Is it just me or is everyone else suitably loathing of the music industry's pathetic attempts to further their strategy of screwing consumers?

At £1.09 PER TRACK, Napster UK, which has just launched today (www.napster.co.uk), has surely got it all wrong. Remember that this is NAPSTER, the black-eyed industry-shafting bunch that is all of a sudden making up for its earlier 'free' model by ripping of UK consumers. And Europeans. And Americans (but not as badly).

There will obviously be some sort of user base by the end of the year - my question is whether these people are clinically short of a few shillings? Well, given that they will be paying £1.09 per track, they aren't short in the fiscal department, but is there anyone home upstairs?

For years we have seen CD prices rise and rise - £17 isn't uncommon for certain artists nowadays, though thanks to the likes of CD Wow and Amazon (which offer the latest albums for about £9), offline retailers are having to compete a little more for business.

We have heard all the tales of consumer revolt as the tabloids went crazy about comparative CD prices in the US - something like £7 for a new CD. Then there's the exchange rates... the UK holidaymaker can pick up bargains galore these days.

Yet when we strip out the whole process of making a CD, which is after all a real product involving paper and plastics and metals and printing and so on. There is a cost to making each and every CD, unlike the virtually-zero cost of providing these files to the online distributors, in digital format.

The record labels own the manufacturing plants and the labelling/packaging plants. Maybe they don't want a digital distribution model, lest they be forced into closing these plants down. But surely digital is cost effective and the rise of the on-demand model for entertainment products is a no-brainer for the record companies to get into.

But hey ho, they actually RAISE the price of tracks in the UK (compared to the US). OD2 charges 99p per track - again, total industry rip-off tactics that do nothing for the consumer. At least we might see some price competition, but I for one won't touch these services until pricing better reflects true worth.

If a CD sells on Amazon for £9, and if Amazon and everyone else can make a little margin on this (given the offline distribution model and manufacturing/packaging etc - ie lots more costs), then how are consumers expected to swallow £1.09 per track? I don't get it.

Except I do. This is proof positive that the reocrd companies are still locked in the Dark Ages, that they are sitting comfortably and that they do not want to change the status quo.

They will accomodate a digital music industry, but only if it doesn't damage the offline model. How much profit do you get from £1.09 per track? Where does it all go? How much will Napster/OD2 see?

Is this just one big price fix, with the industry at large agreeing cartel-style to a minimum price per track ie £1? Maybe Napster takes the other 9p? Of that £1, how much is cost and how much is profit? Compare that to the costs of producing and distributing a CD... how does it add up?

It sucks, but will we see any action from the powers that be? Probably not - the best we can hope for is that consumers recognise these prices as disgraceful and ignore the Napsters of this world until the record industry gets wise.

It would be very interesting to learn how many extra music lovers would buy into these services if the price per track was halved. My bet is that there would be a significant uplift in numbers. I'd pay 50p many times over for my favourite songs. I reckon they'd sell at least twice as many songs, maybe ten times as many. The price would be so much more appealling, more digital music players would be sold, the industry would accelerate... but what would the effects be on CD sales?

It is a curious conundrum and no-one will know the outcome unless someone tries it. But who will, who can? It just looks more and more like the record industry has the digital distribution market all sewn up, and these initiatives are merely a way of keeping price levels intact.

Pathetic.

On 13:45:17 20 May 2004 johnnyh wrote:
>Is it just me or is everyone else suitably loathing of the
>music industry's pathetic attempts to further their
>strategy of screwing consumers?
>
>At £1.09 PER TRACK, Napster UK, which has just
>launched today (www.napster.co.uk), has surely got it all
>wrong. Remember that this is NAPSTER, the black-eyed
>industry-shafting bunch that is all of a sudden making up
>for its earlier 'free' model by ripping of UK consumers.
>And Europeans. And Americans (but not as badly).
>

While I agree that the 1.09 is the wrong level, also in terms of consumer friendliness and marketing, the case is not as simple as saying "the labels" are at fault. To the cost you have to add a per transaction charge (credit card or similar), which typically for such low price items is a real pain, the music publisher share (songwriter/lyricist), and the margin the retailer (i.e. Napster) wants to make on each item. The decision to set those different shares is come by through hard negotiations between these parties - trust me I have attended some.

Fact is that the mass market CD and yes those manufacturing planst that spit out milllions of CDs with digital data are now pretty efficient, and can deliver 650 MB at low cost.

My main issue with the digital download pricing is that it ignores the benefits of packaging such as CD booklets etc which is placed on the consumer (if he bothers). From that angle £1.09 seems excessive, and a one price per track model also seems highly inflexible - something I also don't like about iTunes. It is not good retailing to offer everything at same price, surely.

I guess I have heard the "band does it themselves" story too often to get overly enthusiastic - but yes there are now some good examples, Simply Red, Katie Melua to name 2 that have managed to capture audience directly or via their management companies. It still costs serious money though to get anywhere, whoever pays for it. The difference when going ex-label is really in control over the fanbase and longterm career management. Agree that concerts etc are the revenue drivers. Not sure about everything just on an Ipod, isn't Vinyl making a comeback currently?

