Pearlman added that nothing concrete is in the works with Apple beyond talks, and he has not yet spoken with Google. Still, Apple is listening, and this is the company that has already changed the industry by creating, many believe, the best working model for on-line downloading services.
Pearlman argued that his plan isn't a revolt against the industry. It's merely a pricing decision. Apple should simply be charging 5 cents instead of 99 cents a song, he said. This would bring in millions upon millions of more customers. And he believes that the best place to test this would be in Canada, which has laws he regards as being more supportive of artists and accommodating to an initiative such as this.
Yet, Pearlman went further. He said that since this plan puts the onus on a massive Internet presence to distribute all the music in the world, why not have such computer companies as Apple and such major Internet companies as Yahoo simply buy up the world's four major record labels? Pearlman was careful to add, though, that he doesn't see his plan killing off demand for CDs.
The recording industry is against Pearlman's plan. Richard Pfohl, general council for the Canadian Recording Industry Association, refuted Pearlman on numerous points at the conference forum, arguing that the plan would violate every international intellectual property law that Canada has signed in the last 100 years. It would also obliterate musicians' choices on how their music could be sold by conscripting them into a 5-cents-a-song system. And it would destroy record companies' incentive to invest in new acts, Pfohl said.
Pearlman said that Pfohl misunderstood the idea. Then again, another record-industry type, casually speaking to Pearlman after the talk, had perhaps the most succinct counter suggestion. Why not charge 10 cents, instead of 5, and double the revenue?
http://trinimansblog.blogspot.com/
Article comments
1 - Aaman
Interesting approach - any kind of creative solution has to be considered equitably if it means a way out of the current mess of IP torts.
This model can be applied somewhat more easily by using a radio license sort of blanket fee - charged as part of the ISP fees, perhaps, with an opt-out. Actually, that is what the Rhapsody model is really, at a higher price level since there is little competition. So nothing new here, really.
At the same time, Pearlman's idea of the major computer companies buying up the labels is foolhardy and not a solution to this problem - there is no reason to believe that the change of ownership will make any difference to the corporate policy. IT companies are strong protectors of IP (and TCP too:) ), and their own business model depends on it. What they are good at, though, is using innovative and easy licensing models to make money and still enable usage of their products, unlike the music industry - licensing models like shareware, freeware, and even adware can be borrowed by other industries to great benefit.
2 - JR
I thought "Burnin' For You" was produced by Martin Birch.
3 - Triniman
Yes, you're correct. Martin Birch produced 1981's Fire of Unknown Origin which contained Burnin' For You.
4 - Eric Olsen
I have said all along that somewhere around 5-10 cents ($1-2 per album) per song is the price point that would begin to feel like "free" and therefore remove the incentive for file sharing, with its numerous downsides (digital and spiritual). Downloaded songs are not the same as recorded music on a physical medium and should not be priced the same or anywhere near it. The point is to go for volume, to make it as painless as possible, and everyone benefits.
Very important story - thanks T-man!
5 - sean
I give credit to Pearlman for taking a proactive approach here. At least his business plan does not include suing his potential customers to teach them a lesson as its centerpiece
6 - Tre
Guys, I have a fever, and the only cure is MORE COWBELLS!!
7 - Victor Plenty
Doubling from 5 to 10 cents won't double revenue. Not on a luxury item like downloaded music, where every penny of price increase will decrease your customer base by a significant number.
The ideal for the music industry is to charge $2-$3 per song to everybody who will pay that much (buying 10 song new release CDs costing 20-30 dollars), while also charging $1 per song to everybody who will pay that much for the convenience of iTunes, and selling still more bits at $0.69/song (or whatever) to people who end up at Yahoo or Napster or Rhapsody or the other vendors less sexy than iTunes.
Every economist knows revenue is maximized if you can make price levels curve to follow the demand curve. Trouble is, in most businesses that's impossible to do perfectly. But maybe the Internet will make it possible.
I'm sure the record industry wouldn't mind collecting a nickel a song from everybody on the file sharing networks, if they can figure out a way to do it without losing their revenue from CDs and iTunes and elsewhere. But most of them will never publicly admit that, because revealing such ideas defeats the whole purpose of milking customers for as much as they're willing to pay.