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Steve Jobs Wasn't Lying When He Said $1 Per Song Price Would Stay

from the don't-mess-with-Jobs dept

Thu, Apr 20th 2006 5:37pm — Mike Masnick

It's the story that just won't die. Two years ago, the record labels started making noises about how they wanted variable pricing for songs on iTunes. Steve Jobs immediately made it clear that Apple wasn't interested. A year ago, the same story popped up and again, Apple said it was news to them. Last summer, the labels started saying it again, leading to Steve Jobs to flat out call them "greedy." Meanwhile, many of us were wondering how these statements weren't the equivalent of price fixing. Just a few years ago, the labels all got in trouble for telling retailers how much CDs should cost -- which is illegal price fixing. It appears the labels (even post-fine) don't seem to get this. They also don't seem to get that Steve Jobs is serious about keeping the price at a dollar. Just as the original iTunes contracts are set to expire, the labels who were all confident that Jobs would back down and allow variable pricing are suddenly discovering he's not budging at all. In fact, they're finally starting to recognize that for all their bluster, Steve Jobs is the one who has the power in this relationship -- as none seem willing to actually pull their songs off of iTunes. Of course, some of the execs continue to be totally clueless. The article quotes one unnamed music exec who is upset that the labels didn't "stand up to Jobs." He then says: "Where in life does the retailer set the price of the content?" Isn't that exactly what the lawsuit and the fine in 2002 were all about? The labels can wholesale their music at whatever price they want -- and then Apple (the retailer) can do whatever it wants in response -- just as record stores get to set the retail price for the CDs they sell. If the labels are so upset, then why don't they set their own variable pricing and see what Apple does in response?

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25 Comments

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josh, 20 Apr 2006 @ 6:42pm

Go Steve!!!
I like that. Reverse price fixing. I would think selling music on iTunes has a higher profit margin compared to CD's. Anyone know different?
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- Anonymous Coward, 21 Apr 2006 @ 10:31am
  
  Re: Go Steve!!!
  I believe the labels sell their tunes to Apple for $0.60 to $0.80 per song. Apple barely makes any money, if any, off the sale of these songs because they carry the cost of distribution and maintenance of the store.
  
  The variable cost to the labels is practically zero since they don't need to manufacture nor distribute anything. From a per-unit perspective, for the record labels, this has to be more profitable than selling CD's via retailers.
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Michael D, 20 Apr 2006 @ 6:44pm

Where in life...
The answer to the music executive's question "Where in life does the retailer set the price for content?" The answer is:

Walmart

The same music companies complain all the time about Walmart telling them what they can sell, how they can package it, and how they can price it. But... they keep on stocking the shelves.
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Posterlogo, 20 Apr 2006 @ 6:45pm

I'd love to see what Apple does in response...
I think the day is coming when, instead of flat out backing out of the iTMS, labels will increase their wholesale prices. I would love to see what happens then. Personally, I think Apple would hang in there, take the loss, and keep making money off the iPods and even more foray into videos. Eventually, Apples position could be strong enough to discontinue their deals with certain labels without significant loss in revenue. Hopefully, people will wonder where their favorite music went and find it elsewhere, like P2P. Thus, sticking it to the labels. Which is what I really would love to see. Man, I wish I could walk up to the musicians I love and hand them $5 and say thanks for the music, let's keep this between us and screw the middle man.
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JL, 20 Apr 2006 @ 6:50pm

Go Steve!
With all of the pushing around the music industry is doing as of late, Steve Jobs seems like a hero of sorts. I'm not the biggest fan of Apple, but they did get the iPod and iTunes combo right.

I think I'll download something off of iTunes right now just to spite the labels.
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edward Case, 20 Apr 2006 @ 7:20pm

iPod
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edward Case, 20 Apr 2006 @ 7:24pm

iPod
I remember my licensing days in Hollywood and one well known executive's understudy being more impressed with his bosses private 9 hole golf course on his estate instead of caring about earlier "windows" on pay per view. It is about time to rid the content providers of these unnecessary gate keepers with their excessive executive compensation packages.
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ntimid8, 20 Apr 2006 @ 7:30pm

Nothing New
Walmart has been doing this same thing for years. The lawsuits from manufacturers finally stopped when they realized they were just shooting themselves in the foot - the same will happen to the media companies...
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Boris Jacobsen, 20 Apr 2006 @ 7:34pm

Jobs insists on $1 a song. And calls the labels greedy???? Surely they don't want MORE than that?????

It may be slightly dubious but I'll stick with allofmp3.com for now - prices approx. 5 - 20 cents per song....
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- 2 Good 2 B True, 21 Apr 2006 @ 9:51am
  
  allofmp3.com
  I still haven't bought anything from allofmp3.com, but I have done a little research. Does anyone know if it is REALLY legal? Not that I care all that much, but just good to know.
  
