Apple may have won — but is that good?

by Mathew on April 24, 2006

According to a recent piece in the New York Post, Apple founder and CEO Steve Jobs — now also known as the King of Digital Music — is close to winning his battle against the four major record labels, a battle he has been fighting for the past year or so. On the face of it, the issue is fairly simple: Steve wants to keep prices fixed at 99 cents per song, and the record labels want variable pricing. The reality is a little more complicated.

The natural assumption is that the big bad record labels want to push prices up and gouge the consumer even further — and let’s face it, that’s not exactly a stretch, given their history of that kind of thing. But is having Apple fix the prices at 99 cents a song any better? Sure, there are other music services, such as Rhapsody and eMusice and… well, I can’t think of any other ones (except my favourite, allofmp3.com). Setting the prices becomes a different thing when you control as large a proportion of the market as Apple.

Fighting the labels on variable pricing keeps prices of new songs at 99 cents, and therefore prevents the record companies from charging more for their big hits — but it also keeps prices of older songs at 99 cents, when the record companies might like to (and arguably should be able to) price them lower so they can make some money from their “back catalogue” — although some argue they have no intention of doing this.

So is keeping prices fixed at 99 cents a good thing? It is for Apple, but I’m not so sure it is for you or me (Chris “Long Tail” Anderson isn’t sure either). Obviously, a retailer can charge whatever they want for something and consumers are free to go somewhere else — I’m just not sure Steve should be getting all the high fives for digging in his heels on this one.

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