $0.99? No way! I stopped buying downloads and now buy CDs online. It's not relatively fast but it makes for fun surprises in the mail when I forget that I ordered them lol...

     

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    JB, Jan 29th, 2010 @ 8:31pm

    There are low price alternatives

    allofmp3.com has moved to mp3sparks.com and it appears they are closed to new customers. But you can take advantage of the exchange rate and buy songs, for example, on soundike.com for 15 cents each (with a discount for buying a complete album).

     

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    bob, Jan 29th, 2010 @ 9:26pm

    If music were cheaper

    I would buy more music.

     

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    Suzanne Lainson (profile), Jan 29th, 2010 @ 11:04pm

    But in many cases it is already cheap or even free

    There's a ton of legally free music already available. And Amazon often offers digital albums for $3.99 or less.

    Yes, I think more music would be sold if it were cheaper, but on the other hand, when you can already pretty much listen to what you want without paying, to what extent is lowering the price going to significantly move more product?

    I'm not suggesting a pricing strategy here. I'm just pointing out that lowering the price might not have as much of an impact as one might assume.

     

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    Kevin (profile), Jan 30th, 2010 @ 12:27am

    Selling in bulk

    The record labels don't understand that by lowering the price they will sell more tracks and increase profits? If they worked for me I'd fire them.

     

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    PT (profile), Jan 30th, 2010 @ 12:54am

    Unlike the MPAA...

    ... who seem to have learned this lesson. DVDs come out at about $20, after a few months they're discounted to $12, and you can often buy three or four back-catalog movies in a package for $10. These are the DVDs I buy - everything else I get from Netflix.

    Yet, the soundtrack CDs of these old movies are still $15, even though the tracks may be 50 or more years old. (Does anyone actually buy soundtrack albums?)

     

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    Cheryl, Jan 30th, 2010 @ 1:37am

    Interesting in light of the Amazon/Macmillan spat.

    Obviously it isn't clear there would be a direct relationship with the findings, but I find it interesting given Macmillan's efforts to force Amazon to jack up the price of ebooks.

    http://bit.ly/917Paf

     

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    Richard (profile), Jan 30th, 2010 @ 2:44am

    Re:

    What is needed is for a major artist (and only a really big star could get away with it) to insist on a non-exclusive contract.

    I.e. do a deal which gives two (or more) different labels to market the music - with a fixed royalty to the artist (unfortunately free wouldn't be a possibility). Then they would have to compete.

     

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    NAMELESS.ONE, Jan 30th, 2010 @ 4:19am

    my cost per cdr ( 700 meg of bandwidth )

    is equal to 2 cents

    thats my cost
    at 40$ for 5 megabit bandwidth that i get 4 megabit actual speed

    so when they make it available online what are they charging you?

     

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    The Anti-Mike (profile), Jan 30th, 2010 @ 4:50am

    Geez, you don't have to read too far into the article to realize that the professor quoted sort of went with too small of a sample:

    Professor Iyengar, a specialist in pricing and consumer behavior, surveyed only 600 digital music consumers as part of the study, and no study can reveal precisely what would happen if the price of music were reduced by 50 percent or more.

    Effectively, he is calling for a 50% decrease in the price of music, but has little more than a narrow sample to base this on. This isn't Econ 101, it's mass extrapolation from a horribly small sample.

    It isn't a "fail" outright, but there isn't enough data to support the conclusions. Further, one only has to look at the profit levels of Itunes to understand that a 50% cut in retail price would likely decimate their business model (Apple isn't making 50% profits).

    I would say another study that is not much more than wishful thinking.

     

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    vivaelamor (profile), Jan 30th, 2010 @ 6:28am

    Re:

    Do you have the slightest clue about statistics? If you do then please explain why you think he uses too narrow a sample.