  Gotta love loopholes, especially when they are sticking it to the big media corporations.
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- dain, 21 Apr 2006 @ 12:17pm
  
  Re:
  me too. Allofmp3.com is good for me. Just like American copmanies that outsource their workers for cheaper foriegn labor, I outsorce my buying habits to cheaper foriegn pricing. As long as allofmp3.com operates at the prices they do, iTunes, Rhapsody and the rest won't see a dime of my money.
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Boris Jacobsen, 20 Apr 2006 @ 7:39pm

You can buy my whole album for 80 cents! I receive approximately 0 cents from the transaction. I shall use this information in court if ever I am accused of illegal copying of music, video or software. I have lost more money than I have gained. I'm not bitter though. I don't really like money.
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Brad L, 20 Apr 2006 @ 8:46pm

Greedy, Evil, Clueless
One or even two of the above characteristics will not kill an industry.

Congratulations to the *AA's for each scoring a triple play.
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Laughing, 21 Apr 2006 @ 1:55am

Heh
Wow, something I can say Jobs has done a good job on (becides stealing from Xerox that is)......
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eeyore, 21 Apr 2006 @ 5:09am

A dollar a download is a fair price. The RIAA killed off the 45 twenty years ago and never replaced it with a fair means of purchasing a single song. All of you over the age of 35 probably remember buying the little vinyl records with one song on each side for anywhere from $1-2 until they stopped selling them in the late 80s. Cassette singles were overpriced and the selection was never as good as 45s and CD singles were worse because they usually cost about half of what the full CD would cost. If I can't find a song I'm looking for on iTunes I'm not going to buy it because I'm not paying $15-30 for a CD with one song on it I like, and I'm looking right at you, Metallica.
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- Dain, 21 Apr 2006 @ 12:19pm
  
  Re:
  don't pay 15-30 for an album or a dollar a song. allofmp3.com has the best deal (hey that ryhmes!). Seriously, check them out..
  
  I stopped buying itunes because of DRM.
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R-Bro, 21 Apr 2006 @ 5:27am

Now get on the subscription bandwagon, Steve!
I will be eternally grateful to Steve Jobs for ushering in the 99-cent download era. Long before it happened, I made up my mind that that was a reasonable price to pay for a song.

And I've also come to realize that $10-15/month is a reasonable price to pay for unlimited downloads, like you can get from Napster, Yahoo, etc. Wish iTunes would offer something similar! It's the only thing keeping me from buying an iPod!
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Yonatron, 21 Apr 2006 @ 6:00am

I also think a buck a song is reasonable, but anything higher is likely to block impulse buys, and when Techdirt's brought up the price-fixing argument, it's made perfect sense to me: the labels set the wholesale price and Apple sets the retail.

What's ironic about the whole thing is how hard it is to find current Apple products at prices any lower than the direct-from-Apple ones.
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- Wizard Prang, 24 Oct 2006 @ 7:12am
  
  I disagree...
  ...I think a buck a song is way too high... you're paying CD prices without the CD. Digital download = no shipping, no packatging, no physical product...
  
  Somebody's making out like a bandit here; it ain't Apple, and it ain't the artist.
  
  I'm voting with my purchasing dollars, which mostly go to used and cut-price (
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  - Wizard Prang, 24 Oct 2006 @ 7:13am
    
    Oops...
    Cut-price CDs (less than $10).
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Gary, 21 Apr 2006 @ 7:45am

Doesn't Steve Jobs hold all the cards? After all, the fair use restrictive users to the iPod; the record executives can't do anything about it because, supposedly, users can't move their songs off their iPods. So unless people are willing to give up their iPods...

Am I wrong?
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mmrtnt (profile), 21 Apr 2006 @ 8:14am

Clueless is the Perfect Word

What are we - ten years into the internet revolution and these people still don't get it?
They're not in charge any more. The days of the record labels controlling which music and artists get what distribution are over.
Stifle, already.
MjM
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MindTrigger, 21 Apr 2006 @ 8:30am

You know, the more Apple is shoved into my face, the more I like them and the people running the show there. I've been a Windows user since 3.x, and I'm almost ready to switch to a Core Duo Mac. All they need to do it put a little more work into gaming performance, and it's buh bye Windows.
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anonymous coward, 21 Apr 2006 @ 12:37pm

jobs is part of the problem, not the solution.

fuck jobs AND the RIAA.

allofmp3.com and lala.com
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Dave Reed, 21 Apr 2006 @ 1:04pm

milking a dead cow
I've finally become convinced the record company execs AREN'T that brain-dead. They may not completely "get the internet" but Napster, and itunes and allofmp3.com etc are too loud to ignore. They must see the writing on the wall.

When the dust clears, there won't be record companies or record company execs. These guys are simply trying to squeeze the last drops of money out of the system. They'll keep suing customers (which they figure they are going to loose, anyway) until it stops working. Then they'll sue the artists (who are jumping ship like rats from a doomed ship). Heck, they'll probably sue Walmart before the show is over.

That's the real problem. For them, the show is ALMOST over. It's sad to see 'em thrash around like that.

If the RIAA was a horse, I'd shoot it.

Just my 2 cents, wait 20 years and see if I was right.
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