Top music labels try to raise prices for downloads

[JohnnyCNote]

Top music labels try to raise prices for downloads

Some leading music labels are in talks with online retailers to raise wholesale prices for digital music downloads in an attempt to capitalise on burgeoning demand for legal online music.

The moves, which suggest the labels want a bigger slice of the fledgling market's spoils, has angered Steve Jobs, the Apple Computer chief executive behind the iTunes online music store.

While the rest of the article requires a paid subscription to view, the above paragraphs are enough to convey the gist of it...

[hech54]

"Hey...things are going pretty well. People are starting to pay for music instead of pirating it. How can we get in on the fledgling(only to us) market and possibly get people back to stealing music...thus enabling us to keep blaming piracy on our lackluster business practices?
I know...we'll make more expensive to download music. Now the consumer will not only not want to go to the store to buy the CD....NOW they won't even want to download it legally from the comfort of their own homes."

[AlecWest]

Hmmmm ... the music industry should hold off on those talks until after March 7th ... the date when a Russian prosecutor decides whether or not to prosecute AllOfMP3.com. If he decides not to prosecute, raising the cost of online downloads could kill the domestic download market as people flock to greener pastures offshore.

[BJ_M]

there sure are some greedy shortsighted fools in charge

[MOVIEGEEK]

I think they're raising their prices to offset their lawyers suing 12 year olds.

[proxyx99]

They (exec's and lawyers) will milk the cow until she sees black flakes, then they will raise hell that she's dying asking for more money to save her.
Let's not forget that an artist is paid less the 10% of what labels take typically regardless of actual costs.

[minggnim]

The prices are already too high.
$.10 a minute for the song is more than enough.
The overhead is practically nil.

[BJ_M]

other than the $330,000 a month in bandwidth and 450 employees salaries for ipod ?

[minggnim]

No CD material.
No manufacturing of CD's.
No warehouse cost's(rental,employees etc.).
No shipping cost.
No sales person wages.
No unsold product on the shelves.

[verchad]

Recently I was talking to a guy in the local cd resale shop. He said that as the online purchasing choices grew, their business in used cds has slowed. I have started to buy some online music, redeemed some freebies too. If they start jacking up the cost, some will go back to illegal downloads, others will go back to the used cd stores and the record companies wont see money from those legal purchases of used cd's. Who knows what people do with them once they listen to them once

[Karate Media]

Ming -- obviously, though, BJM's point is that there are still costs involved in the online distribution of music.

Add to that one of the big reasons why any conglomorate corporation can be bad for the consumer: They don't want the price to just cover the cost of that song for that artist. They need your money to also subsidize all the utter crap CDs that never got bought and all the failed million dollar promotional campaigns for failed releases -- part of your dollar may still be going to pay for the promotion of Michael Jackson's HIStory, for all you know. Heck, maybe the company that owns the record label also owns an orange grove and the crop was wiped out last year. They might be looking for iTunes profits to help cover the costs.

Any large company is going to look for profits in one area to cover losses in another. With a small record label (self-owned, not owned by Beatrice or whatever), you'll often find better prices, simply because they have their attentioned focused on a smaller group of artists and they rarely will shell out extravagent amounts of money for outrageous promotions.

[Karate Media]

verchad -- the owner of the record store I used to work at has been saying downloads (legal and illegal) have been hurting his business for years.

That said, when buying a whole album, I'd rather buy a used CD for $9.00 from him than pay $9.99 on iTunes -- at least the used CD comes with liner notes/lyrics/artwork/something. Also, the record store makes more money per disc on used sales than new CD sales.

For individual songs, iTunes has been a godsend, though.

[verchad]

verchad -- the owner of the record store I used to work at has been saying downloads (legal and illegal) have been hurting his business for years.

That said, when buying a whole album, I'd rather buy a used CD for $9.00 from him than pay $9.99 on iTunes -- at least the used CD comes with liner notes/lyrics/artwork/something. Also, the record store makes more money per disc on used sales than new CD sales.

For individual songs, iTunes has been a godsend, though.

My point is, the record companies right now get their money from cds and legal downloads. After they have gotten people to start legally downloading, if they start raising the prices, they may go back to illegal downloads or the used stores. If they go used, they get none of that money for every time someone buys one of those discs.