     

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    WammerJammer (profile), Jan 30th, 2010 @ 7:00am

    .60 per single track

    I totally agree that the cost should be lower. I think as low as 0.30 a track. 3 bucks for a 10 track CD is cool and you can still make money on it.
    The main problem with online sales is the banking system and credit card checkout companies because a credit card transaction can cost as much as 0.30 plus 3% of the total.
    That's PayPal's fee. For a business to even process credit cards on the cheap is still close to .15 per transaction. So if you sell a single at 0.99 the credit card processing can be up to 30% which is prohibitive. It sounds like a loser to me and the only way the cost will ever come down is to be able to get rid of the credit card processing fees.
    If there was a way to batch process single track sales it would be cheaper. But the problem is that each credit card has to be approved and the companies sock you for it.
    I haven't heard anywhere how much the Record Company gets out of each .99 sale, so it's really hard to figure total cost of sale.

     

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  18.  
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    Anonymous Coward, Jan 30th, 2010 @ 7:34am

    Slightly different business, but Valve did a study along these lines with discounting and total revenue earned. As will be no surprise to those around here much, the steeper the discount, the higher the total revenue earned.

    http://www.edge-online.com/features/valve-are-games-too-expensive#expensivegames

     

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  19.  
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    Anonymous Coward, Jan 30th, 2010 @ 7:57am

    Re:

    Cool, now TAM can try to argue against basic economics AND basic statistics.

     

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  20.  
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    Anonymous Coward, Jan 30th, 2010 @ 7:58am

    Actually the industry has acted like such assholes that I no longer want their product at any price. Fuck those assholes, I hope they all go homeless and die cold and miserable.

     

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  21.  
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    Anonymous Coward, Jan 30th, 2010 @ 10:54am

    Re: Re:

    TAM: Always arguing against the basics.

     

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    Ronald J Riley (profile), Jan 30th, 2010 @ 10:57am

    Mike is right when he says "but getting many industry execs to think logically and examine data isn't particularly easy." and I agree that the music industry is not handling changes in their industry very well but it is a fact that when it comes to patents that Mike has the same problems. Mike's reasoning on patents kinds of reminds me of the unintelligent design folks.

    Ronald J. Riley,


    I am speaking only on my own behalf.
    Affiliations:
    President - www.PIAUSA.org - RJR at PIAUSA.org
    Executive Director - www.InventorEd.org - RJR at InvEd.org
    Senior Fellow - www.PatentPolicy.org
    President - Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (810) 597-0194 / (202) 318-1595 - 9 am to 8 pm EST.

     

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  23.  
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    Ronald J Riley (profile), Jan 30th, 2010 @ 11:06am

    "Apple isn't making 50% profits"

    "Apple isn't making 50% profits", but they are gouging their customers in a multitude of other ways. What amazes me is how people line up and hand Apple wads of cash to get products which Apple has crippled by design.

    Ronald J. Riley,


    I am speaking only on my own behalf.
    Affiliations:
    President - www.PIAUSA.org - RJR at PIAUSA.org
    Executive Director - www.InventorEd.org - RJR at InvEd.org
    Senior Fellow - www.PatentPolicy.org
    President - Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (810) 597-0194 / (202) 318-1595 - 9 am to 8 pm EST.

     

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  24.  
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    The Anti-Mike (profile), Jan 30th, 2010 @ 11:48am

    Re: Re:

    Yup, I know enough about stats to know that (a) he only surveyed a small number of consumers, (b) he only surveyed digital music consumers and not consumers as a whole, and (c) digital music consumers are a small part of the overall music consumer world.

    Effectively, he selected a group of people most likely to answer in one manner. It is both too small and too narrow of a group to draw and signficant conclusions. The vast majority of music consumers are not "digital music consumers" (aka online buyers) but rather still buying shiny plastic discs. Asking the larger music community as a whole might actually reveal something meaningful.

    Carry on.

     

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    The Anti-Mike (profile), Jan 30th, 2010 @ 11:49am

    Re:

    I trust you have no "commercial" music on your ipod, right?

     

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  26.  
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    Jon, Jan 30th, 2010 @ 12:09pm

    Re: Really Idiotic Artist Association

    Yes, most tracks are 99 cents. But if you're buying an "album" online, there is usually a significant savings - if your scenario, it would probably be $9.99, not $14.85, for the whole album.

