Saturday, September 24, 2005

Apple: Greedy Labels

Okay, so the music labels want to raise the prices of the songs on the iTunes music store to USD1.49 per song. And then Steve Jobs lashes back at them labelling them as greedy. Well, guess what? I totally agree with him.

I'm definitely against rising prices. Isn't this a blatant and outright collusion by the industry to extort more money out of consumers? By rising prices to $1.49 per song, it'll cost more to buy the entire album of, say $10 songs, than it would to buy the album itself. That's just assuming the album prices stay the same - even if they don't stay the same, raised prices still wouldn't be a deal.

Heck, I still can't buy from the store yet, but nonetheless, if the music record labels still try to extort more money out, it'd be totally unreasonable. That'd just be a profit-maximizing scheme, which totally isn't the way to go. Companies should give good pricing, rather than maximize their profit, for only those that give the best deal to customers can attract them back. That's probably called "sustainable profiteering", rather than blatant extortion.

Even if prices were to be raised, now's definitely not the time. $0.99 per song has become the most best kind of pricing available, for it gives a flat rate that's cheap enough to combat piracy. If there were to be graded pricings, that'd only cause uncertainty in the consumer base, because this would mean that prices are subject to fluctuations at the whims and fancies of industry players. To put it simply, "That's not fair!"

Music record labels accused Jobs of holding up double-standards - that he could gradate the prices of his iPods, but wouldn't allow that for the music store. Obviously, very obviously, the music record labels are trying to shoot themselves in the foot. Why can Jobs afford to vary his iPods' prices? It's all a matter of PIRACY.

It's because he's not fighting a massive war against pirated iPods! He's merely facing competitors who are also trying to profit out of *similar* products. Hence, he needs to show his products' comparative advantage, in not only the pricing, but also the value for money. Jobs' iPods have different inherent value to themselves - being better, smaller, with more features - and, well, you can't possibly ask for the Nano and the Shuffle and the regular iPod to all be one flat price. That's unreasonable.

On the other hand, looking at the poor state of the music industry, they're only lucky they've got loyal consumers like myself who'll buy the un-pirated albums (but that's only because I'm a fan of those music groups whose albums I buy). They face rampant piracy - and they need to combat it fast. If they start to raise prices, they put off customers; if they gradate the prices, making newer albums more expensive than older ones, they risk alienating a good proportion of buyers from the music store.

Think, if they can sell more than 70% of their music through the iTunes music store, wouldn't that mean that they'd be shooting their own feet by raising the prices? Assuming that 15% of their customers get turned off by the raised prices, it would translate to 10.5% loss in sales from the iTunes store – wouldn’t the magnitude be good enough to scare them off?

Even if the labels say that music is an art, and newer albums should be valued higher than the older albums, well, then their own numbers would show whether the public values the items or not. If a particular song is super-duper hot, naturally, more people would value it and buy it, and that would translate into higher sales for themselves. Why, then, would they need to raise the prices?

Think, record labels, think. It just isn’t time, it just isn’t right.

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