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August 27, 2005

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Factory

"Apple may currently enjoy a tremendous lead due to the inept design and poor marketing of its competitors, but the firm cannot realistically expect its luck to hold forever"
Hmm I don't think that this is quite Apples problem. IMHO their real problem is the inability to pitch their product at the low end effectively, which basically means that someone will undercut Apples market, mainly because Apple do not even try to take it. Which is bad because to domniate a market you have to dominate all levels, not just the top end.

OTOH I don't think price differentiation is a huge problem in online music sales, I find the problems are in that the prices are unrealistically high and that catalogues are still not 'complete' (ie for any arbitary music service you should be able to choose from a selection as complete as Amazon's is for books) (P2P actually beats the online services in this area, it shouldn't).

Abiola Lapite

"OTOH I don't think price differentiation is a huge problem in online music sales"

In principle it isn't, but do you think for a second that it means anything to the record industry other than that prices are too low? I mean, they explicitly *say* that this is what they mean in the article. No one would be complaining if they wanted to cut prices on older tracks, not even Steve Jobs, but these fools are belly-aching over what is pure profit for them, without the attendant costs in packaging and distribution of CD singles.

"I find the problems are in that the prices are unrealistically high and that catalogues are still not 'complete' (ie for any arbitary music service you should be able to choose from a selection as complete as Amazon's is for books) (P2P actually beats the online services in this area, it shouldn't)."

Yes, these are problems, but the bottom line for me is that there isn't a chance in hell of my ever buying extremely sub-CD quality, DRM-encumbered music for a greater per-track cost than I would a CD, no matter how complete the seller's catalog may be, especially seeing as I don't even get liner notes or a nice physical object I can be sure will always play no matter what happens with its manufacture.

I'm sure most potential consumers can and do make the same calculation as I have, and that is by far the biggest reason why piracy still runs rampant, not the absence of a back-catalogue of mostly obscure tracks - the 80/20 rule suggests that the great majority of sales are generated by only a small fraction of extant titles anyway.

Niraj

I would like to see a study on how much an artist makes on each song sold via iTunes or CD. If I had to gander a guess, it’s not much.

The bulk of the artist’s income comes from touring, merchandise, endorsements, etc. The only people I see who make money on song (or album) sales are record companies, and because of the success of iTunes, want a bigger piece of the pie.

If I were Steve Jobs, I would drop the offending companies from iTune and we’ll see if they sink or swim.

dof

It does indeed sound bewildering, except for the fact that consumers no longer need to buy filler tracks, so that must be hurting the music industry. Why shouldn't they try to get the price up to CD-single levels?

I don't think Steve is going to budge, and anyway, with or without iTunes, he's still going to ship a lot of mp3 players, and that's where the money is.

Abiola Lapite

"Why shouldn't they try to get the price up to CD-single levels?"

The fact that it gives people an added incentive to engage in piracy, which is already as easy as can be? Even if all the public P2P networks were shut down tomorrow, there'd still be instant messenger, usenet and any number of darknets available for people to get for free what the record industry refuses to sell at an attractive price.

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