Apple seeks TV Price Cut, Irking All Networks…..
Posted September 7, 2007 — in Music News
Apple wants to slash the price of TV downloads such as NBC’s ‘Heroes.’
Apple is mulling a plan to cut the price of TV show downloads in half — an idea that’s fuming Hollywood.
According to three people familiar with the proposal, Apple has told networks and studios that it would like to slash the cost of most TV episodes sold via iTunes from the current $1.99 to just 99¢ — the same as what Apple charges for most music singles.
The half-price plan may have contributed to NBC’s decision last week not to renew its current deal with Apple (though if NBC had simply let its contract automatically renew, the current price of $1.99 would’ve stayed in place).
Apples uses the same sales pitch every time that they will end up making more money from digital downloads under the new proposal. Company believes the volume of sales for TV shows will rise dramatically, offsetting the impact of the price cut.
They admit that it doesn’t make sense to charge the same amount for an episode of “The Brady Bunch” as for “Lost.”
This is what KOAR proclaims — it doesn’t make sense that iTunes charges the same amount for a successful downloaded Pink track as for a Cher song released in the 1980’s. Its a warped mentality with no business sense. Its killing artists’ profits and it scorns achievement. Any artist should be fuming…
But of course Apple has proved to be resistant to multiple price points for video downloads, preferring to keep things as simple as possible.
Oh Yeah, really simple!
It seems possible Apple and the nets will come to a settlement in which shows are sold via tiered pricing, perhaps 99¢ for library titles, $1.99 for current hits and $2.99 for megahits or shows on premium cablers such as HBO or Showtime.
While big networks and studios seem to be scoffing at Apple’s proposal, some nets could welcome the idea NBC like major music labels wants more pricing flexibility rather eglatarian price structure of 99 Cents.
Bottom Line: Since the CEO of Apple Steve Jobs embraces the egalitarian price system where “all units are priced equal’ — he should stand up to his principle and have an egalitarian pay structure within Apple. Steve Jobs would make the same salary as his executive assistant all the way to the janitor. That is basic logic. Do we have a double standard here? We sure do ladies and gentlemen.
Apples argument is that if all things are priced equal then the volume will rise off setting the impact of the price cut.
We will use the same argument. If Steve Jobs embraces the egalitarian pay structure within Apple — then the employees all the way to the janitor will be more motivated to work, thus increasing Apples total bottom line off setting Steve Jobs price cut. That means Jobs could be making more money. Do you buy it?
IF we want people to pay for music or tv shows, then we can NOT price them at $1.99 or even $2.99. $0.99 is the absolute maximum of what I say people paying for a single file, whether it’s a song or a tv show.
Comment by alex — September 7, 2007 @ 12:33 pm
I really like the Amie Street model - increase the price as the downloads increase and therefore as the numbers increase. People will be even more anxious to buy early before the “stock” rises and will be more likely to not share as they will have had the advantage of not paying as much as the track costs now.
Comment by Blah — September 7, 2007 @ 12:36 pm
I think the .99 cent model is fine. I wouldn’t buy anymore singles if they went up in price. Now, that might be a reason to push the price up. It might make people buy more full albums.
Comment by Tim Towner — September 7, 2007 @ 1:01 pm
“IF we want people to pay for music or tv shows, then we can NOT price them at $1.99 or even $2.99. $0.99 is the absolute maximum of what I say people paying for a single file, whether it’s a song or a tv show.”
Do you see how that is DEVALUING the product? Thats the whole argument here. It shouldn’t be free…why should it? It costs a lot of money to make and its logical to make that money back. If you want it for free, tape it off TV like people did in the old days. Why are you demanding high quality, immediate downloads at a cost of practically nothing? You DO realize that you can start expecting advertisements attached to your CHEAP downloads to help the content creator break even, right?
It’s bound to happen. Songs, tv shows, movies…it’s not difficult to tack on ads at the beginning or end of anything you can download. Would you be willing to deal with that just to save a fucking dollar?
This mentality everyone has of ‘I’m just one person, my behavior doesn’t matter’ is bullshit. EVERYONE thinks that way and what we’re seeing now is a decline in sales across the board and massive layoffs. How is that fair? You want to save a buck or two so badly that you’ll put people out of business? Shame on you.
I can’t believe people are actually complaining about the high price of downloads when it still costs less than a gallon of gas. All that really says to me is that music means less to you than gasoline. I feel sorry for you.
