Duh. We’ve only been saying this for 2+ years: reduce the price of digital music and they will come. The online music downoad services are competing with free – no matter how many people the RIAA sues, free is not going to go away. BUT there are real COSTS to file sharing: spyware, corrupted files, unreliable titling, spoofed files (thanks RIAA), questionable karma, etc.
Steven Levy spots an apt analogy:
- As residents of the Gulf Coast were reminded last week, there’s no turning away nature. You can’t pass a law that snuffs a hurricane at the border. You can’t sue it. You’ve got to understand it, and make the right plans to deal with it. Technology generates its own form of nature, a set of conditions that enforce an artificial, yet equally unstoppable, reality. With the Internet, fast computers, cheap storage and high bandwidth, it’s now just a fact that digital files—be they documents, images or Hoobastank tunes—can be sped through the ether with ease, a phenomenon no easier to halt than a storm surge.
That’s why it’s so fascinating to watch the music industry’s efforts to claim some high ground in its fight against piracy. For the longest time, the labels viewed digital music as something that could hurt them with hurricane force but made no efforts to adjust to this new reality, let alone exploit it. Finally, they were persuaded to license their works to online music sellers. Apple’s iTunes Store, which sells songs for 99 cents a shot, became a template for a mini-industry that clearly represents the future of music. Microsoft opened its own long-awaited online outlet earlier this month. And just last week Yahoo dropped $160 million to buy Musicmatch and its store.
This summer provided a clue to further harnessing the force of digital nature. For three weeks, Real Networks tried to lure new customers by slashing prices to 49 cents a song and $4.99 per album. Since Real paid the full royalty load to the labels (almost 70 cents a tune), the company lost money on every transaction. CEO Rob Glaser says that the company did get new customers, but here’s the real news: Real sold six times as much music and took in three times as much money.
….Lower prices won’t happen unless labels and artists agree to smaller royalty fees per song. But this version of the Monty Hall Problem isn’t too tough to crack. Behind Door One is the money you can make by selling a million copies of a tune. Behind the other door is the money to be reaped by selling 6 million copies at half the price. Do the math, guys!
What’s more, the benefits of low price and wider distribution don’t stop there. When you’ve got more people buying music, you grow your fan base and encourage experimentation. And the lower prices go, the less reason there is to get pirated songs.
….It’s a fact of nature: the best way to serve music lovers, as well as the most effective method to curtail piracy, is to go cheap and sell tons of songs. If the moguls don’t see this, they’re as deep in denial as those stubborn souls who refuse to evacuate shoreline bungalows in the path of a Category 5. [Newsweek]