The media companies thinks that Apple is unfair, while Steve Jobs thought they are greedy.
So, where should the average consumer stand? Would you pay $0.99 for a song or something like $2.99 for a new song or a song by popular artist?
My take is the recording industry is greedy. They do not have a clear cut strategy on how to price their goods and especially so, how to distribute it using the Internet.
“If they want to raise prices they are getting greedyâ€. — Steve Jobs
With the old distribution model of tapes and CD, they can choose to sell the same CD for SGD$20 in Singapore and maybe USD$20 in US.
But with the Internet, all of a sudden, this ‘protection’ called national border seems meaning less to them. On one hand, they can get cheap effective distribution using the Internet, but on the other hand they claims that piracy is costing ‘lost in revenues’.
The truth is, in my opinion, with the Internet, consumer have found a whole new way to get reviews of songs and this change is also fueled by the strong growth in the adoption of MP3 devices (iPod, Zen and now the mobile phones).
Nowadays, the average teenagers, from my observation, is capable of creating their own playlist… be it from downloading a song or ripping from CD. They will not hestitate to question why should they pay more for a new song (an unproven song).
The argument of paying by value is not strong enough to change this. Cinemas. I remember how I brought my 3 year old daughter to movies. The staffs tells me they she needs a ticket. It does not matter that she may not understand half the show. They are trained to reply ‘We are selling the value of the movie.’
Great! I like that answer. So, a blockbuster like Star Wars is going to cost as much as Catwoman (which I think is a bomber).
By that argument, then all media content of the same category be it music or videos should be priced the same. It does not matter whether Madonna or the band next door is releasing one.
You never know which one is going to be a hit. And after all, media companies taps into other channels such as MTV to help promote and ensure that the song rise up the charts.
Price, in my opinion should start low. And if that song proves successful within that channel, eg iTunes, it can be pushed up….based on ratings from consumers. But, that does not mean consumers cannot get the same song from other sources. This should be left to retailers, be it within iTunes, or other sites like mp3.com
At the end of the day, the ability to sell a good with or without discount depends on
1. The value of the goods. In this case, there is NO guarantee that a song will be a hit!
2. The profit and loss of the retailer. A retailer selling goods in USD, based his development in India and infrastructure in Singapore may choose to continue to sell his goods low. That could be a strategy.
To the media companies, stop using RIAA to fight your war. Stop using such outdated pricing strategies and apply it on digital goods for the Internet.
It is time you listen to what your consumers want. My bet is, consumers prefers fixed pricing for all goods when shopping within the same site. This makes decision fast and simple.
Going through the tunnel of change is going to be tough for all media companies. Too much revenues are at stake. Copy protection itself does not change anything. It does not answer the question of how your company have adapted to the needs of consumer in the new era.