Comment by AJ-KOAR — September 7, 2007 @ 1:09 pm
Everyone should know by now that everything Jobs does is a new way to make his business, products and personal bank account rise..sounds like any good businessman if you ask me, and I think he and Apple have proven time and time again that they can stay ahead of everyone…Think about it they don’t even make commercials for new products, they just post photos of it on their website the day it’s unveiled. I don’t know too many companies who could do that.
As far as the egalitarian pay structure, that could be said for any business, but someone was there first just like any other, I doubt much money would be made by Apple if that was there pay structure because all of the “big” people who develop, create and call the shots in that company would bail in a second if they knew the janitor made us much as them. Honestly, so would I.
Comment by sweet — September 7, 2007 @ 1:20 pm
Price discrimination, which is what is being referenced by the tiered pricing structure this website advocates, is absolutely true and great in principle. It’s not that I would not pay $1.99 for a track, but I definately would not pay $19.99 for a cd. I did’nt in 1997, and I will not now. Society is used to certain pricing parameters for music; we may not like it, but it is still the case. If we want to raise the price of music being downloaded, we have to bring added value to what people are paying for. Maybe music videos with the songs included? Maybe an audio track with the song where the artist does a short story about where the song came from? maybe even a digital fairy that flys around on your i-pod and sprinkles HAVE A NICE DAY. The point is $o.99 is the max folks will pay for this stuff RIGHT NOW. The entire business model needs to evolve; not just the pricing structure. That’s like saying the solution to the government making more money is raising taxes; it looks good in principle but when you get down to it if people have more money THEY SPEND MORE MONEY.
Comment by jake — September 7, 2007 @ 1:25 pm
Yes, equal pricing sucks. But I think the plan is to keep all the units priced the same to get people used to the idea of buying intellectual property digitally. Getting people to switch something in their lives is hard, why not make the transition as easy as possible? It will not last forever.
Comment by Keith Freund — September 7, 2007 @ 1:34 pm
I think the prices SHOULD go up. Maybe then people will only buy what they actually like instead of buying EVERYTHING they hear. It will add value back to the quality tracks and will restore a little order to the chaos.
I dont think 12.99 was ever an unfair price for a full length album, since it usually comes out to be around a dollar per song, but includes the ‘extras’ that people seem to want like videos and artwork. I think where most people had a problem with it (and where I had a problem with it) was profit distribution. We want more of our money to go to the artists. But it’s not like 100% or even 50% of the spare change you’re paying for digital tracks is going to the artists. Everyone is still taking a piece.
Great music lasts forever. You will listen to a song you love for YEARS. I truly DO NOT understand why that is worth less than a dollar to you people. Think for a second about all the stupid shit you buy with an incredibly limited shelf life that costs MORE than a CD. I don’t get it.
Comment by AJ-KOAR — September 7, 2007 @ 1:54 pm
“Great music lasts forever”…..and BAD music costs the same on itunes.
So if i buy the new 160 gig ipod, buy enough music to fill up half the space on itunes…how much will I have invested?
$20,149.00
think i’ll get a car instead….and listen to the radio for free.
Comment by Mark — September 7, 2007 @ 5:13 pm
“Its killing artists’ profits…”
When was the last time an artist saw a royalty check. Its effecting shareholder profits and the label president bonus at best.
Even back when sales were at the all time high’s, and artist could have a platinum record and still end up not recouping.
Comment by Brian — September 7, 2007 @ 8:24 pm
“Great music lasts forever”…..and BAD music costs the same on itunes. ”
Then Don’t buy the Bad Tracks….
Here’s the arguement against the Amie Street model. The majors are the ones who can buy the mass exposer. They sell the big numbers not the up and coming bands. (the rich get richer– the poor get poorer) If you want to make it harder on the New Artists thats a great way to do it. Its so hard already -even for a good band- to make enough money to keep doing it for a living. All that model does is tell people if your not already Huge you’re not as good — which is why your song cost less. I think getting people to open to more music besides top 40 is the way to go. I understand labels would like to decide what people hear and where they hear it but from an artist perspective that sucks. Just trying to get your music in front of people so that they will even give you a shot is half the battle. I’m for leveling the playing field…. thats when the good music will start to stand out. People will be forced to search for good music because of the competition.
Artists get stuck in the trends because they think a label will only go for a certian style. The general public is tuning out because there is no good music coming out. maybe its a generation thing but almost every person i know thinks the radio blows… because its the same old shit over and over. Im not saying the radio doesnt sell records still– im saying its losing a generation of music lovers due to lack of progression. when the market becomes a fair playing field artists will focus on art and not the other crap that has lead to this drought. then people will value music again. the days of the monopoly majors are riding off into the sunset….
