Jobs: Record labels 'getting greedy'

The music industry is considering higher prices for downloads, and that would be a big mistake, says Apple's chief.

The story "Jobs: Record labels 'getting greedy'" published September 20, 2005 at 8:43 AM is no longer available on CNET News.

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[ballssalty]

Wow Jobs ya think?

What took you so long to figure out the RIAA was greedy? First of all, digital downloads are already overpriced. It's cheaper to buy a physical CD used or on sale at a Best Buy or Circuit City than to buy one online.

This means you are paying more money for an inferior product that is compressed with no liner notes, photos or lyrics. Also don't forget to figure in the cost of your CD that you might use to burn your download. That's an additional $0.15 to $0.20 you have to add, and don't forget about ink and paper if you plan on making a booklet. Oh and then the cost of a jewel case to put the booklet in. Even more overpriced now.

Also, if you read the user community Real provided Rhapsody support board, you'll read horror story after horror story of people's purchases not downloading properly and the user having to waste one of three restore credits. Once all three are used up, that's it. Backing up the license is also problematic if you re-format and move to an entirely different computer and try to restore the license for your downloads.

The perfect price point would be $0.25 per track the way the system is now. Maybe upt to $0.49 but no higher. Unless the prices actually drop, I'll never purchase music online.

[Thrudheim]

Jobs' statement is significant

Jobs obviously knows the economics of the download market
and the greediness of the labels. As you state, that is not news.
The significance of his statement today is that he is willing to
wage a public battle with the labels over the pricing of
downloads.

It would be easy to negotiate this quietly and agree to the
demands of the record company executives. Apple owns no
music content, after all. Instead, Apple launched the iTunes
music store in Japan without having Sony-BMG on board. Looks
like the same thing will happen in Australia. Now, by making
the fight over pricing a public one, Jobs is throwing down the
gauntlet. This will surely make the Sony execs mad, but but
someone has to bring them back to reality.

[vanox]

Price Points

While downloading an entire CD can be more expensive than buying it at the store, not everyone is downloading the entire CD.

There are those (such as myself) that may only like 1 or 2 (maybe 3) songs on the album. I would much rather pay the $0.99, $1.98, or even $2.97 for just the songs I want.

If the record execs want to stop losing money, they should force quality versus quantity. I would buy a CD if I like 3/4 of the songs, but I won't buy it if I only like a few.

So for my situation, the $0.99 price point works out well.

[dinkelburt]

I'm going to have to agree

I've yet to buy any music online simply because I haven't found anyone selling music in a lossless format. A pricing model that would be attractive to me would have a lossless format at around $1 and then having a lossy format slightly less than that. Fun to dream anyway...

[SteveBarry687]

Record executives are "getting" greedy?

Almost everyone in the real world knows that record execs ARE greedy. They always have been. They may be "getting" greedier, but it is not anything new.

They were all busted for price gouging before. I guess they didn't learn their lesson.

Keep being greedy, keep having your product stolen. I don't personally use P2P, but I understand why people do.

I myself buy a CD, rip it, put it on my Zen Micro and put the CD away. That way my CDs only get played once and there isn't any DRM on my tracks. I can do whatever I want with them after that.

[herkamur]

Ripping your own CD's

> I myself buy a CD, rip it, put it on my Zen
> Micro and put the CD away. That way my CDs only
> get played once and there isn't any DRM on my
> tracks. I can do whatever I want with them
> after that.

Of course, the RIAA doesn't like that either. If they had their way you wouldn't be able to do this LEGAL activity either.

I actually do the same thing.

Additionally, I'm not adverse to downloading a digital version of a recording that I purchased on cassette tape either. I've already paid for the music and I'm certainly not going to pay for it again.

