Feeds

Labels seek end to 99c music per song download

Too cheap

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

Remember how online music stores were going to route around the music industry? The pigopolists have barely got their feet under the table and already demanding more. The Wall Street Journal reports that the major five labels think that 99 cents per song is too cheap, and are discussing a price hike that would increase the tariff to $1.25 up to $2.99 per song.

The current tariff is too much for most people, as saggy sales indicate. "99 cents a song is a pricing model designed to protect CD sales, and not one designed to move people into a new digital music marketplace," senior staff attorney at the Electronic Frontier Foundation Fred Lohmann told us recently. "If an iPod has room for 4,000, does Apple think people are getting to spend $4,000 filling it with music?"

As it is, online music stores are a loss leader, or barely cover operating expenses. Apple alone can consider its online store a success: it has driven demand for its iPod and given itself a toe-hold in a valuable new consumer market. Some analysts reckon Apple's cut is as high as 33 cents, but once the bandwidth, manpower and marketing are counted - and let's not forget that Apple pays Thomson an MP3 licensing fee on the iTunes software it gives away - there's very little to the bottom line. What it does do is indirectly help the iPod.

The iPod's success wasn't always assured. Almost exactly two years ago, we reported that Apple had seen a 50 per cent drop in demand for the iPod, launched to great fanfare, and an apologetic CFO Fred Anderson "defended the figures, and said other MP3 manufacturers had seen steeper declines". In the last quarter Apple generated $256 million worth of income from iPod sales and admitted it could have been higher if it had made more.

It's not a pretty picture for the other download services, all of which take the distribution costs onboard. What does the customer get for this? A very low bit rate file encumbered with DRM. Now the major labels want to make online music downloads even more expensive than conventional CDs, so customers are invited to pay more for less.

The major labels want us to view the DRM-encumbered download services as the carrot to the legal stick. But paying more for less is a business proposition that has only worked for the record industry when it has been able to make the previous generation of technology, such as vinyl, obsolete. It doesn't have that option anymore. CD sales and "pirate" downloads dwarf DRM online downloads.

Von Lohmann thinks the online services may yet be a success, although they need to offer much more for less. "Maybe. With no DRM, and by bringing the price way down and by having much more music - at 25 cents a song or with a flat rate pricing. That could be compelling." ®

Related stories

DRM music goldrush is a race for losers mp3.com founder
Free legal downloads for $6 a month. DRM free. The artists get paid. We explain how
Apple will make RIAA beg for mercy readers
Your 99c belong to the RIAA - Steve Jobs
Why wireless will end piracy and doom DRM and TCPA - Jim Griffin
War on Culture's victims face Penitentiary Blues
Mom sues RIAA members for racketeering
P2P file swapping back on the increase
Crypto plan to anonymise P2P, thwart RIAA
DRM: who needs it? UK label stands up for its customers
There's a noose in the hoose: iTunes shoppers discover DRM

Providing a secure and efficient Helpdesk

More from The Register

next story
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Yes, yes, Steve Jobs. Look what I'VE done for you lately – Tim Cook
New iPhone biz baron points to Apple's (his) greatest successes
Lords take revenge on REVENGE PORN publishers
Jilted Johns and Jennies with busy fingers face two years inside
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Edward who? GCHQ boss dodges Snowden topic during last speech
UK spies would rather 'walk' than do 'mass surveillance'
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.