Something for Download Music Sites to consider.

I don't know if many of you have noticed but recently there has been an upshift in pricing of tracks at download music sites, such that we are seeing a lot more Digital Pre-Release stuff coming out which is fine but at hideous prices. TraxSource is definitely the worst at present at this disturbing new practice I'm calling "Price Jacking". A scan through their new releases a couple of days ago showing pre-release mixes going for as much as 4.99 - 6.99 per TRACK. Not the whole release just one Track!

Now today I was scanning through BeatPorts new releases and found Timo Maas new album up for pre-release sale and noticed the individual tracks are $2.99 each! The Album is $29.88! "I'm sorry Timo but as good as your album is "I AM NOT BUYING A DIGITAL COPY THAT WILL SOON ENOUGH BE AVAILABLE IN STORES FOR HALF THAT PRICE!"

What worries me more is the long term effect of pushing prices up like this is that we wind up with labels and services driving prices up to rival that of Vinyl.

It has always been my contention that once digital formats were widely adopted in a sector such as DJing that such a practice would be put in place. I'm picking we are seeing such a practice emerge.

BeatPort / TraxSource et al TAKE NOTE!!! I ain't playing that! I respect much of what you do, attempting to 'rape us at the pump' so to speak ain't gonna fly! You wanna kill yourselves at the expense of your customers while you make hideous short-term profits go ahead, expect P2P of your releases to thrive in your market space as result of you pricing yourself out of many DJ's markets. I don't condone it but face it you will drive some to do such.

Expect such excessive pricing to badly affect market uptake of digital DJing long Term, where DJ's simply won't move to digital because of the pricing disadvantages.

On a pure opinion level this to me once again shows the music industry preying on its consumers. For years there has been a bad taste on the mouth of consumers and total mistrust of the industry. These perceptions over time have been well-founded in some areas. Exploitation claims over time have been rife. This is in my opinion a continuation of that theme, given that the dance music scene is much smaller and much more dependent on the DJ's for survival, I simply don't understand this behavior. Face it, if DJ's don't buy your tunes because they can't afford them or refuse to buy them because of price Jacking who is going to buy them to play them? Joe average clubber mostly ain't coz he simply doesn't care enough to bother!

Stop the Price Jacking!

Got an opinion? Please voice it! I intend to send the link to the Support groups at the Download Services when we get a strong sense of peoples opinions be it good, bad, for, against whatever... Are you active in other forums where this may be an issue? Please spread the word and link to this thread if you can.

Phil

 

Timo Maas $29.88? for the aulbum? are you sure its not his entire collection? WTF?

 

Bravo, Phil!

A 33% price jump means I'll ultimately have to be even more selective when I purchase online. It's frustrating to choose a track based on a short audio sample, only to find the full track to play out like a dud. The least they could do is let you hear more of the track so buyers don't end up with as many unwanted purchases.

They may be charging a third more, but I'll definitely be cutting my purchases down by MORE than 33%.

 

I agree with you on this. I see hip hop albums on sale for £5 in shops that are being sold for up to double that for mp3 format. Surely the internet companies' costs are much lower for selling mp3 format, there being no physical storage costs or rent, so what is their excuse for trying on such high prices?

Mind you, on www.wippit.com they are basically offering most of Ninja Tune and Big Dada, and some of Grand Central and Low Life Record's catalogs for £50, at decent bitrates as well! That sort of thing, however, is a rarity, and presently the prices for mp3s, particularly in the UK, seems very unreasonable.

 

I totally agree. And while we're talking about it, I want to add something else.

I just spent $30 on Beatport. I buy music every week (something like 15 songs last week). Today, I was all set to add a new release off the Superstar label when I was greeted with a "territorial limitation". Basically the label only licenses releases to Europe.

Why would an internet based worldwide music store agree to deal with a label that would limit their distribution? Morons.

Apparently they (Beatport) use your IP to determine your country of origin. I was able to use a SOCKS proxy to get around this limitation, but the whole process was needless teeth-pulling.

Either don't deal with these labels at all, force them to a new distribution deal, or only pick up the release when other labels with wider distribution can cover the slack.

 

maybe they're just stupid enough to do this..
but dc++ is growing minute by minute..

 

dc++ wazzat then?


Ultimately the label look at things in the digital realm from the perspective that the value is in the music not the medium where they use just the opposite argument when reasoning why vinyl costs so much. The reasoning I would bet money on will see procies for tracks escalate to over $5.00 per item in 2-3 years if left unchecked. If we are silent and tolerant enough to allow them to do it they will. The labels have shown continued persistence to exploit the markets whenever and whereever they can. Take Single disk CD new releases in N.Z. $31.99-36.99 in U.S Dollars thats currently about $24-29
the Same CD sells here for $16-21. Given the premium placed on individual EDM tracks there appears to be plenty of room for exploitation, or what the music inductry calls 'market price alignment'.