     

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    Anonymous Coward, Jan 30th, 2010 @ 2:16pm

    Re: Re: Re:

    Notice these specific words

    "Yet another study has come out suggesting that the industry has pricing all wrong"

    (emphasis added). This isn't the ONLY study, it's just one of many studies. The problem is that you have no evidence to contradict the studies so you simply pick on the studies. Why not present contradicting evidence instead of picking on each individual study and ignoring what they do indeed suggest.

    However, one thing to note is that Americans don't like to buy something once the prices increase after the prices have gone down so as a result many industries often try to avoid dropping prices to products, even if they know it will make them more money in the short run, because they anticipate that once those prices drop they will be harder to raise again. Other countries aren't so much that way. Hence, even though the industry can make more money by dropping prices they don't like the idea of getting people used to fair prices, they want to continue to rip everyone off.

     

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  28.  
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    Anonymous Coward, Jan 30th, 2010 @ 2:17pm

    Re: Re: Re:

    BTW, how much do you get paid for this?

     

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  29.  
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    Anonymous Coward, Jan 30th, 2010 @ 2:20pm

    Re: Re: Re: Re:

    Why, he does it for free! He cares and respects artists and right's holders to such a degree that he's always making with the posts here on Techdirt.

    That's our TAMMY!

     

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  30.  
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    Another AC, Jan 30th, 2010 @ 2:22pm

    Re: Re:

    I stopped listening to music thanks to the shenanigans of the recording industry.

    I don't have an iPod. I don't listen to music. Good job recording industry! Thanks for destroying what little respect I had for the musical arts.

     

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    mrG, Jan 30th, 2010 @ 2:31pm

    A more fundamental question: why do we need to OWN music?

    This is where the whole thing comes tumbling down: the foundation is wrong. People don't want to own the music, they want to hear the music. They want to hear the music they like when and where and how it suits their mood.

    That may be in the car, walking on the street, in a restaurant, at a dance, while reading, while studying, while playing racketball ... having lost the ability to sing (as Souza predicted) they nonetheless crave the comfort of music to ease, speed and beautify their day.

    Nothing in there says they must own anything. The question is only the access to music, not stuffing one's shirt with leaves on the mistaken assumption they are 'valuable' in themselves.

    So the whole sales model is flawed from the start. Music is not an unit item sales business model, it is a bandwidth access rate supply model- I don't believe anything meaningful will happen to save their sorry hides until they wake up and realize that while they sit there stuffing their shirts with dead leaves, others out there are supplying audiences at affordable bandwidth access rates.

     

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  32.  
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    Anonymous Coward, Jan 30th, 2010 @ 2:32pm

    Re: Re:

    Not that I purchased in the last 24 months. I fully support musicians by going to concerts and purchasing merchandise. I do not support the recording industy - they have done nothing but alienate their best customers for years. I do not and will not support the recording industry, if that means going without new music purchases then so be it. There is still radio and other commercial broadcasts that allow me to record some music without paying for it. I've learned to better expolit that which comes at no cost to me. I don't like the word 'boycott' but that is essentially my stance with the recording industry.

     

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  33.  
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    Haywood (profile), Jan 30th, 2010 @ 2:41pm

    Re: .60 per single track

    I never thought of it that way, and you're right, that is a problem.
    The only solution that comes to mind is; do like some toll road authorities do for toll tags and; set up an account with perhaps $25 in it, the draw against that until the balance gets low at which point they let you know, so you can put more money in the account. That way there is only a fee for every $25 or $50 or what ever amount you chose, and you could be offered a much better price for going along with the program.

     

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  34.  
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    Anonymous Coward, Jan 30th, 2010 @ 2:43pm

    Re: Re: Re:

    For the record, I'm not one that believes that music should be 'free'. If the recording industy did not act like a bunch of spoiled children I'd be happy to pay a reasonable price for music. I understand that there are costs to record/produce tracks and albums. I understand that the cost of production needs to be spread across some number of expected sales. I do not understand treating your customers like shit and price gouging from every possible angle.

