Apple Fights to Hold 99-Cent Download Line - Los Angeles Times
Apple did consent to some changes in the latest round of contract negotiations, label executives who participated said. For instance, the computer company agreed to make technological changes that would allow labels to post music videos more quickly, and consented to continue variable pricing on full album downloads. Moreover, Apple agreed to improve the digital rights management software that makes it difficult for hackers to copy or post songs purchased on iTunes to Internet file-sharing networks.Universal Music Group, the world's largest record company, agreed with Apple that it was unwise to charge more than 99 cents for the most popular tunes.
"We want to get more people discovering and enjoying digital music and grow the marketplace," said Rio Caraeff, a Universal Music executive who helps oversee the company's digital strategies. "The wrong way to do that is to charge early adopters higher prices."
Others say that even if Apple permitted variable pricing, a sliding price scale would wreak havoc with music company's current accounting systems. Executives at some labels say it would take them as long as 12 months to develop necessary databases to sell songs at variable rates.
"It's really complicated to track royalties and copyrights and other payments for online sales unless everything costs the same amount," McGuire said. "And if you decide you're going to charge more for new songs, but once they're 18 months old they revert to the price for older songs, its complicated to track all of that."
I don't love the idea that FairPlay will somehow get more restrictive. Since I haven't had a catastrophic data loss, and since most of my iTunes library has been ripped from my CD collection—it's where 1994 went to die—it's been relatively transparent to me until now. Perhaps this is in reference to the multiple times FairPlay has been nullified by tools like SharpMusique, forcing Apple into a leapfrogging race against programmers reverse-engineering FairPlay.
With regard to variable pricing, I think there are two major reasons to stick with a universal pricepoint. First, it contributes to the simplicity of the customer experience. I can't back this up with numbers, but my guess is that very few people make variable value distinctions between new releases and back catalog. To a regular guy, a new release has value because it's new, he heard it on the radio, and it's been bouncing around his head all day. Back catalog has value because it's got "the classics," (at least in his mind). In any case, the yield-maximizing pricing sought by some labels (where new releases are more expensive than back catalog) might only serve to push more of the buying into the back catalog category (or, worse, into the free file sharing category). Flat pricing removes this extra element from the decision made by the buyer.
Moreover, I happen to agree that the labels asking for variable pricing are probably underestimating the difficulty and expense of creating sufficiently robust back-end systems to track things like pricing over time and royalty payments due. Ask any artist—it's notoriously difficult to get a straight answer on royalties owed out of a record label, and that's only partly due to outright greed; there's an element of sheer technical ineptitude, too.
