Apr 8, 2009
I like how the new iTunes tiered pricing the major music labels have been calling for exposes them as the greedy gougers they are. It’s not like the cost of distributing one digital song is any more for them so the only rationale for raising the price to US$1.29 for a popular song is that they think they’re going to make more money. This is called price gouging. The cost of distribution, the cost of manufacturing and packaging, the cost of advertising & promotion, are all completely decoupled in the digital music world from the only cost that is real which is the cost of recording. And this has been plummeting for years now.
Music say they can make money with more flexible prices and possibly help make music retail a profitable enterprise again.
“If we can gain traction with $1.29 that will be good for greater margin,” said another label executive, also involved in discussions, but who did want to identify the record label.
…because that’s a really healthy thing for the market and what consumers want.