Wednesday, September 28, 2005

Warner Music execs just don't get it...

This stuff makes me wonder sometimes: at what point during their rise to the top did these guys just start to lose touch with reality?
On Thursday, one of the music industry’s highest-profile executives responded publicly to Mr. Jobs’ charges, made earlier in the week, that they were “greedy” when they requested a price hike for downloaded songs.

At an investors’ conference in New York, Warner Music Group CEO Edgar Bronfman Jr. said the price of downloaded songs should vary depending on the popularity of the songs and the artists. He called Apple’s across-the-board $0.99-per-song charge unfair.

“There’s no content that I know of that does not have variable pricing,” said Mr. Bronfman at the Goldman Sachs Communacopia investor conference. “Not all songs are created equal—not all time periods are created equal. We want, and will insist upon having, variable pricing.”

Variable pricing only serves to make things confusing. Does this song cost 99 cents or 79 cents, or $1.50. If I wait, will it cost 99 cents later? These companies seem to miss that with the iTunes Music Store, their monopoly is broken, and their pricing controls loosened, which benefits the music consumer. God forbid they do something to benefit the consumer...
“To have only one price point is not fair to our artists, and I dare say not appropriate to consumers. The market should decide, not a single retailer,” said Mr. Bronfman. “Some songs should be $0.99 and some songs should be more. I don’t want to give anyone the impression that $0.99 is a thing of the past.”

My translation: "We don't like making only 95 cents off of every song sold, despite the fact that this distribution costs us nothing. We'd like to charge every sucker we can $1.50 or more for a song, if we can get away with it. But of course we'd NEVER charge less than 99 cents for a song."
Many believe that Apple’s model of picking and buying individual songs is much more consumer-friendly than the traditional retail model of buying an album or CD with seven songs, of which the consumer might be interested in only one or two.

“Instead of spending $15 for a CD, you buy two cuts for two bucks. That’s a lot of money left on the table,” said Joe Nordgaard, managing director of Spectral Advantage, a strategic consulting firm. “The traditional model with premium pricing has been so lucrative for the music industry. When they cut the deal with Apple, they did not realize what they had done. Now they want out.”

Yeah, and you know WHY all that money gets left on the table? Crappy product. If an artist gets to make a CD full of great music, the public will have no problem paying for the whole thing. If an artist makes a CD of crap with one "hit" on it, people don't want to be forced to buy the crap with what they want, when they only want the "hit." You can see why the record companies hate this. Their business is currently not quality driven, it's hit driven. If they can no longer make that $15 because of the one hit, and instead only make the 99 cents, they have a problem with that. Solution: MAKE BETTER PRODUCT! Oh, wait, that would make too much sense.

“We are selling our songs through iPod, but we don’t have a share of iPod’s revenue,” he said. “We want to share in those revenue streams. We have to get out of the mindset that our content has promotional value only.

“We have to keep thinking how we are going to monetize our product for our shareholders,” added Mr. Bronfman. “We are the arms supplier in the device wars between Samsung, Sony, Apple, and others.”

Ah yes. They make MOST of the money from the songs sold by Apple. But that's not enough. Noooooo, they want iPod money too. Freaking nuts.
Michael Nash, Warner's digital strategy chief, suggested labels might have no choice other than cut Apple's digital music sales off at a stroke.
"What if Jobs says 39 cents or 29 cents per download - what then? The industry can say, OK we'll cut him of - very few people people buy music from digital downloads," said Nash, who pointed out that most of the music on iPods is from their own collections.
These guys kill me. "very few people buy digital downloads" Apple has sold over 500 MILLION tracks (as of July 18th), and while that may currently pale compared to CD sales, it's great considering the record industry and their current distribution method had about a 50 year head start.

I'll NEVER pay more than 99 cents for a song. I think that even at 99 cents, songs are still too expensive. Still, I do buy a lot from the ITMS. I'll also RARELY pay more than $9.99 for a full digital-only release. At that price point, I'll often pay for the convenience, and the instant gratification. If I can buy the physical CD easily, for less money though, I will, so trying to charge the same $12.99 for a new digital-only release as the record store nearby just ain't gonna fly. Try and charge me more and you've lost me. And if the record companies have their way, they'll lose a lot of others. Jobs and company have finally made a dent in illegal sharing, and yet the record companies still aren't happy. Well, we'll just see how happy they are if Apple is forced to cave into their demands.

Read more:
Bronfman Fires Back at Apple
Warner raises decapitation strategy for Apple


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