BizzyBlog Encore Post and Update: Music Industry, In a Hole, Still Wants to Keep Digging

Reason for Encore Post–Fresh from a legal victory over Kazaa, the recording industry (read: the music cartel) feels they can put the squeeze on their digital customers:

PARIS (Reuters) - Apple boss Steve Jobs, the man behind the popular iPod digital music player, called the music industry greedy for considering a hike in the price of digital downloads, warning such a move would drive users back to piracy.

I suggested that a price hike was a dumb idea six months ago. It’s still a dumb idea.
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ORIGINAL POST (Feb. 28):
Music Industry, In a Hole, Keeps Digging

ORIGINAL TEXT:

The music biz gets about 65 cents out of each 99-cent download, but that’s not enough:

NEW YORK (CNN/Money) - Just as legal music downloading is taking off in earnest, the major record labels are in talks to raise the price they charge online retailers for song downloads, a newspaper reported Monday

This wouldn’t be the first time the music biz ignored reality. Illegal downloading caught on because for years music executives stubbornly refused to even consider the idea of making music available digitally. When they finally did, the sites they built were anything but consumer-friendly. Apple, Roxio, and others spent millions and solved their problem, and this is what they get?

They can run their business any way they want, but raising prices is a really bad idea for a lot of reasons:

• 99 cents is a significant psychological barrier. Forcing Apple and others to raise the retail price to $1.19 per song (a 20% hike) would reduce demand by a lot more than 20%.
• The acts hurt the most would be those in the second-tier. Britney and Hilary Duff will get theirs; buyers will be less likely to take a chance on lesser-known artists.
• The industry makes plently of money on downloads, probably MORE than they make on CDs. A quick visit to Amazon shows me that a typical 12-15 song CD costs $14-$15, or just over $1 a song. There has to be a lot less than 65 cents a song left by the time you take out the material cost of the CD, duplication, packaging, shipping, the distributor’s cut, and the retailer’s cut–let alone having to deal with returns, product placement fees, and the other hassles inherent in retail.
• If prices go too high, turned-off customers will go the illegal route. Though they’ll try, the industry can’t sue everybody.
• The future is in downloads. Apple alone has sold over 250 million downloads (UPDATE: At an early September conference, Jobs announced that the figure is over 500 million, and that the download rate is over 1.8 million songs a day–Ed.). CDs are so 20th century. I for one will never buy packaged music again. Period.

Note to ignoramus artists who haven’t joined the digital age–If I can’t download it, I must not need it.
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UPDATE: A question: Now that anyone with time and a little talent can compose, publish, and mass-produce complete musical scores from scratch using more musical instruments and sounds than I even knew existed, will we even need a music industry cartel 10 years from now? Roger Simon also has the same question with movies and the big studios, but isn’t convinced that the results will be desirable.