Well, you hit the nail on the head there!

Coming from a music publishing background, I have found it increasingly frustrating that in 2005, many music publishers, (the one I work for at present including!) have still not woken up to the digital age we are living in!

I sit in sales meetings and hear the constant drone of "sheet music has a small profit margin" due to printing and distribution, and i feel like a broken record sometimes with, "well, why dont we get our arses in gear and get these products available online!"

I do believe that the music industry will have know other choice but to change their current models, of pricing and distribution. Unfortunately it's just not going to happen overnight. The majors are like spoilt teenagers, they know what they should be doing but they'll just do the opposite to try and prove they are in control, then what will happen is one major will continue to loose money, have to sack tons of staff, then will have to change the way they run business - then the rest will scuttle behind.

However I do think the traditional method of buying an album from the record shop down the road has to remain available - having the intellectual property as a physical format, with the 16 page sleeve, photographs, and lyrics is just as much a joy having than the actual music itself. An inkjet printed out sleeve and tesco branded CDR of the music isn't quite the same!

Any hoo - check out HMV and Virgin's new download resources, launching begining of September. Perhaps their pricing models will be a little less ridiculous!

We shall see....

Joni

On 13:45:17 20 May 2004 johnnyh wrote:
>Is it just me or is everyone else suitably loathing of the
>music industry's pathetic attempts to further their
>strategy of screwing consumers?
>
>At £1.09 PER TRACK, Napster UK, which has just
>launched today (www.napster.co.uk), has surely got it all
>wrong. Remember that this is NAPSTER, the black-eyed
>industry-shafting bunch that is all of a sudden making up
>for its earlier 'free' model by ripping of UK consumers.
>And Europeans. And Americans (but not as badly).
>
>There will obviously be some sort of user base by the end
>of the year - my question is whether these people are
>clinically short of a few shillings? Well, given that they
>will be paying £1.09 per track, they aren't short in
>the fiscal department, but is there anyone home upstairs?
>
>For years we have seen CD prices rise and rise - £17
>isn't uncommon for certain artists nowadays, though thanks
>to the likes of CD Wow and Amazon (which offer the latest
>albums for about £9), offline retailers are having to
>compete a little more for business.
>
>We have heard all the tales of consumer revolt as the
>tabloids went crazy about comparative CD prices in the US
>- something like £7 for a new CD. Then there's the
>exchange rates... the UK holidaymaker can pick up bargains
>galore these days.
>
>Yet when we strip out the whole process of making a CD,
>which is after all a real product involving paper and
>plastics and metals and printing and so on. There is a
>cost to making each and every CD, unlike the
>virtually-zero cost of providing these files to the online
>distributors, in digital format.
>
>The record labels own the manufacturing plants and the
>labelling/packaging plants. Maybe they don't want a
>digital distribution model, lest they be forced into
>closing these plants down. But surely digital is cost
>effective and the rise of the on-demand model for
>entertainment products is a no-brainer for the record
>companies to get into.
>
>But hey ho, they actually RAISE the price of tracks in the
>UK (compared to the US). OD2 charges 99p per track -
>again, total industry rip-off tactics that do nothing for
>the consumer. At least we might see some price
>competition, but I for one won't touch these services
>until pricing better reflects true worth.
>
>If a CD sells on Amazon for £9, and if Amazon and
>everyone else can make a little margin on this (given the
>offline distribution model and manufacturing/packaging etc
>- ie lots more costs), then how are consumers expected to
>swallow £1.09 per track? I don't get it.
>
>Except I do. This is proof positive that the reocrd
>companies are still locked in the Dark Ages, that they are
>sitting comfortably and that they do not want to change
>the status quo.
>
>They will accomodate a digital music industry, but only if
>it doesn't damage the offline model. How much profit do
>you get from £1.09 per track? Where does it all go?
>How much will Napster/OD2 see?
>
>Is this just one big price fix, with the industry at large
>agreeing cartel-style to a minimum price per track ie
>£1? Maybe Napster takes the other 9p? Of that
>£1, how much is cost and how much is profit? Compare
>that to the costs of producing and distributing a CD...
>how does it add up?
>
>It sucks, but will we see any action from the powers that
>be? Probably not - the best we can hope for is that
>consumers recognise these prices as disgraceful and ignore
>the Napsters of this world until the record industry gets
>wise.
>
>It would be very interesting to learn how many extra music
>lovers would buy into these services if the price per
>track was halved. My bet is that there would be a
>significant uplift in numbers. I'd pay 50p many times over
>for my favourite songs. I reckon they'd sell at least
>twice as many songs, maybe ten times as many. The price
>would be so much more appealling, more digital music
>players would be sold, the industry would accelerate...
>but what would the effects be on CD sales?
>
>It is a curious conundrum and no-one will know the outcome
>unless someone tries it. But who will, who can? It just
>looks more and more like the record industry has the
>digital distribution market all sewn up, and these
>initiatives are merely a way of keeping price levels
>intact.
>
>Pathetic.