The music industry for a while argued that properly managed digital distribution was the way to go because of the lower infrastructure costs. Interestingly the major players boycotted one 2002 music industry conference when one discssion paper announced was a round table on future pricing plan for digital media. the authors were worried about overcharging and the indistry refused to discuss the issue. Since that time they have been strangely silent on the matter but now that digital media has gained a wide acceptance it seems prices in some quarters are on the rise.

One industry watch paper I read a little while ago said the industry was already suggesting simplification of overall music pricing would be needed, in that digital pricing should be equal to physical pricing.

Estimates by opponents were that this would long term (5-10years) equate to an ongoing industry wide windfall of many 10's of billions per year in revenue. Apparently majors in the music industry support such as strategy saying it makes sense for consumers to know the same prices exist for both physical and digital delivery. They refuse comment on projected revenue enhancements... I wonder why...

End result as this becomes reality... you and I get f**ked and the pump. I'll leave you to draw appropriate parallels.
I'm all about everyone getting their dues out the digital delivery system but artist continue to be pillaged by every other leach in the long and tired chain and as predicted the music industry has managed to port their business model into the digital realm and is preparing the consumer gang bang as we speak... Once again they control the entire chain from start to finish and thus control pricing at every level. It could have been different but it isn't.

As loleatta said... 'Don't bend over you'll get the shock of your life'! The pisser about that is that its true and she probably didn't get paid for the use of it either. You can bet the labels did!

Phil

 

My 2 cents:

If tracks were all $0.50 then most people would not use P2P/Bittorrent..etc anymore.

I would say most people use other ways cuz $2.00 a track is insane when the CD is $10.00!!!

 

The problem with .50 cents per track is that there may not be sufficient revenue generated by a tracks sales to support the infrastructure needed to get it to consumers in digital form. However at $2.00 and more, the consumer is in my opinion being exploited.

The cost per track relative to a full CD far exceeds the cost of a physical album shipment.

Apple sometime ago by their own admission said at .99cents per track they don't make money. Sometime shortly after when earning announcements came out, showed (albeit unclearly) that iTunes was a successful revenue model. You can bet these days the likes of Napster iTunes et al are not pricing tracks to make a loss. I can accept there is a higher cost associated with dance tunes I cannot accept it is 300% of regular mass release stuff. Show me numbers to prove otherwise might lead me to conclude otherwise, I doubt those numbers exist.

I was hoping with the emergence of BeatPort, TraxSource, et al they would be good stewards for dance music. However it appears greed is ruling the day. Its same old thing of days gone by.... <ggrrr> and that just pisses me off.

Phil

 

It seems so nonsensical though, buying a CD just to burn the tracks onto your computer and (in x number of cases) discarding it into your loft or corner of your room, dosen't it!?
Aahh. the inefficiency of capitalism...

 

what someone large and with the push to do it needs to do, is to start a music search engine that actually works and is very specific and lets you compare prices. that would rule. like go to google and click a button and type in the track name and get the cheapest on up to the most exspensive. if there was any price gouging goin on then if that service was implemented right then almost immediately there would be a more fair market for this form of commerce and everyone would keep thier prices as low as possible.

i also dont see how any of the huge ones could say they dont make money. im summing this up greatly, but they arent moving a actual item. a artist could send them 1 cd and the company rips it onto the servers in numerous ways and thats it. 400000 people could download it im sure and all it began with was 1 cd. kinda scary now that i think about it. sounds like great potential for someone to get F ed in the A by the man. . .

 

i know i haven't posted before so please don't cut me a new one for jumping in here... i appreciate all your points but i would like to add something things to consider:

1) most of the major download sellers (e.g. itunes) do not make money on the music they sell, they make it in other ways. in apple's case it's the ipods. there has been talk as of late that napster is in trouble - or soon will be - since it is a pure download player (i.e. it has no alternate revenue stream). basically, it's the ol' razor/razor blades story.

2) the basic rule of thumb in prining something is "price what the market can bear" and also "something is only worth what someone else is willing to pay for it".

3) like it or not, with digital as a format DJing now becomes a commodity - much like the music itself (see point #1. apple doesn't care about music, it's ipods they wanna sell). so now any DJ anywhere can pretty much have the same tunes you have. no more "i got to the store first and got the last one". no more "it's no longer being pressed". none of those "limitations" of vinyl. however, it should be noted that those same limitations is one of the factors between a great DJ who hustles for his/her tunes and a more casual/lazy/slow ones. so now how does a DJ compete? it's easy! and we all know the saying... "the difference between men and boyz is the price of their toys".

4) did i mention the "law" of supply and demand kinda factors in here as well.

