Several months ago, Sandy Pearlman produced this idea for resolving the issue of digital music piracy by reducing the cost of mp3s to 5 cents per song. His claim is that the reduction of the price will cause an exponential increase in the amount of music being sold online, due to the price being low enough that potential pirates wouldn’t bother.
I doubt that the RIAA would go for such a plan in the near future, but is this a feasible plan for reducing the (IMHO dubious) impact of piracy on record sales? Online music is a new industry, so can anyone make claims about the elasticity of digital music? And why 5 cents? At what point does the downloader start considering legitimate purchase over pirating?
It would seem that such a plan would require the cooperation of the RIAA, so what if only some labels agreed to go through this plan, or if independent labels offered music in such a way? Without the support of the RIAA, would a third-party online distrubutor be able to offer music through deals with independent labels, or by itself becoming a record label?
It seems that the costs associated with setting up an online music store is the same cost as setting up a normal website. However, with each sale, you pay for bandwidth plus royalties. Based on the iTunes business model, it seems that a significant amount of the money from the sales goes through the record label before it reaches the artist. However, this doesn’t seem like a very fair system; costs associated with CD distribution including packaging, breakage, materials cost, and so on should be included as costs. Plus, the mp3 format is noticeably lower quality than CD, and should arguably cost less than their CD counterparts. The 20:1 ratio seems a bit excessive psychologically, however.
According to the RIAA, billions of songs are being downloaded illegally each month. If they were able to tap into any significant fraction of that by the price reduction, it would appear to be economically viable.
I have seen no credible studies that show music piracy/file trading have any impact on album sales. The proposal strikes me as attempting to solve a problem that doesn’t exist.
Not as a cure for the claimed reduction in album sales, though. I mean as a way to popularize an alternate distribution method and capitalize on the new media format. Though I’m not too supportive of their current gouging of artists’ royalties, it would be a quick way of distributing legitimate music at a greater volume than any of the online music stores right now. If it worked.
I think the RIAA is the big factor standing in the way of such models. The parasitic apparatus makes it difficult to do such things.
As far as indy labels go, I don’t know too many people who make $.50 or less purchases on their credit card.
So between the RIAA being the only organization with a large enough volume to make it valuable, but also having too much useless infrastructure to support, I don’t think it’s really going to happen.
In the end as idealistic as it sounds, music belongs to everyone, and it never really meshed with commodification in the first place. The people who love doing it will continue doing it. I work in the music industry in the underground, and most people I know barely cover expenses or lose money, and do it because it’s what they love. They make money to make music, they don’t make music to make money.
I don’t think anyone’s managed to bring the total cost of transactions for any purchase anywhere near the 5 cent level yet so, for a start, it’s impossible. But even if we magically wave a wand and say that all internet transactions are free, then it’s still not likely to happen. Currently, there are dozens of internet music retailers out there experimenting with different pricing/service models. If iTunes is charging $1 and someone else charges 50c and makes more profit, then they would be tempted to try going lower and seeing if they can make yet more profit. The fact that prices seem to have stabilised at 70c - $1.30 seems to indicate that this is a reasonable market price. If it were indeed as low as 5c, then surely someone would have done it well before now.
PS: After actually reading the article, it seems the 1% sales tax is far more significant than the 5c music charge.
Truthfully, I’d buy more music online if it was DRM-less. I have N computers. I reformat them, I toss them in car trunks, I swap locations on them. Some at work have restrictions on them. I would like to be able to buy a song, and then play it where I want, when I want.
The difference between five cents and a buck isn’t that much, at that point, when the pain-in-the-assery is still too high.
$1 for a song isn’t horrible, but it isn’t how I want to buy music–I’m an album guy. Even back in the Napster/AudioGalaxy days, I always took pains to download full albums. $9.99 is far too much to download a full album from something like iTunes, when I can shop around and get the actual CD–with physical medium, album art, better sound quality, and no format limitations–for $12-13.
5-10 cents a song sounds about right. I’m not opposed to downloading from P2P services, but I’ve still gone to AllOfMP3 instead when possible, because it’s more convenient and gives me exactly the quality I want.
AllOfMP3 charges by the megabyte, so you end up paying less for lower quality songs. You can download them in whatever format you like (MP3, WMA, AAC, etc.), at whatever bitrate you like, and many of the songs are even available in lossless formats that literally sound exactly the same as the CD versions.
Well, you could charge customers a minimum amount like $10, then deduct 5 cents per song from that balance.
Hear, hear. I’ve given AllOfMP3 more money than iTunes, not just because songs are much cheaper there, but because I can actually use those songs without having to jump through any dumb hoops.
DRM isn’t stopping anyone from trading songs. All it does is contribute to vendor lock-in and make life harder for people who want to listen to the music they’ve paid for.