     

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  35.  
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    Anonymous Coward, Jan 30th, 2010 @ 5:14pm

    Re:

    The dead guy that you insist in including in your signature (despite "speaking only on your own behalf") told me that you shouldn't try to randomly bring your patent whining into a post that has nothing to do with patents.

     

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  36.  
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    Anonymous Coward, Jan 30th, 2010 @ 5:16pm

    Re: Re: Re:

    Yeah, I mean, when I survey car buyers about car prices, everyone always tells me my survey is stupid because I didn't also survey the people buying bicycles, motorcycles, mopeds, scooters, running shoes, bus passes, airplane tickets, taxi rides, and Segways.

     

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    jordan, Jan 30th, 2010 @ 6:13pm

    Guess who figured out that that works for everything

    Im pretty sure walmart figured out that if you lower profit margins you actually end up making more money because more people buy your stuff a long time ago..... time the music industry caught up

     

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  38.  
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    vivaelamor (profile), Jan 30th, 2010 @ 6:29pm

    Re: If music were cheaper

    If I thought the money was going to the artists, I'd buy more music.

     

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  39.  
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    vivaelamor (profile), Jan 30th, 2010 @ 7:35pm

    Re: Re: Re:

    "he only surveyed a small number of consumers"

    Small by what measure? If you know that it is too small then you should be able to give some detail as to why. Depending on what you're doing a sample size of 300 can be quite adequate for the population of Earth.

    "he only surveyed digital music consumers and not consumers as a whole"

    The study says that they surveyed both existing customers and consumers who had professed an interest. I am unsure what surveying people who don't have an interest would achieve.

    "digital music consumers are a small part of the overall music consumer world."

    Isn't the point of the study to help companies take advantage of a yet untapped market?

    "Effectively, he selected a group of people most likely to answer in one manner. It is both too small and too narrow of a group to draw and signficant conclusions. The vast majority of music consumers are not "digital music consumers" (aka online buyers) but rather still buying shiny plastic discs. Asking the larger music community as a whole might actually reveal something meaningful."

    Ah yes, study the cat to learn about the dog. Sage advice. You did read the title of the study, didn't you?

     

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  40.  
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    vivaelamor (profile), Jan 30th, 2010 @ 7:38pm

    Re: "Apple isn't making 50% profits"

    "What amazes me is how people line up and hand Apple wads of cash to get products which Apple has crippled by design."

    Finally, something I can agree with you on.

     

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  41.  
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    The Anti-Mike (profile), Jan 31st, 2010 @ 1:39am

    Re: Re: Re: Re:

    Again, sorry, but last week Mike has a survey up that showed that most of the activity in the music business was still in shiny plastic discs. So if you are going to survey music buyers, you should survey all of the, not a small sub-set.

    It would be incredibly relevant to see what price point ALL music consumers would consider good for digital media. and perhaps also to see what part of the plastic disc market would be shifted online if the price was right.

    Keep an eye on all of the information out there, not narrowly on a single study.

     

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  42.  
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    vivaelamor (profile), Jan 31st, 2010 @ 3:27am

    Re: Re: Re: Re: Re:

    "Again, sorry, but last week Mike has a survey up that showed that most of the activity in the music business was still in shiny plastic discs. So if you are going to survey music buyers, you should survey all of the, not a small sub-set."

    Is this your Benny Hill impression? You've completely ignored what I said and gone on to repeat what you said before.

    Before I get dizzy, let's try again:

    1. The study does not limit itself to current customers of digital music, nor does it exclude those who buy CD's.

    2. Including those who have no interest in digital music would do nothing to help find a price for digital music.

    3. Keeping an eye on the all the information out there would include any single study.

    4. Including those who aren't already interested in the service would likely skew the results in the opposite direction to the one you want. People who currently buy disks aren't likely to become part of the digital market if the price goes up and would likely already be part of the market if the price was right.

