Besides removing anti-piracy software, more importanly, Apple has finally caved in and will embrace 3 tier pricing.
Apple finally bowed to a long-standing recording industry demand and agreed to sell music downloads at three prices — 69 cents, 99 cents and $1.29. Starting in April, iTunes customers may pay the top price for a hot new track such as Beyonce’s “Single Ladies” and barely half that for a long-forgotten song from Air Supply. (Los Angeles Times)
Tiered pricing can open the door to more experimentation and digital bundles.
For example, Kanye West’s single “Heartless” might be packaged with a discounted track from the “808s & Heartbreak” album, or a cellphone ring tone.
We will observe significant changes in 2009. With Apple beginning to sell DRM free songs and embracing tiered pricing are steps in the right direction. As the Los Angeles Times said, “Apple will follow one of the oldest tenets of capitalism: The more someone wants something, the more you can charge for it.”
This means success will be rewarded again. It never made much sense to set the same price for an unknown song and a song that was in demand.
A ferrari is not the same price as a Hyundia. Since iTunes is open to everybody and all musicians – 3 tiered pricing is a must.
Variable pricing was a short sighted money grab Apple.
Rich, that’s not how it works. On iTunes, the Ferraris will be the cheapest. The most expensive will be the little Honda econo-sedans & the gas guzzling suvs. It’s the Amie St. model, where the popularity drives the price up. QUALITY IS NOT BEING REWARDED HERE, the consumers are, instead, being punished for participating in trends.
Songs have never been worth $1.29 a piece, even when manufacturing & distribution played into the equation. And these are a fraction of the sonic quality of a non-compressed cd track. You’re accusing Apple of a money grab with constant pricing, but it’s perfectly fine for labels to jack the price up on the top 40?
Experimentation is a side effect here… the labels are drowning & they’re jacking up the price on the songs that are selling. There isn’t any nobility in this change, DRM is something they’ve only held back as a bargaining tool… the labels stopped caring about DRM with Amazon. The labels don’t care about experimentation, either, it only makes the pill easier to swallow. They don’t get it… it’s not about enlarging the pie for them, it’s about sucking more money out of the pie they have.
In practical terms, as it stands, given the heavy concentration of Top 40 sales @ iTunes, what this means to the consumer is a price hike, not a price drop. If the labels wanted to increase the size of the pie, they would be dropping the price of the songs that sell, not raising the price.
>> Apple will follow one of the oldest tenets of
>> capitalism: The more someone wants something, the
>> more you can charge for it.
That sentence was written for someone’s tombstone. And someone is being very generously estimating the demand for modern music.
I mean, try telling something like that to Sam Walton… that kind of ideology flies in the face of the brilliance of the internet as an incredibly efficient & incredibly cheap, practically free means of content distribution.
This old school thinking will continue to run everything into the ground.
Does that mean I have to sell my music for 69 cents?!?! LOL *just kidding*
Tiered pricing is fantastic, in fact, I see some order restored in the music business. I agree that since iTunes is OPEN TO ALL, there should be a pricing structure just like a food menu.
Now Google just has to start cleaning up the mess!
Jon, re-read the original post.. A Ferrari will NOT be the cheapest, contrary to what you indicate in your post.
Note:
“Starting in April, iTunes customers may pay the top price for a hot new track such as Beyonce’s “Single Ladies” and barely half that for a long-forgotten song from Air Supply.”
This means that Rich was right in his analogy. Now, I pose the question: With this pricing model, what makes it different from walking into a physical record store, seeing a new album out for $9.99, or sorting through the old random-old-or-unknown bin where everything was $1.99? Remember those days? You could buy the new Ozzy disc for $10, or sort through the random bin and buy an OLD unpopular Chastain tape for $1.99. Tiered pricing sounds closer to a traditional record store to me, and it DOES put a certain, additional value on the music, not just with the price tag. It definitely draws a line between the “popular/known” and the “unpopular/unknown.” Whether you think that is good or bad, is purely opinion at that point.
All this means is that most of the “popular” major label music will sell for $1.29 and that the music put out by most indie labels will sell for 69¢ guaranteeing a smaller piece of the pie.
But when you consider how much money a major label spends to produce a record, versus an independent label, the indies (and their artists) will probably see a higher profit.
Scott, the difference is that record labels didn’t use these bins as an excuse to jack the price of new releases up 30%. Or maybe they did, maybe that’s why CDs were close to $20 for a while. But where did that get anyone? And where were you finding new releases for less than $10? Except as loss-leaders at Best Buy?
That’s the issue here, that the vast majority of the pie, in terms of sales, just got an unjustified 30% price hike, when $.99 for a low quality copy of what you could get on cd was already overpriced.
The concept of tiered pricing doesn’t bother me, it’s overpricing digital music.
The reason the Ferrari analogy doesn’t work is because Ferraris are fine automobiles, meticulously crafted, and enjoyed by very few (still waiting on the ‘97 456 GTAs to drop under $50k). I have an incredibly hard time considering Katy Perry or Fergie musical equivalents of the 550 & 355. Instead, what’s most popular… the equivalents of what you see most out on the road, the gas guzzling suvs, the econo-sedans, the full size pickup trucks, that’s what’s going to be the most expensive. It’s popularity-based, not quality-based. Which isn’t to say that Hondas aren’t very well made vehicles, only that evoking the prestige of a brand like Ferrari is incredibly misleading. The bottom line is that YOU AREN’T GETTING MORE FOR YOUR MONEY, as you would with a Ferrari.
I agree with the drm free music but not charging less for some artists & more for other artists. thats just unfair.