Navigating digital-music pricing wars

Labels trying to figure out if simple, single-price model is best, or if variable-price or other models should prevail.

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[lwvirden]

"cost nothing to produce"

While it is true that Apple pays nothing to produce the song, one should not assume that prices are being "pulled out of the air", as if there were no costs that need to be recovered here.

The music resides on disk drives, which are connected to computers, all of which run on electricity and are accessible by internet, all of which have backup, all of which are run by humans, and so there are a lot of costs involved. And of course, Apple continues to put work into bug fixes and enhancements, new features, licensing fees with artists and record companies, etc. all of which costs money. So let's give Apple a break here. If someone doesn't like the current Apple price, let's see them do it for cheaper, and if their interface, pricing, service, etc. are competitive, then great - bring them on.

[skeptik]

how to screw our customers more?

Fixed prices are never a good solution. But given the very documentable greed on the part of the content companies, I think consumers would be extremely foolish to adopt a variable price model at this time. I guarantee that the amount of money spent on creating a complete collection would increase, not decrease for nearly every consumer.
Notice we are not talking about how to create better value for the consumer to increase sales. We are talking about how to increase profits now that people have started paying for their downloads.
Nobody seems to be denying that the .99 price is based on CD cost bought in a retail store. But how is this a viable pricing model? The cost to deliver a song to a consumer via download vs B+M store is exponentially cheaper, even considering the costs mentioned by the previous poster (very minimal to run the web service, sorry buddy). Couple that with the large decrease in value of a download vs physical CD (reduced quality, temporal nature of license, lack of physical product and accompanying packaging, and so on) and you get a clear screwing of the consumer.
But as long as people are foolish enough to pay these prices, they will be charged... and that's certainly fair under the capitalistic model.