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January 25, 2008
Should music downloads cost less than CDs?
Everyone's canned answer to that question should be a simple - yes. It doesn't make a lot of sense to pay the same price for digital versions of records when a CD costs the same. I'd rather get the hard copy of the music on CD, along with the artwork, liner notes, and whatever other goodies are included for the money if the costs are comparative. After all, it's not all that much work to rip CDs.
Downloading is mega convenient in that it's practically instant, and for singles it can't be beat, but the lack of the rest of the package washes away the urge for immediate gratification when it comes to digital albums. The Compact Disc is a remarkably good value and convenient in comparison to downloads when considering the latter allows only a one time opportunity to download the music. For digital music player fans, the plastic CD is useless in terms of need for listening, until it becomes an invaluable backup source in case of hard drive or digital music player failure. Anyone whose ever lost the contents of a hard drive can testify to the painful realization of losing the equivalent of their digital life. Losing an entire library of music is one of my most tragic nightmare. And yes you can always backup, but how many of you actually do? Right.
iTunes policy states you don't get second chances to download purchased songs after that initial download. However my CD collection has no such built in mechanisms stating how often I can rip the songs onto my hard drive, or anyone else's for that matter. The RIAA may think differently, but at least they aren't literally inside my music forcing the issue.
Before iTunes started moving away from copy-protected files, I used to be spit that last part about the embedded DRM protection with a bit more venom when explaining my decision to shy away from the download marketplace. However, increasingly DRM-free times have afforded an oppurtonity to realize that not even the lure of higher bit rates and removal of DRM is enough to change the manner in how I choose to receive my music. DRM concerns, while completely valid in these uncertain technological times, are not the real reason why most people do not download music and neither a legitimate barrier to why we are not seeing a true spike in the adoption of legal avenues for downloading music.
It's the cost, stupid!
Talk of the many ills of the music industry has become about as passé as pointing out the President's infinite foibles - acknowledged by everyone as expected and incredibly redundant. But really now, why on earth is the consumer expected to unflinchingly pay the same sum for a product that is clearly an inferior version of the traditional, hard copy? Accepted rules defining why a pay-per-view movie saved to your DVR is not the same as owning the DVD seem to not fit the music paradigm. Why is that? Clearly someone decided these things are different. I'd like to see the fleecing stop. I also want to know why Cat Power's new album is so damn boring, but that's neither here nor there. Is iTunes and its competition complicit in the 21st Century's Great Digital Swindle? Especially sad considering the fall guys in all this are technologically savvy, current digital music customers. Count them as part of the most considerate and loyal of the dwindling population who still buys music. And they're getting hosed.
Author Seth Godin explains why the market for downloadable movie rentals might go the (failing) music route:
"The movie studios are starting to get excited about renting movies digitally (via Apple and others). The pricing seems to be modeled on Blockbuster (+). Figure $3 a rental, another buck or so for HD. That seems 'fair', because it's in the same range as we're used to.
...and completely blow it:
"Blockbuster buys DVDs for $15 or $20 (probably a lot less in volume, but I have no clue what the real number is). The studios have to pay for duplication and warehousing and marketing and they take a risk with every pressing that they'll have to shred the leftovers.Blockbuster then rents them out 30 or 40 or more times each, meaning each rental costs Blockbuster fifty cents. Not to mention rent, surly clerks, cost of capital, advertising, etc. Or, in the case of Netflix, stamps.
In the case of online rentals, all of these intermediate costs immediately disappear. Gone.
So, why try to mimic the current model when it comes to pricing if the costs are mostly gone?
Some holes there. Servers, computers, bandwidth, co-location of network equipment, staff and salaries do add significant costs. However it's his focus on the efficient scalability of downloading that is indeed valid. Before all you music anarchists bring a light to your petrol-tipped torches and head out into the night, be sure to know Mr. Godin is not proposing the economically impossible, though perennial favorite, free.
"No, I don't think Free is always the answer, but I do think the studios are about to make a mistake of RIAA proportions. I'd charge fifty cents for an online rental. It would immediately hammer the rental stores (which is fine with Hollywood) and DVD replicators (also fine with Hollywood) but would instantly teach people a new habit....At fifty cents a rental, all desire for piracy goes out the window, replaced by convenience, ease of use and a clear conscience. More important, entire new services show up, habits are built and the studios end up with a direct relationship with consumers who want to hear from them. If they don't get greedy at the start.
Until the cost of digital versions of music is more in line with its actual value, specifically in relation to more robust formats like CDs or DVDs, I can't see how the business model is viable in the long term. It will not be acceptable to have a small percentage getting overpriced and the vast majority dealing on the black market of file trading and illegal downloading. The record industry's real problem is with its own innate greed - an inherently necessary evil for any capitalistic endeavor worth sustaining, but also a cause of great self-inflicted harm when not managed properly.
Read: How much for digital? [Seth Godin's blog]
Posted by Merry Swankster at January 25, 2008 09:53 AM
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Comments
I know I'm in the minority on this issue, but the prospect of owning the original hard copy isn't all that much of an incentive to me. At least not enough for me to pay an extra $5 or how much ever.
If your primary concern is the music, than shouldn't a burned copy of a CD be just as valuable as an original? There are some questions about the lever of sound quality, but even those concerns cannot dictate what I'm going to listen to.
Beyond that, it's not as though I spend much time poring over the liner notes with headphones on; most of my music listening is done in the car, making reading-while-listening somewhat dangerous.
Posted by: Randall Monty at January 25, 2008 03:58 PM
The music is the "primary concern". Which is why you shouldn't be charged the same amount of money - say $10 - for a digital album when a CD, which comes with a bunch more stuff (re: value), goes for the same $10. Point is - downloaded versions of a record should be say $3, and singles $0.20.
Posted by: Sebastian at January 25, 2008 04:14 PM
Where are you buying albums for 10 bucks? Maybe, if it's some hip band like LCD that EMI is trying to push in its first week, or some heavily discounted stuff that no one likes, but trying to buy a new release or worse a slightly obscure but in print older album and it's always over ten bucks, no? Or is New York screwing me yet again...
Posted by: Jeff K at January 25, 2008 04:50 PM
Same deal, price-wise, in Texas. But I always figured it was a mark-up because it takes so damn long to ship anything down here.
But to your point... for the company, selling a digital copy for $10 is almost all profit, while selling a CD for the same price takes in less (because they have to package and ship the product). I don't know the specific pricing breakdown.
Posted by: Randall Monty at January 26, 2008 12:03 AM
Most CDs I get are bought online and prices are from $8-14 usually. Regardless....the basic point is that it seems like the best thing the industry can do is bank (literally) on volume, where volume is increased by charging dramatically less. Because the status quo isn't going to cut it..so why take some bold moves that may actually reshape consumer habits??
So much idealism...so little time.
Posted by: Sebastian at January 27, 2008 02:09 AM
"Legitimate" download prices are a ripoff and the files' inherent instability (so easily lost) are no incentive for me to give up buying cds. All the hype about nosediving cd sales is just that: there are many conflicting reports of annual cd sales' apparent decline, but all of them detail cd sales in the billions. And now that record companies have entered the download market, they're flooding it with old product dressed as "new release" and charging premium prices; I've seen dozens of "new" albums available for download that are also available in your vanishing bricks-and-mortar music store's bargain bin. The media conglomerates deserve to die.
Posted by: Grant at February 9, 2008 12:08 AM