The used cd store here sells starting at $5 for good condition cds. But how many people buy and keep the used stuff, sure if it's a classic/essential type of cd but I have heard of people, the cd store guy talked about it, buying the used ones, listening for a little while, possibly ripping them, then reselling them back to the store.

If they start jacking up the cost of a download, people may go back to doing what I described above. If it starts to cost $1.50 or $2 a song, and you like 3 to 5 songs on a disk, can go to the used store, get the whole cd for $5-9, and then sell it back after you get tired of it. I think I'd stop buying downloadable music.

Besides, didn't the record just settle a suit for price fixing, I got my check. They are already selling new and other releases starting around $10. If a new release has 12 tracks, that's 83 cents a song, plus the packaging, shipping, etc. To go over $1 for just the song is a bad idea. I think a lot of people think $1 is a good price point ( itunes - 99cents, others 99cents, walmart 88cents, someplaces had some as low as 79cents for some tracks ).

[AlecWest]

My point is, the record companies right now get their money from cds and legal downloads. After they have gotten people to start legally downloading, if they start raising the prices, they may go back to illegal downloads or the used stores.

Actually, the music industry now has a new worry. Today, after evaluation, the Russian prosecutor has deemed that AllOfMP3.com is not guilty of piracy and will therefore not prosecute them. The music industry was not available for comment:

https://www.videohelp.com/forum/viewtopic.php?t=260948

So, all this talk about raising prices for domestic downloads will only end up shooting the music industry in the foot.

[Karate Media]

verchad -- well, one theory is that in order to have used CDs, someone needs to be buying the new CDs first. (with the exception of cut-out/promo copies that end up in used bins). Without new CDs being bought in the first place, you don't have any used CDs to sell.

As for this quote: "If it starts to cost $1.50 or $2 a song, and you like 3 to 5 songs on a disk," -- keep in mind that iTunes already gives you a discount if you buy the whole CD at once. The songs are 99-cents each, but a 14-song album can be only $9.99 -- roughly a $4.00 savings. I assume a similar practice would continue even if the cost of individual songs rises.

AlecWest -- correct me if I am wrong, but it's been my understanding that the jury (the figurative one, that is) is still out on the question of whether AllofMP3 is legal in the US or not. Even the site itself states: "Users are responsible for any usage and distribution of all materials received from AllOFMP3.com. This responsibility depends on the local legislation of each user's country of residence. AllOFMP3.com's Administration does not keep up with the laws of different countries and is not responsible the actions of non-Russian users."

It would be similar to a country with no IP/anti-piracy laws allowing bootleg CDs and DVDs to be made and selling them in the US. It may be legal to make the bootlegs in that country but it's still illegal to sell them in the US. At least, that's my understanding of it all. I don't know much about this suppossed Russian licensing fund that AllofMP3 pays into and if it allows for international sales of the licensed music.

[proxyx99]

Now add China offering DVD's for export or downloads at $2 a pop.

Lowering prices in the light of ever expanding world wide distribution net seems would make sense but media companies want more money period.

Long distance charges because of technology dropped like a stone and no one seems to cry foul, they adopted new prices, but not greedy Hollywood and family.

[Karate Media]

Long distance charges because of technology dropped like a stone and no one seems to cry foul, they adopted new prices, but not greedy Hollywood and family.

Oh yeah, nobody has done anything sketchy/anti-competition at all in the phone biz:

http://story.news.yahoo.com/news?tmpl=story&cid=75&ncid=75&e=2&u=/nf/20050304/tc_nf/30927

[proxyx99]

There's always crooks but the outcome is pro consumer's choice unlike with media companies...
Read it well...

[AlecWest]

verchad -- well, one theory is that in order to have used CDs, someone needs to be buying the new CDs first. (with the exception of cut-out/promo copies that end up in used bins). Without new CDs being bought in the first place, you don't have any used CDs to sell.

