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August 30, 2005
They Shoot Emerging Markets, Don't They?
Marty Schwimmer @ Between Lawyers, in a post categorized under "Anger":
I loved iTunes and I thought iTunes loved me.
But then I wanted to buy the song BREATHE ME (the song from the death montage from Six Feet Under), and iTunes told me that I couldn't unless I bought twelve other songs I didn't want.
Darling, our first fight.
Maximizing every short-term advantage may not be the best long-term strategy. [emphasis added]
For more on that last point, check out SharkJumping's Music Label Unhappiness with ITunes - a Price Elasticity Debate
, a post responding to the fracas
between Apple and the record labels over raising prices in the infant market for online music:
The core disagreement is that labels feel that flat rate pricing doesn't capture enough margin for those hot tracks where users would pay more. Numerous studies will be trotted out, showing that consumers will pay up to $2-3 for hot singles, so the labels are giving up substantial margin by wholesaling all tracks at $.70-75...I have no doubt that if you picked one hot track, and polled users in isolation to ask them if they would pay more than $.99 for that track, many would tell you yes. But the studies show that when you measure behavior across a longer period of time, everyone is better off with lower prices for music downloads, with $.50 being actually the magic number, especially for a business which has NO hard cost of goods outside of artist royalties, which are almost never on a fixed basis so they will decrease with the price.
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