Record Industry Russian Roulette

The record industry is suicidal. That is the only possible explanation for the desire to hike prices on legal download sites like Apple's Music Store.

I kept expecting this story to go away, but it keeps surfacing.

iTunes has been hailed as the first successful online music store, with over 50 million songs downloaded. Its success has been due largely to Apple's powerful name, the iPod, flexible use of the tracks, and the 99 cent-price per song or $9.99 for an album. More than that, it has been celebrated as a sign of things to come for an industry still in its infancy.

Despite iTunes' success and the growing success of other services, the record industry still isn't happy; it thinks that 99 cents a song is too cheap, and the five major labels (Universal Music Group, EMI, BMG, Sony and Warner Music) are discussing a price hike ranging from $1.25 to an eye-gouging $2.49 per song.

Not only is the idea of paying $2.49 for an individually downloaded song ridiculous, but it is utterly unnecessary. The industry is building a new flow of income and wooing people away from illegal downloading with successful (and still growing) legal sites. A price hike will kill the legal sites and will probably re-invigorate file trading services.

At $.99/song, the cost is reasonable. The product that is sold digitally requires no expense for packaging, no expense for inventory, and only the cost of digitizing and distribution that Apple takes as a loss leader to fuel sales of the iPod. So, essentially, the industry is saying that they'll take their savings and charge you more.

Fools.

Read the story.

Sama wrote about this subject a few weeks ago. As I said, I kept hoping it would simply go away. But never underestimate the incompetence of the record industry.

Posted by zombyboy at April 22, 2004 01:18 PM | TrackBack