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February 28, 2005

The Music Industry: Work Hard to Screw Up A Good Thing

Some days I wish the entire music industry would implode. I wish it would just collapse in on itself, crushing all of the boy bands and whiny little girls who sell sexuality to ten year olds. The wreckage would, if we were lucky, take the Grammy's with it, giving us back a few hours of our life every year. Time better spent with family or a good book.

If you surf Drudge every morning, you'll know what's got me upset: music industry execs want to see the prices raised on downloadable music. Ninety-nine cents just isn't enough for that three minute slice of Kelly Clarkson's latest whatever.

Luckily, there are voices of reason at some of the bigger labels, cautioning against the move. The truly ironic twist is that the reason some of the labels want to raise prices is that they want to "capitalise on burgeoning demand for legal online music." Of course, if raising the prices actually cuts into sales, the profits will be lost--and raising costs will curb enthusiasm for legal downloads.

The major, legal download sites have hit the sweet spot: the price they charge is one that most people seem to be willing to pay, the price lets the record industry tap into an emerging market that had abandoned CD singles in favor of illegal downloads, and still allows the retailers to recoup most costs or even make a small profit on each download. Move the price much lower, and recouping costs becomes more difficult, move the price higher and people will stop buying.

Think of it as the Laffer Curve of online music download economics.

If the push becomes reality, though, the pop music Armageddon might just take a whole lot of bad bands with it--and allow a new, forward-thinking industry to rise in its place. Imagine there's no Britney; it isn't hard to do...

Posted by zombyboy at February 28, 2005 09:49 AM
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