     

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    The Anti-Mike (profile), Jan 31st, 2010 @ 7:41am

    Re: Re: Re: Re: Re: Re:

    Can I try this again?

    Professor Iyengar, a specialist in pricing and consumer behavior, surveyed only 600 digital music consumers as part of the study

    600 digital music consumers. Next.

     

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  44.  
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    Paul, Jan 31st, 2010 @ 7:47am

    Econ 101

    I take exception to the assertion that the music industry is a Government sponsored monopoly. Thanks to the internet and "free" music sites the market is dictating the cost in the form of losses to the record companies. These loses are then transferred to the rest of the music buying public. Even with recent trademark cases regarding internet music downloading, there has not been a significant drop in demand or access from these sites; nor has any label been able to curb their use in any significant way. This is the market forcing change...can the labels continue the status-quo? We'll see....

     

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  45.  
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    RD, Jan 31st, 2010 @ 9:02am

    TAM the amazing TAMHOLE

    "600 digital music consumers. Next."

    Yes, because ignoring small, emerging markets with significantly enabling technologies is a smart move.

    The auto.

    Film.

    Electricity.

    The Telephone.

    At one time, these were all "next" type items. No one knew what they were, how they worked, what they would do or mean to anyone, and couldnt afford them anyway. New product segments dont always spring full-blown from your Corporate Masters Assholes like a spring rain that showers down upon the clueless masses, who accept it like mana from heaven and move en masse to adopt it, you know.

     

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  46.  
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    Anonymous Coward, Jan 31st, 2010 @ 9:47am

    Re: Re: Re: Re: Re: Re: Re:

    Please continue failing Stat 101.

     

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  47.  
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    bigpicture, Jan 31st, 2010 @ 10:39am

    Re: Monopoly

    I don't think that you got this quite right. Yes copyright grants monopoly that is the downside, and the record labels use this to the extreme. But as far as choice/price goes the market is no different than for any other commodity. Yes strip down all the cultural hype and music is just a commodity like cars or PCs.

    My preference would be to drive a Mercedes but I drive a Kia. Why? Because I got it equipped with every technical feature and convenience that a Mercedes has but at about 1/2 to 2/3 the price. I buy music the same way, music I like at the price I like. Musicians can now market their product and bypass the labels, and soon this segment will grow to where there are a lot more options than buying from the labels. The music recording companies are going to die because they are no longer needed. They are only going to have rights to intellectual and artistic content that they actually produced. (i.e. movies)

     

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    The Anti-Mike (profile), Jan 31st, 2010 @ 11:07am

    Re: Re: Re: Re: Re: Re: Re: Re:

    Moron. I understand the idea of sampling, but if you are only sampling a single small part of the overall buying public (just digital music consumers, instead of all music consumers) you won't get the full answer.

    So you can anonymously continue to fair reading101.

     

    reply to this | link to this | view in thread ]

  49.  
    identicon
    Anonymous Coward, Jan 31st, 2010 @ 1:44pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Yes, surveying people who don't buy digital music is the best way to find out what price people who buy digital music want to pay.

    You would have learned what a "population" is in Stat 101, if you hadn't failed.

     

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  50.  
    identicon
    RD, Jan 31st, 2010 @ 2:09pm

    TAM the amazing TAMHOLE ...now with MORE HOLE!!

    "Moron. I understand the idea of sampling, but if you are only sampling a single small part of the overall buying public (just digital music consumers, instead of all music consumers) you won't get the full answer."

    Says the moron who repeatedly calls people out for personal attacks as "losing the argument." Good job asshole.

    So what good is it to poll people who arent consumers of a product again? Lets see....lets poll 90% of people who are not a consumer of a product, then draw a conclusion about what they want....that would be, lets see...carry the 1....90% AGAINST whatever you are polling about.

    Dumb shit.

     

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  51.  
    icon
    vivaelamor (profile), Jan 31st, 2010 @ 2:13pm

    Re: Re: Re: Re: Re: Re: Re:

    Thank you for alerting me to the fact that you haven't actually read the study.