5) not sure if this is common knowledge but in a consignment situation - which is what a DL site is - the site only gets 40% of the net (after expenses are charged back to the label). ok, you're thinking "wow, 40%!!!" but when it's of $1.50 (probably less) that don't exactly buy daddy a new pair of shoes

so basically, what you are seeing is a very natural extention of this niche of the DL industry. low profit/low margin items must be made up for in some way. and while you're looking at that as "price jacking" it's really just someone's assessment as to what they might be able to get, and hopefully make up for some of the slimmer margin items. it's supply and demand. (and please don't be offended but) it's the men saying "i'll take it. i need it" and the boyz stepping away from the table. unfortunate as it sounds, there's not much you can do to fight such natural and well established market forces.

with that said, i am not defending anyone - i'm just trying to shed some light on this matter and hopefully help in some way. cause as i see it, it's going to get worse (i.e. labels and sites being able to make money at $1.50 or so per item) before it gets better. oddly enuff, it's the hardware/software manufactures who are making out here. they are the ipods/razor blades of the "dance music" industry.

thanks for listening
mark "spike" simchock
ruthless ruler
planet x

 

and please allow me to add...

phil sez "who is going to buy them to play them? Joe average clubber mostly ain't coz he simply doesn't care enough to bother". this brings up another good point - and it's actually the bottom line (no pun intended). the music being made right now, by what is the best technology ever available, is meaningless if no one is willing to pay for it. if joe/jane public isn't interested then there is some VERY wrong. i mean, it sounds to me as if some of your are barely interested. i honestly don't think the issue here is price as much as getting something worth paying for. prior to digital an import single was about $10 and most/all gladly forked that over for just one good mix. not the tunes are about 15-20% of that and less and less people care. we don't need cheaper music - we need better music that is worth of the investment. whatever the price. can i get an "amen""?

 

Spike, I agree...the quality of music has decreased over the 18 years I've been buying vinyl. Back in my fledgling DJ days, I'd literally spend my entire paycheck on 12"s. In the first third of my vinyl buying existence, I would buy literally 35% of all the vinyl I listened to in vinyl shops. As the amount of material expanded in my 2nd third, of course I could not afford it all (damn if i didn't try). I was down to about 10%, but my desire was only for about 20%. No longer did I have to have it all. There was just a large portion of the selection that just didn't excite me or I plain just didn't like. I'd sample the vinyl in the vinyl shop & the music wouldn't change one bit. I was thinking...I can do that.

So, that became my mantra...if I thought I could easily replicate it, I didn't buy it. I had to filter out all the crap somehow. Anyway, that brings me to the last third where I buy less than 3% of what I listen to. Has my taste over time changed? Sure. Have my standards raised? Sure. Do I still spend the same amount of money every month on vinyl? For the most part...yes. All that being true, I can go back into the history of my vinyl collection and still gain enjoyment from say >70% of it. What that says is that if I were to analyse the history of my vinyl buying adjusted for my taste & standards of today, then there was still a higher percentage of good tracks overall back then.

The bottom line is that the percentage of good music has dramatically decreased over time and thus the ammount of money people are willing to pay has decreased. If the tracks out there were slammin', then I wouldn't mind spending a bit more loot. On the other hand, $30 for a digital release doesn't make sense. There has to be some sort of middle ground here.

 

"The music business is a cruel and shallow money trench, a long plastic
hallway where thieves & pimps run free, and good men die like dogs.
There's also a negative side."

--the late Hunter S. Thompson 1967

These people are Greedy Scumbags!

 

Big Amen!

 

@PX You make some good point there is no reason you should be flamed for your comments, challenged certainly, flamed, no.

Hmmm... True enough, that Apples initial claim was that they did not make money in selling music and they trotted out their math to support the claim that it was, and still is, iPod sales they were really after. Impressive looking stuff but some economists of the moment poked some small holes in their claims. 6 months later when reporting financial results the veracity of those initial claims came into question by some who took the numbers they learned and applied it to the Apple supplied model of the past and found there was indeed money in them thar bits.. A lot of water has passed under the bridge since then, as well as demands on corporations to return a profit from their business ventures. No doubt about it the Napster and others revenue model leaves them exposed by the lack the market breadth to do well in the established digital download market.

Once again true enough. But if someone isn't willing to buy it at the price point demanded what other mechanism will be used to obtain it? Sensiblily priced music will significantly reduce the demand and need for non traditional (non purchased) procurement. If you drive prices to approach or match phyically shipping units sold, you will I suspect not just provide fuel for the fire, but will be throwing the entire tanker truck on the P2P fire.

I can tell you for a fact $2.99 per track for (10 mins of music in a single song) reduces my willigness to invest in online music sales. If I'm making that statement publicly then you can bet that the silent majority which by industry estimates account for 70+ % of the online market force will be doing the same, but will not be speaking up to voice their opinion.