Stores buy new CDs ... or DVDs. Blockbuster is a good DVD example. Recently, I bought a DVD of the film "The Handmaid's Tale" from them (based on a VideoHelp.com user's recommendation) because there was no rental available. As I was leaving the store, I told the clerk that I was buying it under the assumption I'd like it ... and that if I didn't like it, I'd donate it to my library for a tax write-off. He immediately piped up that this wasn't necessary ... that they "buy back" DVDs for credit on future rentals or purchases. CD stores are doing likewise.

In short ... buying a used CD or DVD is a cheap option. But, buying a new CD or DVD from a store with a buyback-credit policy is the next cheap option.

AlecWest -- correct me if I am wrong, but it's been my understanding that the jury (the figurative one, that is) is still out on the question of whether AllofMP3 is legal in the US or not. Even the site itself states: "Users are responsible for any usage and distribution of all materials received from AllOFMP3.com. This responsibility depends on the local legislation of each user's country of residence. AllOFMP3.com's Administration does not keep up with the laws of different countries and is not responsible the actions of non-Russian users."

The jury is still out ... but only because all laws are subject to change. As the article said, even the civil suit is likely to fail if AllOfMP3.com can prove they make payment to ROMS (which I'm sure they do). The statement you quote from their site is a standard disclaimer. There's an almost identical disclaimer on a website in Britain that sells cellphone disrupters (illegal in the U.S.). But, that doesn't stop them from selling to U.S. consumers ... and U.S. consumers are buying them. I know of one local theater in my area that uses them (grin). Walk into that theater with a cellphone and the disrupters turn it into a silent doorstop.

Frankly, though, I'm surprised that the music industry hasn't employed the solution to problems like this that Bill Gates and Microsoft has used a number of times -- "If you can't beat 'em, buy 'em." Really, you'd think the industry could just "buy out" AllOfMP3.com ... and then turn it into a clone of the domestic online retailers like iTunes or Rhapsody. Maybe it has something to do with AllOfMP3.com's parent corporation, MediaServices Inc., being in partnership with the Samsung Corporation. Could be that Samsung likes things just as they are.

Point is, whether it's MP3 files or cellphone disruptors, the bugaboo is in the tracking. Without the ability to track these purchases, proof that they're taking place will remain sketchy (and non-prosecutable). Even if some legal entity were to prove that a given user is connected to the service, it wouldn't prove they were downloading domestic music. AllOfMP3.com has a huge selection of Russian music as well.

[AlecWest]

Just a brief P.S. on trading across borders. Portland, Oregon and Vancouver, Washington are only separated by the Columbia River. Every year around the 4th of July, Blackjack Fireworks opens up in Vancouver ... and Uncle Sam's Fireworks opens up in Portland. Each store sells fireworks that comply with individual state laws. But, each store has a room labeled "wholesalers only" ... in which you can buy ANY kind of fireworks you want.

How do you become a "wholesaler?"

You simply show either store an out-of-state ID and sign a small form saying your purchase is for resale out of state. Bingo, into the "wholesaler's room" you go.

Of course, there has been the occasional sting operation ... with a plainclothes cop watching people leaving the wholesaler's rooms and taking note of their car's license number as they leave and forwarding the info to cops on the other side of the state line. But, serious buyers got wise to that early on ... parking their cars blocks away from the stores in some cases and walking to them.

It's been years since I've been to either store but assume that they're still in operation (though perhaps, under different names and at different locations).

[State Of Mind]

Someone raising prices... What else is new...

[Karate Media]

Proxy -- yes, that story has an overall good outcome. The point is that shady things happen in the phone biz as well. They've had a history of this, going back to and beyond Ol' Death Star Ma Bell.

If you'll notice, it was an FCC ruling. The phone companies are much more heavily regulated by the government than record companies. That's a big part of why you aren't seeing as big a problem with them. If the RIAA had as many federal regulations, they'd probably be more passive as well. Look at the latest issue of Wired -- radio is also heavily regulated and they're another business that is looking ahead at things like digital radio.

Alec -- Yes -- whoever it is buying the media, whether stores or customers -- it still means new product has to be bought before it can become used product. Does it mean as much money for the record companies? No, and they've been trying to fight things like used CD sales for years now. The record business is in many ways a very outdated form of business. As a music fan/musician/person with musician friends and clients I think we'd all be better off if the current system was torched to the ground and something brand new was created.

