Stumbling into obscurity…



One of my favorite album titles of all time is Sarah Mclachlan’s “Fumbling towards Ecstasy.” It reminds me of “slipping into enlightenment,” a phrase used to describe the feeling that you get when you about to slip on a surface, recognize that you are about to fall, understand that there isn’t anything you can do about it, and then just have to smile when you hit the surface.

On the flip side of enlightenment, according to this article in the Wall Street Journal (subs required), record labels and the digital download stores are experimenting with various pricing schemes to raise the per song price of a digitally downloaded song. The article notes that “the issue of online music prices raises philosophical debates for music executives. Some executives, for example, believe they should be charging a premium for the online versions of older tracks because consumers may be willing to pay more for harder-to-find material.” This is perhaps the most absurd argument I’ve heard in a while, for weren’t these the same executives who were getting fat and lazy off of people upgrading vinyl for CDs since the commercial introduction of the CD? So now you want me to cough up yet more money on older songs instead of building an artist roster for the future?

Apple makes its bank off the sales of iPods and led the legitimate revolution in commercially viable (and legal) digital downloads. I am now and forever a faithful iTunes+iPod user (despite the fact that I own a PC). I hope that Jobs and Co. will have the good sense to lead the discussion of music pricing rather than taking a “me-too” attitude if labels apply to much pressure to some of the other online digital retailers to bump prices or as the article describes, “[bundle] hit songs with less-desirable tracks.” Right…force me to listen to crap because you can’t cultivate artists with real musical talent….

In a free-market economy, the market decides the price of sale for goods and services, and so I don’t necessarily disagree that the $0.99/song construct doesn’t makes sense in the long run, given that the instrinsic value of a song from one artist may be higher than a song recorded by a bubble-gum pop artist (remember that Michael Jackson bought the publishing rights many Beatles songs in 1985 for $47.5MM…and has recouped that investment multiple times over… he didn’t buy the rights to Menudo).

The digital download music industry is still in its infancy however, and I fear that the tinkering from exasperated record executives will drive more music fans in to back-alley P2P networks, that grow like kudzu, and will not be able to be stopped if all the intellectual property lawyers in the world were to sift through log files and IP addresses to hunt down the downloaders. Given that labels have unceremiously NOT embraced legitimate music downloads, STAY THE HELL OUT OF THE KITCHEN until there is widespread adoption of digital players, more and more legitimate digital downlaods, and most importantly, FANS who have put up with enough shenanigans already.

One industry that could use a dose of dynamic pricing experimentation is the movie industry. Instead of pricing every ticket the same, they would do well to price a new release when it hits the screens on the first week (or 2 weeks, etc.) at a higher cost-per-ticket. The movie companies, just like the music labels, want to recoup their investment as quickly as possible. A certain % of people are likely more willing to pay a 10-20% premium for an opening week ticket because they are the ‘early adoptors.’

If the movie industry adopted some of the practices of the discount airline industry, more seats would be filled with less expensive movie tickets, leading to a higher net margin of sales. 10 people paying $10/ticket vs. 20 people paying $8/ticket means that not only am I making $160, but I have 20 bodies going to the concession stands. Technology has evolved to make this experiment a reality; unfortunately the movie business moves at the same glacial pace as the record business when it comes to change.

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