Here are a few excerpts from a recent article in the International Herald:
“At 99 cents, it’s difficult for all of us to make a decent living,” he conceded, but added, “It’s a fair way to begin the business.”
“The way this business is structured at the moment,” said Christophe Cuvillier, vice president for development at FNAC, the leading French music retailer and the operator of its own digital music store, “there’s no way today to make money.”
Thomas Hesse, president of the global digital business group for Sony BMG Music Entertainment, called it “an introductory offer.”
“In the longer term, we believe music is worth more. And we should resist the temptation to price music down to zero just because we’re competing with free,” said Hesse, underscoring the position of the major music content owners.
“Is that the right price point?” Conte asked rhetorically. “It’s a stake in the ground. It will find its own level.”
Several executives said they wanted to move consumers toward signing up for monthly subscriptions that let them download music selections at will or “stream” songs like a radio station over their Internet connection.
“It’s the difference between pay-per-view and basic cable television,” said Dan Sheeran, senior vice president for international operations at RealNetworks, whose Rhapsody service operates on a subscription model. “We have done a lot of pricing studies. They spend more money using subscriptions.”
Pretty bold statements for an industry that is being crippled by digital innovation. Obviously these executives still believe that their High Street sales cash cow is sustainable. I can’t believe they are even considering making music even *more* expensive.
Digital music sales have no manufacture, wrapping, shipping, stocking, inventory, retail, costs, etc. Period. If the record labels have been making money all this time selling CDs in stores at $15.99, then with no cost associated with the delivery of their product, they should be making profit at $9.99 on the iTunes music store.
I expect music to be *cheaper* digitally. If it isn’t cheaper, then I prefer the shrink-wrapped jewel box with my music, thank you.
I will say it again, like many others have, LOWER THE PRICE TO $0.50 for online music. The flood gates will open, and all those “lost sales” to “piracy” will turn into sales. The peer to peer networks will disappear. Kill the store distribution, eliminate the channel conflict.
The music industry needs a serious restructuring, and it means loosening the death grip the monopolist-inspired music industry has on pricing. Every time I read comments like those above, it literally makes me want to steal music.
(And they call us “Vulture Capitalists”…I would say VCs pale beside music industry execuitives.)