And yes, I understand that stuff on AllofMP3 is just boilerplate. It doesn't change the fact that it's correct. The rulings you keep mentioning are Russian rulings. They are related to Russian law. And it's still very likely that an American downloading music from that site is committing a crime based on the laws of the land where s/he lives and is downloading. If it's illegal in America, then the fact that it's legal in the country where the site is hosted makes no difference.

And I'm not talking about the possibility of getting caught. I'm talking legality. As for your "tracking" statement -- well, the RIAA has done a pretty good job so far of tracking illegal downloaders and making them pay outrageous fines. What makes you think they can't do the same in this case? Heck, isn't there even a money trail since you actually have to pay for these downloads?

Your fireworks analogy also applies simply to "getting caught." I live in a fireworks "dry" state. If I go across a state border or two and buy fireworks and bring them back to my state, I'm still in possession of *illegal* fireworks. They aren't suddenly legal because I bought them in another state. As you said, people found ways of circumventing the law by hiding their cars, etc. But that's simply "not getting caught." Which has absolutely no importance. Otherwise let's all commit murder and post about warez at dvdrhelp.com. As long as we don't get caught, it's OK, right?

[proxyx99]

Think global economy. You go to Europe, buy few CD's and bring them home. Crime? Hell, no! Same buying a German car directly from a factory. Now what an import/duty tax should be on buying online music. You pay legit 5 bucks a CD abroad and get slapped with 20 bucks duty? Makes no sense. Shows you how stupid and impossible to hold media companies positions is in the long run. What I'm saying is that larger market exposure means lower prices (supply/demand situation) ...but not in this case. Question why? Are they so greedy?

[AlecWest]

As for your "tracking" statement -- well, the RIAA has done a pretty good job so far of tracking illegal downloaders and making them pay outrageous fines. What makes you think they can't do the same in this case?

The RIAA has done a marginal job of targeting illegal "sharers," not "downloaders" ... and only because IPs publically exchanged between two people are open to public view on open network configurations. One-way downloads in closed network configurations, on the other hand, only reveal IP numbers to the source and destination.

But, there's a point here that needs to be made. The music industry has voluntarily sold music in Russia, knowing full-well that their copyright laws cover "tangible" property differently than "intellectual" property. Is AllOfMP3.com (or the Russian judiciary) guilty of forcing the music industry to shoot itself in the foot? There's a lot of sour grapes and after-the-fact back-peddling going on here by the music industry, don't you think?

Heck, isn't there even a money trail since you actually have to pay for these downloads?

Yes ... a protected money trail. CyberPlat is under no obligation to reveal customer payments until it's so ordered by a Russian court. And even in Russia, consumers are protected against retrieval of their payment information until such time that a ruling becomes effective (in short, ex-post-facto laws aren't allowed in Russia either).

Otherwise let's all commit murder and post about warez at dvdrhelp.com. As long as we don't get caught, it's OK, right?

I think you're going a little bit overboard, hehe. AllOfMP3.com is not a black market for music. It is a "gray market." Frankly, no one knows exactly what is and what isn't legal. It is NOT illegal to be in possession of an MP3 file of a Beatles song. It is only illegal if it was acquired illegally. And if the point of sale is in Russia (which it is), and if Russian law says I can legally acquire it, what illegal act am I committing?

BTW, I think I've committed an illegal video act (snicker). The film, "The Quiet Earth," is not available on DVD in the United States. But, it is available on DVD in Britain. Sometime between March 12th and 15th, according to Amazon.co.uk's estimate, my very own DVD of the film should be arriving in my mailbox ... which I will play on my region-free and format-free Yamakawa 175 DVD player. Will the MPAA be knocking at my door to chastise me for "getting around" their region and format dictates? I think not.

[bazooka]

I think the executives should walk the plank.

Arggghhhhh.



I would rather pay about 30 cents a download.

[AlecWest]

I think the executives should walk the plank.

Arggghhhhh.



I would rather pay about 30 cents a download.

Arggghhhhh, you scurvy cheapskate. Pay $1.50 a download or we'll make you walk the plank.

