Former Music Industry Exec Says Album Prices Should Be Drastically Lower
from the he's-onto-something... dept
Robert Katz was the first of a whole lot of you (really, this may be the story with the most submissions ever) to pass along the news that former Warner Music UK boss Rob Dickins is suggesting that the record labels lower the price of albums all the way down to £1 -- about $1.60. He points out that, at a price like that, it becomes much easier for people to buy. With the prices today, he says there's simply too much of a mental transaction cost to determine if people are willing to pay the much higher amounts. Not surprisingly, others in the industry complained about his suggestion, first mocking him for presiding over Warner when the prices were so high (true, but that has nothing to do with what he thinks now) and then someone else tossing out the obligatory misunderstanding of the difference between price and value:"A piece of music is a valuable form of art. If you want the person to respect it and value it, it's got to cost them not a huge sum of money but a significant sum of money."Yeah, so that's not how value works, actually. And the problem, which Dickins appears to have figured out, but Jonathan Shalit who made the quote above has not, is that whether you like it or not (and whether it is legal or not), music today is already competing with free music online. So, it's not a question of "value," but of market prices.
Dickins seems to recognize the actual economics at play here, noting that by making albums so cheap, the number of sales would shoot way up, offsetting some of the price decline when it came to revenue and getting more people more interested in more acts, leading to greater revenue from alternative sources like concerts and merchandise. Of course, plenty of folks have been suggesting this same thing for years, but it's nice to see an "insider" get it, even if he's mocked by those who are still confused about these things.
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Filed Under: albums, music industry, pricing, rob dickins
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I never thought of it like this before, but it is of course the mental transaction cost. Song buyers aren't really getting fantastic savings either, but it feels like they are because the individual price tags are so low.
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But I'm just talking about the way a lot of things are declared "dead" nowadays, but it usually just means they are trending towards "specialty item" as the years go by.
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cheap albums
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Re: cheap albums
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at the current price there only getting X amount of money so reducing the price will get them so much less, the only way something like that could become the norm is if an artist or a small label does it and wins big.
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Commoditizing of a costless product.
Music has no *intrinsic* objective value. Any of us can live without it indefinitely. Its costs, even on some form of physical media, approach zero in a mass market. Therefore "price" has very little meaning; it's simply what they think, or find, the market can be gouged for.
Your notion of more interest in more acts for more "revenue" through concerts and logoed products fails to consider that any person's time is limited, and so is interest in junky "merchandise". That's going to place an upper limit on what you view as the potential benefits.
And the MBA focus on "revenue" and commodotizing music is a *big* part of what's wrong with the whole system.
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Re: Commoditizing of a costless product.
Actually, that's kind of the core of the new music business model: charge for that which is limited (time, physical goods) and not for that which is infinite (music)
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"Albums"
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Gaming is my main hobby, if we add all the games, consoles, and accessories I've bought over the last 15 years, you get ~$3000, which works out to an average of $200/year.
Movies and Music are secondary hobbies. I do not buy DVDs, and I rarely pirate movies. I watch anywhere from 5-10 movies in theatres a year when I was in highschool (i.e. when I was regularly watching the most movies). That's ~$150/year on movies if I take the higher estimate.
Over the last 5 years I've accumulated about 3500 mp3s, that's 700 mp3s per year on average. That means, at current prices, I'd be spending ~$700 (actually $1000 if you're using the new $1.29 price for many songs).
It's insane for a minor hobby to cost more than twice as much as my two main media based hobbies combined. Prices of songs would have to be at the very least 1/4 of what they are now to even seem somewhat worthwhile. For $2 per album (1/10 of the current price) I'd probably be buying all my music legally.
Even if there are people that'd still pirate at that price, it's probably better that the music industry get $70 a year from me rather than the $0 they're getting now.
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Several really big problems ....
2) Yeah the lead up to the eventual words ... "Now that ACTA has been signed we will see a reduction in the prices we all pay for digital media". Which everyone in the news media will cheer.
3) Ths US goverment (office of the president) pushing a socialist support the artists (record labels) tax on internet and cell phone access.
I could go on but its late here ...
Fun stuff speculating on the future
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My First thought
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This must be a busy time of year for you! ;-)
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This how we have been conditioned to think. How about we stop it?
In the games industry, Asian MMO's are nearly ALL free to play with micro-transactions supporting the game. This model is only now starting to make inroads in the west but people here DO tend to turn their noses up at some free products.
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Personally I like albums
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Music and value
I am on an island, with food, water, a shelter, but no music. Someone else is on a nearby island, no food, water, or shelter.
He's feeling very sorry for me - he has all the music. After all, who needs food, water, shelter, a job, or any of that trivial stuff, when you can play some music?
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lets see
5 cents for a label and 5 for a chinese made case.
20 cents
COST TO YOU
19.95 at walmart now....
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Re: lets see
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My take on the music industry.
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