    From the study: "The conjoint survey was sent to some of the customers of the service provider and
    other consumers who had professed interest in its service."

    The article you quote from is wrong.

     

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  52.  
    icon
    lbds137 (profile), Jan 31st, 2010 @ 2:33pm

    Re: Broken Record

    It's too bad that the will of the consumer is falling on deaf ears... but hopefully if enough consumers decide that enough is enough, then the house of cards that is the recording industry (NOT the music industry) will finally come crashing down.

    The question is not if, but when. I guess only time will tell.

     

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  53.  
    identicon
    Theo, Jan 31st, 2010 @ 3:56pm

    this is not news.

     

    reply to this | link to this | view in thread ]

  54.  
    identicon
    Anonymous Coward, Jan 31st, 2010 @ 4:51pm

    Re:

    President - www.imakestuffup.org - SelfImportant at imakestuffup.org
    Executive Director - www.ihavenolife.org - Loser at ihavenolife.org
    ...

     

    reply to this | link to this | view in thread ]

  55.  
    identicon
    Gordon, Jan 31st, 2010 @ 6:39pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re:

    And you couldn't possibly be calling him a moron TAM. Your fingers must be on auto pilot without input from your brain. If you think for a second that asking any person on the planet if they'd like to spend less money on music would bring any OTHER answer than the one stated, YOU sir, are the moron. YOU might like paying way too much money for music (though I dare say that part of your employment for the RIAA could possibly be free (artists will never see penny one) mp3's).
    The rest of the population of , I don't know, The world maybe, would I'm sure rather be paying less.

    The one doing the study could have given only HIS opinion and pretty much been speaking for the rest of us, Those of us NOT payed by the RIAA et al.

     

    reply to this | link to this | view in thread ]

  56.  
    identicon
    Anonymous Coward, Jan 31st, 2010 @ 7:38pm

    Re: Re:

    In TAM's world higher prices means more customers.

     

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  57.  
    identicon
    Anonymous Coward, Jan 31st, 2010 @ 7:44pm

    Re: Re: Re:

    Not only that, but we should sell the digital content on shiny plastic discs, for that is the only true measurement of an artist's worth.

     

    reply to this | link to this | view in thread ]

  58.  
    icon
    The Anti-Mike (profile), Feb 1st, 2010 @ 12:18am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    No, the question is why not ask ALL music buyers, rather than then smallest possible subset?

    Econ 101: If you have multiple markets for the same thing, you don't lower the price in the smallest market so as to hurt your larger market.

    60 cents per song would mean 60x12 = $7.20 for an album. When albums retail between 11 and 20 dollars, why would you want to depress the overall market? You might encourage more people to buy online, but your net profits overall would drop. That wouldn't be good business.

    Proof that none of you have run a business before.

     

    reply to this | link to this | view in thread ]

  59.  
    icon
    The Anti-Mike (profile), Feb 1st, 2010 @ 4:08am

    Re: Re: Re:

    liar.

     

    reply to this | link to this | view in thread ]

  60.  
    identicon
    Phil, Feb 1st, 2010 @ 5:31am

    Re: Really Idiotic Artist Association

    @e100
    Excellent thumbnail analysis of the situation.

     

    reply to this | link to this | view in thread ]

  61.  
    identicon
    bakester, Feb 1st, 2010 @ 5:39am

    How to sell music and get a profit

     

    reply to this | link to this | view in thread ]

  62.  
    icon
    The Anti-Mike (profile), Feb 1st, 2010 @ 5:45am

    Re: Re: Re:

    Here's the funny part: Did you go to a live nation show? Then indirectly you supported a label. They are doing more and more "360" deals which means they are getting a part of the ticket price as well.

    The name changes, but the function remains the same.