[AlecWest]

P.S. Just a brief aside. One of the biggest gripes other countries have against the United States (and deservedly so) is our penchant for attempting to impose our laws, our politics, and even our morals on other countries. Many Americans can understand this gripe and sympathize with it. But some people think it's OK for the largely American music cartel to get away with it.

It's almost as if there's a clear blue sky where everyone thinks it's OK for all countries to control their own affairs ... with one tiny black cloud hovering over the music world.

[Karate Media]

I think you're going a little bit overboard, hehe. ...And if the point of sale is in Russia (which it is), and if Russian law says I can legally acquire it, what illegal act am I committing?

Yes, there was an unseen smiley at the end of that statement

Well, it goes back to the fireworks example. Even though it's legal in the location of the sale, that doesn't mean it's legal to acquire from your home in the US via the internet. Another "extreme" example -- say there's a country where selling marijuana is legal and they have websites in that country that sell pot. Buying the online pot from within the country is legal. But in America, if you ordered the drugs from within the US and had them shipped to your home in the US, there would be multiple charges you could/would be arrested for. You still have to consider the laws in the country of the buyer when it comes to internet sales.

[AlecWest]

Well, it goes back to the fireworks example. Even though it's legal in the location of the sale, that doesn't mean it's legal to acquire from your home in the US via the internet. Another "extreme" example -- say there's a country where selling marijuana is legal and they have websites in that country that sell pot. Buying the online pot from within the country is legal. But in America, if you ordered the drugs from within the US and had them shipped to your home in the US, there would be multiple charges you could/would be arrested for. You still have to consider the laws in the country of the buyer when it comes to internet sales.

Yes and no ... and this is where the "gray" area comes into play. If it is illegal to own pot in one country then, yes, bringing it into a country that forbids pot is illegal. But, according to the Audio Home Recording Act, U.S. citizens are allowed to space-shift music they own. In short, if I own a Beatles song (in any format) and convert it (to any other format), I haven't violated the law. Ownership is the issue ... and ownership has to take place first. In an AllOfMP3.com transaction, which takes place first - the payment (ownership), or the file transfer?

Let's go one step further. If I flew to Moscow, bought a legitimate Madonna CD for $3.00, and flew back to the U.S., would they arrest me? Of course not. It was legitimate where I bought it ... and the fact that it's cheaper is not the issue. How is it different if I "surf" to Moscow, purchased legitimate MP3 files for a Madonna CD for ???, and downloaded it back to the U.S.?

This is just another example of the United States attempting to impose its laws on transactions that take place on foreign soil ... transactions that occur before a product is acquired. If anything, my DVD purchase from Amazon.co.uk seems more of a violation since I'm actually circumventing the industry's decision to not release the film on DVD in the U.S. by bringing this "tangible" property across international borders. But as I said, I doubt if the MPAA is going to raise much of a ruckus.

P.S. In the United States, it is not illegal to own a 3-wheeled all terrain vehicle. However, after a number of accidents raised eyebrows, it became illegal to sell them ... in the United States. But I know people who bring them across the border (for their own use) without hassles. They can't resell them, but they can own them.

[proxyx99]

Let's go one step further. If I flew to Moscow, bought a legitimate Madonna CD for $3.00, and flew back to the U.S., would they arrest me? Of course not. It was legitimate where I bought it ... and the fact that it's cheaper is not the issue. How is it different if I "surf" to Moscow, purchased legitimate MP3 files for a Madonna CD for ???, and downloaded it back to the U.S.?

That's what I said.

This is just another example of the United States attempting to impose its laws on transactions that take place on foreign soil ... transactions that occur before a product is acquired.

US cannot control (thank God) global markets as they please. US policy was always full of hypocrisy.
First they want open markets. Then they sell DVD's to China at the price that reflects local buying power. Then they complain if it finds its way back. You cannot keep them open and isolate at the same time and if so this is up to the individual company to protect their business not to Gov. to regulate what you can (buy high) and cannot do (buy low).

It is not about common sense but rather protecting special interests. US policy internally and externally is driven by lobbyists who couldn't care less of whets good for the public or what makes sense. It's called shareholder value, the only God they prey to.