Comment by nathan — September 7, 2007 @ 9:25 pm
“Here’s the arguement against the Amie Street model. The majors are the ones who can buy the mass exposer. They sell the big numbers not the up and coming bands. (the rich get richer– the poor get poorer) If you want to make it harder on the New Artists thats a great way to do it.”
AND THATS THE WAY IT SHOULD BE!
We need to go back to these days when labels used to be a filter. Right now we have anarchy, everybody can set up a MySpace page and record in his home studio. That’s what’s really devaluing music. Lots of crappy acts.
@AJ:
It’s not me who thinks $0.99 is absolute the maximum of what people will pay, it’s the public. If people were so into paying a buck a track, then illegal downloading wouldnt be so big. Make it cheap enough for the people to buy, so they cant even be bothered to steal. All of this has nothing to do with me, or other people not valuing music anymore, it’s just the harsh reality. There aint nothing YOU or anyone else can change about it… unless we finally get a world-wide subscription model for music.
Comment by alex — September 8, 2007 @ 4:18 am
AJ,
I mostly spend .99 cents on music from the past that I love. Music does have value to me, thats why I actually pay for it. I never download.
Most of us in the business do care about the artists. But you have to remember that just 5 years ago, people were downloading and NOT BUYING. So, if .99 cents is making people buy (which I firmly believe it is), then its good.
The higher you price things, the more people will go back to downloading for free. Also, the .99 cent model helps unsigned and up-and-coming bands, as well, with cheaper exposure.
Overall, I think the .99 cent model is fine. I don’t know the price distrobution of the artist/label but I do know that this is money that wasn’t coming in when people were downloading for free.
Comment by tim.towner — September 8, 2007 @ 8:13 am
We need price discrimination. Hit songs and popular artists need to be priced higher. It has more value.
Nothing can compete for ‘free’. A lot of comments I see above are trying to cater to thieves. Thieves and burglars will steal. It doesn’t matter if a track is priced a nickel –the thief will steal.
We cannot cater to robbers. They will never be customers.we should have 3to 4 price points– 1.99 - 1.29 - and .99.and .79.
This will also give artists a goal to write great song that will warrant demand.
Comment by koar — September 8, 2007 @ 8:59 am
KOAR, show me any normal high school kid that will be willing to pay 2 bucks for one single song. If that’s gonna be the new price model, P2P will grow even more. Like Lefsetz always says, make it so cheap that it’d be ridiculious to steal.
Comment by alex — September 8, 2007 @ 3:56 pm
KOAR, show me any normal high school kid that will be willing to pay 2 bucks for one single song. If that’s gonna be the new price model, P2P will grow even more. Like Lefsetz always says, make it so cheap that it’d be ridiculious to steal.
Koar: lefsetz isn’t for the artist. Don’t buy the spin. Price music for a nickel so the thief won’t steal? This devalues music cheaper than a roll of toilet paper. Artist won’t make a dime- won’t be able to afford to cut a record-no motivation - no great music. Need price discrimanation and can’t market to thieves. Thieves are thieves..
Comment by koar — September 8, 2007 @ 6:35 pm
Unfortunetly it takes a little more than a good song to sell a lot of singles.(It is a requirement but it isnt everything) Most bands can’t afford to get the mass exposer that large volume sales require and will loose out. Or it makes artist more dependant on labels. Neither of those options sound good to me at this point.
Unless the industry comes up with a better game plan– whatever that is— Im betting on makeing more per unit by cutting as many middle men as i can out. I may sell less units but i wont be spliting the cash up much either….
Comment by nathan — September 8, 2007 @ 11:04 pm
Artists don’t want labels to have control because they have abused it in the past. They abused it because there were no alternatives. We see clearly today that the internet and indie labels DO provide options for artists. You don’t HAVE TO be on a major label to make some money…but shouldn’t being on a major label provide you SOME advantage?
They are multimillion dollar corporations…they SHOULD be buying the exposure for their artists that will sell more product. They should be working in the MASS sales while indies and DIY focus niche. For some artists, a niche audience is exactly what they want. There is more long-term money making potential focusing solely on a committed niche audience. Being on a major label COULD result in serious longevity, but only if the band is good enough.
I think part of the problem here is that musicians seem to think that all bands are created equal. That’s simply not true. There is a world of difference between ability and talent and a world of difference between a catchy song and a timeless hit.