     

    reply to this | link to this | view in thread ]

  63.  
    identicon
    Bakester, Feb 1st, 2010 @ 5:51am

    How to sell music and get a profit

    If you dont want to make money selling your music dont go to http://436563dfklv12t0jqvw2hd4o-4.hop.clickbank.net/?tid=SUPERSALE2

     

    reply to this | link to this | view in thread ]

  64.  
    identicon
    Anonymous Coward, Feb 1st, 2010 @ 7:08am

    Re: Re: Re: Re:

    No, I did not go to a live nation show. The funniest part is that I really do not support major record labels. While there may be times when I support them indirectly its not intentional or frequent.

     

    reply to this | link to this | view in thread ]

  65.  
    icon
    PaulT (profile), Feb 1st, 2010 @ 7:29am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Wow, that's idiocy, even for you.

    Ask ALL customers? How? There's a large proportion who would never respond. How would you ask? Via mail? Via phone? Via email? Not everyone uses all three and there would be a lot of overlap if you contacted everybody, even if that were possible (e.g. how do you get the contact details for those who only buy music through Wal Mart, or who only buy it second hand due to the high prices of new music)?

    Maybe you have an answer. If you do, I suggest getting in touch with the top statisticians in the land because you've just rendered every algorithm and the concept of sample sizes obsolete. Even better, patent the process and you can be rich!

    As for having run a business. Yes, many of us have, and we understand the concept of margin costs. The marginal cost of creating a digital file is $0. The marginal cost of distributing and storing it is minimal. It's almost irrelevant compared to a CD, and the shipping, storage and transport of a CD makes up a large proportion of its cost.

    In other words, they can drop the price of digital file significantly and still make a healthy profit on each unit. Meanwhile, they sell more units. Get the proportions right, and they make more profit while making "pirated" content a little less attractive.

    Only a fool like you would consider this a bad thing, and there's already some great examples of it in action out there. (e.g., admittedly anecdotal, but I bought many more albums when I was an eMusic member that I ever have before or since. 10 albums/month minimum, eMusic's prices got higher, availability lower, so I quit and now buy 1-2 albums on average each month and spend at most half of what I used to.)

     

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  66.  
    icon
    PaulT (profile), Feb 1st, 2010 @ 7:41am

    Re: .60 per single track

    Sadly, that's what eMusic used to be like - a subscription service admittedly but it was possible to get tracks for $0.29 if you were on the right plan. Then prices nearly doubled, not so suspiciously at the same time they acquired Sony's catalogue. They lost a lot of loyal customers that way.

    I'd like to see a mixed service, maybe 79 or 99c for one-off singles but offer the albums for $5 or $6. They'll soon stop bitching about the death of the album if they stop selling them for exponentially greater prices than the songs people actually want. People can happily pay a couple of bucks more for a full album, but $10 if all they want is 2 $1 tracks? Doesn't take a genius to work out which option people will go for, even if they would actually have enjoyed the full album..

     

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  67.  
    identicon
    Anonymous Coward, Feb 1st, 2010 @ 10:23am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Good try, except that the people buying shiny plastic discs aren't buying cheap digital files, according to, umm...you.

     

    reply to this | link to this | view in thread ]

  68.  
    identicon
    Anonymous Coward, Feb 1st, 2010 @ 10:25am

    Re: Re: Re: Re:

    Pot meet kettle. Kettle meet pot.

     

    reply to this | link to this | view in thread ]

  69.  
    identicon
    Anonymous Coward, Feb 1st, 2010 @ 10:26am

    Re: Re: Re: Re:

    Copyright will be rendered obsolete in the near future. Good luck.