[unknown unknown]

There is not "getting" to it, they are greedy.(nt)

<EOM>

[lingsun]

Jobs is a hypocrite: labels want to lower prices of albums but Jobs says no

Jobs is a hypocrite: labels want to lower prices of albums but Jobs says no. Jobs is also the greedy one--Apple's board is loaded with those sympathetic to him. He gets way too much money.

[ricke8]

Where do you get your info....?

I have worked the in Record industry and still have many friends
and you saying they want to lower the cost of an album is incorrect.
The only way they would lower album cost is to take it from the
artist. A record contract is nothing but a 100 page document
explaining how the record company is going to screw the artist.

[lingsun]

"Greedy" is a cheap shot coming from a multi-millionaire

"Greedy" is a cheap shot coming from a multi-millionaire. Especially given how expensive iPods are. Apple sells 60gb iPods for $399 and he calls recording executives greedy?? What a hyprocrite!!

[spepper]

Jobs' grasp of the obvious

Jobs has a firm grasp of the obvious-- the RIAA is greedy-- DUH! A bit understated perhaps? Like saying "The Galactic Empire is a bit tough on Rebel Alliance members"? The RIAA, being controlled by Sith lords, IS the Supreme Evil in the galaxy-- if you don't believe it, just ask any of their lawyers-- they will tell you, through their stormtrooper helmet comm systems--

[skeptik]

I failed econ, but even I know...

Higher prices? I don't buy music online now because of restrictive DRM and exhorbinant prices... a compressed (inferior quality) download of music only (no packaging, etc) should not cost anywhere near the same price as a physical product. There is no product manufacture, no transportation, no retail space and so on.
The industry needs to go back and take economics 101. They seem to have the crazy idea that since the distribution of music has moved to a non-physical product with "higher perceived usage value" (whatever that's supposed to mean) that they should charge a higher price for the product, nevermind that it's an inferior product. In most industries, as technology makes it cheaper to manufacture and deliver a product the price to the consumer goes down... this encourages more users to adopt the product and purchase more. (For an example, look at the prices of DVD players and DVD movies.)

[Juster444]

Who benefits from $0.99 per song?

The consumer definitely benefits if iTunes maintains the $0.99 per song price level. The labels still make millions. Apple is the biggest winner because that price level keeps iPod sales very robust.

If the labels raise prices, everybody loses. Consumers pay more. Sales go down as piracy increases. Apple sells far fewer iPods.

But there's even a better way than maintaining the $0.99 price level. There's been some duscussion (by Leo Laporte of TWIT among others) of a study that concluded that the best price level is $0.05 per song. Some would initially laugh at such an idea, but it makes sense for everybody. Consumers can buy any amount of music for very little. The labels would end up making more because sales would skyrocket (without any increase in production costs) and piracy would pretty much go away. And Apple would sell boatloads more iPods, especially the 60GB versions.

Maybe $0.05 per song as not realistic, but what do you think would be the right price to make piracy almost nonexistent and for everybody to win big?

[montgomeryburns]

Apple does not profit from itunes music store sales

The price of $.99 is set by recording companies. Apple pays
them around $.975 per song, for the 'rights' to distribute the
music. This is what the labels charge. Apple actually loses
money selling music because of the high cost of licensing
combined with the cost of develpment and support of the itunes
software. However they in turn sell an enormous amount of
ipods because thats what works with their ever popular digital
music download service.

Buy music used; its cheaper, non-DRM crippled, and most
importantly, the money spent on used music doesn't end up in
the hands of recording companies and does not contribute to
the overpriced demand of 'new' and digital music.

[M C]

Labels DO NOT want to reduce album prices.

It's a smokescreen - labels say this, but they would reduce bargain-bin albums only, while further increasing the prices on new releases.

They've alread won the new-release battle vs. Apple: Jobs wanted $9.99 album prices, but the labels refused to make that a standard, and now many albums are as expensive as a sale-priced CD version! If the RIAA had agreed to hold to 9.99, online sales would be even higher now.

Yeah, trust the labels to make music cheaper for us - that'll work...