As I noted earlier, the music industry is desparately trying to alienate its customers. For some reason, it took Steve Jobs to come in and create a usable way for people to download music and let the labels make money. One nice part about the iTunes music service is the pricing simplicity– $0.99 per song, $9.99-$11.99 for most albums. Now the music industry, apparently unhappy that its customers might actually be happy (or nervous about Apple intruding into their oligopoly) is starting to talk about raising prices. “Unnamed music executives” claimed that wholesale prices for downloaded song were deliberately set too low, to stimulate demand.
As the CNN article notes, this type of pricing activity could land the industry back in hot water with the DoJ for collusion, and drive more consumers to piracy.
Aside from those minor points, I bought three albums online last weekend, and I can only imagine that the $20 or so of pure contribution margin that the record companies made off those purchases is greater than the money they make from 3 sales of physical CDs in a store, let alone from a CD club.
So what’s going on? Perhaps music executives, constantly on the hunt for the next boy band, have become (understandably) very depressed, and simply want to kill their industry.
p.s. Many of these posts are about “bad pricing.” I really do want to talk more about “good pricing”, but sometimes it’s easier to rant at such easy targets.