     

    reply to this | link to this | view in thread ]

  70.  
    identicon
    Zombie doc, Feb 1st, 2010 @ 11:17am

    Re: Re: If music were cheaper

    The basic issue of the music industry is that it is a business build on loaning money. I run a small independent label Godless Bottle Records. In a nut shell this is what I offer my bands. 1. I'll get you recorded and I'll pay for the recording and duplication of your CDs. I'll get them digitally distributed as well. 2). I get 75% of your gross from these sales until I get paid off then at that time once your 'advance' is paid the band gets 75% of the money the label gets 25%. This is uber fair for the artist and for the label. It allows me to invest in to new acts and in the current stable of bands. Big labels work like this here is your 200,000 advance your royaltiy rate is .02 cents per media sale. You see nothing until we get our money back. Which may never happen if your album doesn't sell 50 million copies. What happens is a label signs a band to a crappy deal like this and they are one hit wonders and then they drop them like a hot rock for the next 'big thing'. Notice most bands who have massive first albums seem to disappear after that second one? Bands aren't given a chance to come back. They are dropped and kicked out the door. Anyone remember The Ernies? Chris Bondi from that band is in a band on my label At Arms Length. They were huge for like 20 seconds... Then dropped like hot rocks when their second album failed to sell 40 million copies.

     

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  71.  
    icon
    Nastybutler77 (profile), Feb 1st, 2010 @ 11:57am

    Re: How to sell music and get a profit

    The only thing worse than a troll is a spammer. Begone foul turd.

     

    reply to this | link to this | view in thread ]

  72.  
    icon
    vivaelamor (profile), Feb 1st, 2010 @ 1:47pm

    Re: Re: Re: If music were cheaper

    I am very well aware of the distinction you describe between fair labels and unfair labels and applaud you for being on the fair side. I find riaaradar an invaluable resource in the fight against unfair labels and lament the fact that Amanda Palmer is on Roadrunner.

     

    reply to this | link to this | view in thread ]

  73.  
    icon
    The Anti-Mike (profile), Feb 2nd, 2010 @ 6:08am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

    Paul, get a grip.

    Ask ALL customers? How? There's a large proportion who would never respond. How would you ask?

    Not ALL as in each one individually, but a sample that is larger than only a sampling of digital music buyers.

    Digital music is still only a small part of total music sales. It would be like saying you sampled soft drink preferences from the market, when the only people you asked are people walking by holding Freska bottles. The sample is too narrow to get a full and reasonable result.

    As for your purchases, have you considered that perhaps you have reached the saturation point in your collection? One of the amazing things about "long tail" stuff is that over time, your personal demand for older material drops off. Now you are only purchasing or looking at mostly newer material. So your declining in purchasing might have more to do with a lack of new material you like, than anything else. If you really wanted something, you would pay the (slightly) higher price for it today.

     

    reply to this | link to this | view in thread ]

  74.  
    icon
    rwahrens (profile), Feb 2nd, 2010 @ 6:12am

    Re: "Apple isn't making 50% profits"

    Apple charges a 30% fee on every download, which beats every other music store out there, except the ones that have met that same price (see amazon, recently). Obviously, the iTunes store has physical costs associated with it, and this fee is meant to offset that cost.

    ALL music now sold on iTunes is DRM free. You can buy it and transfer it to any other music player on the market, since you can convert it from the open AAC they sell to an MP3 format, and there are third party converters that can convert to other formats as well.

    So please tell me how their music is crippled?

    Movies are a different story, but then is there ANY online store that sells DRM-free movies?

     

    reply to this | link to this | view in thread ]

  75.  
    icon
    IrishDaze (profile), Feb 2nd, 2010 @ 8:55am

    Confusion

    Wow. I've been a TechDirt reader and Masnick fan for quite a while, so I've become familiar with the anti-TAM gang-up. I don't undertand the motivation behind it at all.

    Yes, TAM is clearly an aspiring-to-professional-level contrarian, especially regarding the topics that Masnick tends to write about, so he might be a tad bit unpopular with the TechDirt crowd. That, I understand. What I don't understand is the mob behavior and sheer nastiness of other TechDirt readers towards him.

    Generally TAM isn't ugly (resorting to personal attacks, etc.) until others, en-masse, provoke him without (apparent) provocation. Sometimes posters attack him before he even posts in a given thread (not this one, but I'm sure I've seen it in others).

    Can someone explain the anti-TAM sentiment? Because I don't understand it, I find it distracting and a downer when reading TechDirt.

     

    reply to this | link to this | view in thread ]


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