You just did.. but what you failed to point is that the conventional laws supply and demand do not apply here. That the conventional model the supply is limited, the demand is not. In the internet delivery model where bits and bytes are delivered, supply restrictions are substantially removed. In the conventional sales cycle, a limited number of physical units are created, where the product is good enough, demand for the unit will drive prices higher, especially the case if supplies are indeed limited, as is traditionally the case with small volume Dance music tracks. On the internet, no such limitation occurs and indeed to enforce one goes counter to an artist's and label's desire to be be successful. It is totally ludicrous to consider that labels and artists would tolerate such a sales restriction on digital sales in order to drive market prices higher.

Given that no such restriction exists and given that Beatport et al entered the market as a small cap orgianization with the intent to be profitable early (indeed ,were I to be a capital investor in such a venture, it would be a requirement prior to investing), one should conclude the initial pricing was such that some profits were obtained at or shortly after day one. To my knowledge no dance music download deal has signed a revenue agreement with hardware vendors to bundle MP3 players with their software download service.

So given we have increased demand but no change in the supply - you yourself said "so now any DJ anywhere can pretty much have the same tunes you have..." how do we justify 33%-300% jumps in pricing over just 3-4months.
How do we as cunsumers reconcile being charged nearly $30.00 for an album that lists on Tower records website today for $15.99. In answer to another question, would I bother saving 14.00 dollars by buying a physical unit and ripping it myself? Hell YES I would!

This kind of price Jacking is especially egregous when you consider that by economists estimates the COST of digital delivery for a single dance record is around 27% of that of a physical unit. If you consider that the builk of the intrinsic cash value of a record is in the physical medium, then why is that we see such pricing for digital delivery as is currently emerging. If you consider that the bulk of the intrinsic value being in the music itself then why do we see such significant price premiums being placed on physical units?
You cannot have this argument both ways.

Very True... BUT consider what actual costs charged back are, and how much they make up of the $1.50 Lets do a breakdown and lets first consider that Beatport et al are NOT doing this to make a loss per unit sold.
lets assume chargebacks account for 25% of the sale price. Chargeback = ~.37cents
DL Service fee is 40% of sale price ~.60cents
Allow .10 cents per track in other costs and you have a total of $1.07
Since this is consignment, the DL service pays nothing until the track sells, but it does have cost of operation which is paid out of the 40%+Chargeback! The labels are left with 43 cents per track of the $1.50 total.
Does not look like much until you factor in download volume... Lets say for a hit track maybe 3,000 downloads per week worldwide. Do some multiplication on this one track and your shoes look to be gold plated. Do some division into the number of physical items sold over the same period and the costs look to be well covered.

Now here is where perpective comes in. If your expectation of margin is the same physical cost per unit sold, then the reduced costs associated with digital delivery make it VERY very appealing for the music industry as a whole to go after the dollars.
For Example if a record sells for $10.00 and cost of goods is $5.00 then you have $5.00 profit = 50%
The music industry, when discussing digital delivery has shied away from track % value discussions because they like saying physical & digital delivery are analogs because ultimately the user has music to play.
Therefore the idea of charging $10.00 for the same track can be entertained and considering cost for a digital track by industry estimates is about 25% that of a physical item that sees an (underestimated in my opinion) improvement in margin of ~25%. It funny that at his point the industry discussions will turn from one of the units being equally valued to one of percentages.... Once again you cannot have it both ways

Yes but its artificially contrained supply & demand. The retailers would like you to believe the notion that there are supply limitations (which in fact do not exist) thereby justifying that prices can be escalated.
It is only supply and demand in the sense of what we are willing to pay for. Like the oil companies the music industry will where allowed, escalate prices to identify and exploit price boundaries.

There are things that will occur as a natural consequence, shrinking sales is one, piracy / illegal distribution is another.
There are a number of things consumer can / will do. Its unclear at present at what point in the escalation process it will occur.

interesting and valid comments, I appreciate your insights! One wonders though, do you sell the razors or the razorblades?

Phil

 

I love this quote! It is so true.

 

the state of new york just busted sony and others in a payola scheme. these people got caught installing software that would erase the harddrives of customers they felt were trying to seal their music. these people steal from their own artist (see prince, billy joel,george michale, paul simon) and countless others. when you buy an album or cd it's not yours they lease the music to you, you don't own it. read the fine print. they want to make any kind of file shareing ilegal. so that they can control the download market and charge you what they want it's all about the money. it's not about supply and demand it's about bending you over and useing ben gay as a lubicant.
end of my music industry rant!
julio

 

hi, i know something very underground called http://www.martialfunk.com ,there is some hot stuffz on it!