For DIY bands, you should WANT major label music to cost more. Consumers can either pay 2 bucks for that song that’s on the radio every 20 minutes, or they can pay 1 dollar to buy your song. If your song is good and your band is kicking ass live and working it online and in the streets, you’ll sell the volume you want to make money. Why do you give a shit that your song costs less than an overplayed Fergie track? Sure, she is going to make more money than you are, but she is on a major label…so she SHOULD be making more money than you. In a ‘great song’ comparison, do you think your song has the same value as Bohemian Rhapsody? Or Stairway to Heaven?
There are going to be advantages to working with the big guys. You’re going to get more exposure and have more access, but more importantly, you will be able to afford your own staff to ensure that everyone is working toward YOUR goals. Your songs will cost more, which is a deterrant to purchase, but you’ll be getting the support that can increase the volume.
Also, and this is somewhat unrelated, but a point people shouldn’t forget- when Napster first came about, record sales INCREASED. People had access to more and were purchasing more as a result. That changed when labels took this ‘us vs. them’ stance toward music buyers. They got greedy and didn’t understand the value of what was happening online. Now we have a whole generation of kids who think the industry surrounding music is a big scam and music shouldn’t cost anything. Anyone older than 20 should know better…and anyone who has ever owned a GREAT record that truly changed their life should know better as well.
Comment by AJ-KOAR — September 9, 2007 @ 1:56 pm
So essentially, you want to punish people who are actually willing to buy music by making them pay more for a popular song than for an unpopular/unknown song? Yeah, that won’t encourage more piracy…
And in terms of TV, the networks have ZERO room to complain. Does it cost them any more to create, develop, produce or broadcast their shows now that iTunes is here? Nope. So their costs haven’t changed, yet they’ve got a brand new revenue stream that’s essentially 100% profit (ie: damn near free money) — and they have the nerve to cry about it when the retailer wants to cut the price so it can sell a great volume (which will probably have a minimal effect on the amount of free money they’re enjoying).
It’s clear that there’s one major cancer eating away at the entire entertainment industry and that’s greed.
Comment by jalan — September 10, 2007 @ 7:04 am
Simply put, Steve Jobs understands consumers purchasing habits. Something no label executive has accomplished in the past five years. All those willing to pay two dollars (or more) for a song, please leave a message here.
Comment by Alison — September 10, 2007 @ 7:45 am
People who value music still BUY music. Should the goal be to get FEWER people to value music so the will buy larger volumes of meaningless crap? Or should the goal be to get MORE people to value music so the best can honestly rise to the top? Shouldn’t there be some kind incentive for labels to release quality music? With a completely level playing field, it doesn’t really matter WHAT they put out. It only encourages a formula and a continuation of this ’scramble for a radio hit’ mentality and a continuation of this ‘development free’ industry.
The television comparison keeps coming up… have DVD sales plummeted or something? Absolutely not. DVD sales are increasing. Even in the face of downloading and DVRs, DVD is still selling. People are still watching television.
In music, things haven’t gone the same way. It’s not really a fair comparison. Why are people still spending upwards of $6o-$100 for box sets of shows they can download for free? The commentary?? You can download that too. Is it that people are making a stronger connection to television shows than they are to music? That seems to be the case..and you don’t strengthen emotional connections to music by giving it away. It must have SOME KIND of value. It needs to be something people really WANT, not just frivolous impulse purchases. Downloading SHOULD work for music like it does for television- an ADDITIONAL revenue stream. A supplement. A promotional outlet for the actual product.
Even right now, physical cds often cost LESS than their digital counterparts. In many cases, buying a physical cd- bonus material, artwork and all, comes out to be LESS than a dollar per song. This isn’t about price…it’s about VALUE. What music is WORTH to people, which clearly isn’t much. THAT needs to be changed.
Comment by AJ-KOAR — September 10, 2007 @ 11:21 am
Apple’s pricing structure isn’t killing artists, that would be the record labels who draft predatory contracts that indenture artists, and force them to trade their creations for beans.
Also, selling all tracks does not imply that they all have equal value. Music will always have a personal value that cannot be cleanly quantified.
It DOES, however, reflect the notion that all this technology we have here should simplify the buying process, not make it extremely laborious, and that consumers will respond to this simplicity by spending more money than ever. Coincidentally, this happens to be the case, as the iTunes stores are selling more digital everything than anyone.
Steve Jobs probably would not agree with flat salary rates across the board, but it is important to note that his salary is $1. It was established when he returned to Apple as not to create a significant financial burden on Apple, and because Steve was already wealthy. His total compensation, therefore is entirely tied to the stock/bonuses he receives from the board. If investor’s don’t make any money, neither does Steve.
Comment by Leop — September 20, 2007 @ 9:45 am