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A First Pass And Look At iTunes Variable Pricing
April 17, 2009
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"On Wednesday, one day after the price increase, the iTunes Top 100 chart had 40 songs priced at $1.29 and 60 with the original $0.99 price point. The $1.29 songs lost an average of 5.3 places on the chart while the $0.99 songs gained an average of 2.5 chart positions ... A similar trend was seen the following day. The 53 songs priced at $0.99 rose an average of 1.66 places on the chart; 24 rose on the chart, 18 dropped and 11 remained even. The 47 songs priced at $1.29 lost an average of two chart positions."
-- From "iTunes Price Changes Hurt Some Rankings" on billboard.biz.
It might seem silly to try and assess what effect the new variable prices on Apples iTunes store might be having after such a short time. I myself thought so, but then I found over 2.7 million results on a Google search for 'Higher prices on iTunes result in...' It's obvious a lot of people are writing and talking about it, so I thought I'd chime in as well.
The majority of the articles on the new pricing say the higher pricing has resulted in more revenues, but fewer songs sold.
It's my opinion that nobody has done a better job of getting people to BUY music online than Steve Jobs and iTunes, and I've said that repeatedly in the newsletter. Six billion songs sold means six billion less stolen. Six billion songs sold means a whole lot of checks went out to artists, labels and others, who would have received nothing had people just stolen that music online.
So while higher prices might increase revenues (temporarily anyway), if less songs are being sold, shouldn't someone ask, "Are the people buying less and now possibly stealing more again?" Maybe it's too soon to answer that question, but if the trend continues, then you do the math. I, for one, certainly don't believe the public's consumption of music is any less that what it was when songs were priced at 99 cents.
Analysts can slice and dice the results all they want, and I've seen enough analysts slice and dice data to get the kind of results their bosses want when they do their Excel spreadsheets. But the fact remains, and it's not one you can put into any spreadsheets when trying to justify price increases, that people can still steal music online in big numbers. No, make that gargantuan numbers. The last thing I think anybody in the industry wants is for people who were BUYING music online to start stealing it again in big numbers.
If this trend continues (increased revenues while unit sales decrease online), can we then expect labels will increase CD prices as well? CD sales are decreasing year over year, wouldn't a price increase result in higher revenues and less units sold?
I seriously doubt anybody at any label is thinking along those lines, but that's exactly the type of thinking being applied to variable pricing on iTunes and other online stores.
The strategy at this point and place in time should be to keep people in the habit of BUYING music in BIG numbers at a price they perceive as worth it to buy music at all in the first place.
A decade-plus of the ability to steal anything they want online (including the entire Beatles catalog ... anybody out there at EMI or representing the Beatles listening?) has certainly devalued music in the consumers' eyes. Like it or not, that's the truth and yes, it's hard to swallow. So drink whatever it is you're drinking in big gulps, label people, and get that all down, because nothing is going to change that fact, and certainly higher prices at iTunes and elsewhere aren't going to do a thing in the long run to solve the problems of the big dollars CDs used to generate for every label's bottom line.
A study of price increases on almost any product in any industry will almost always show that in the long run, that the competition will always beat it down with lower prices on the same items. In this economy, is there anything anywhere going up in price? Houses are at then lowest price levels in a decade plus, automobile pricing and financing is down dramatically, furniture stores are offering their lowest prices in over a decade, electronics manufacturers are dropping prices on every flat-screen TV they make, cable and satellite companies are lowering prices, restaurants are doing two-for-ones, hotels are selling rooms at rates lower than they have since 9/11, DVD sales are at their lowest levels ever and prices are being reduced to move inventory out there, and so on and so and scooby-dooby-dooby.
So, is raising the price of online music at this time really a smart move? The only two companies I hear about making big profits every month are McDonald's and Wal-Mart. They both offer everyday low prices. People have rethought their monthly budgets out of necessity and are changing buying habits daily.
The labels should be VERY careful what they wish for in this variable pricing scheme.
Last week I ran this quote from Michael Nash, executive vice president, digital strategy and business development, for Warner Music Group, and I think it's worth repeating again this week: "There is a multi-trillion dollar economy of digital connectivity, made up of digital networks, wireless, broadband and hardware. Music is extremely important to this economy and the driver for a wide range of larger industries. These industries are thinking about how to partner with the music industry in new ways. The health of the music industry is going to contribute significantly to the health of this trillion-dollar economy."
Mr. Nash is spot on. It's time now for those in the music industry to create the revenue streams for the "multi-trillion dollar economy of digital connectivity" and stop worrying about getting more money in the short-term from the sales of online songs. That's myopic thinking in a world where 20/20 vision is needed for the future.
THE 'A-SIDE' - TRACK 2
THE STATE OF COUNTRY
"That's what music is entertainment. The more you put yourself into it, the more of you comes out in it." -- Kurt Cobain
A look at the Top 50 albums on Billboard's Top 200 Album Charts reveals that 12 of them (24%) are by artists from Nashville, or signed to labels' Nashville divisions. Those artists combined sold almost 800,00- plus units his week as well.
This week, the new Rascal Flatts (these guys are from Columbus, OH) album, "Unstoppable," debuted at #1 on the chart with sales of over 355,000-plus. It beat out the #2 album (Hannah Montana soundtrack) by over 160,000 units, and by the #3 album (Jadakiss) by 200,000-plus. Not bad for the Flatts at all. But of course, their last album did sell four million-plus. And the one before that ("Me And My Gang") sold five million-plus. Add that to the sales of their first two albums and you've got over 10 million units sold. (And several million plus selling songs as well)
I'm not going to go into all the multi-platinum Country success stories on the charts (Taylor Swift, Carrie Underwood, Keith Urban, Sugarland, etc.), but I thought it interesting to note that 40% of the Top 10 this week are Country.
While Britney, Kanye, Flo Rida, T.I., and a whole bunch of other names seem to be everywhere on the tabloid TV shows weekly (and online as well), it's good to know that a whole lot of people are still buying great SONGS by great artists who are delivering consistently with each and every release.
Right now, while the music industry is facing challenges from every side, I'm quite sure every label is thankful they've got good people in Nashville.
THE 'A-SIDE' - TRACK 3
THE NAB FIGHTS BACK
While the labels and many artists fight for performance royalties from broadcast radio, the NAB (National Association of Broadcasters) has started its own campaign against those efforts and launched a website called 'No Performance Tax' at www.noperformancetax.org
From the website's home page: "Local radio stations provide billions of dollars in promotional value to artists and record labels. In appreciation, the record labels bestow upon radio stations "gold" and "platinum" albums to show their gratitude. So why do labels now want to "tax" radio for playing music -- a practice that has put money in their pockets for more than 80 years?"
The website is filled with info and answers lots of questions about the issue, and if you think the performance royalty idea is a good one, you should read what the results might be if the legislation does eventually pass. As the facts state on the website, "the free music that radio plays provides free promotion to the record labels and artists -- between $1.5 to $2.4 billion annually."
"This is a multifaceted resource that our members can use to educate lawmakers and listeners on the dire consequences of a performance tax that threatens the very survival of free, local radio," said NAB EVP Dennis Wharton. "On behalf of our 235 million weekly radio listeners, NAB urges member stations to take advantage of this new website and stand united against a cynical money grab by the foreign-owned record labels."
THE 'A-SIDE' - TRACK 4
THIS AIN'T ROCKET SURGERY - CONTINUED
"The video used to be just a cost center," Jean-Bernard Levy, CEO of Vivendi, whose videos have been watched on YouTube more than 3.6 billion times.
"We used to do lots of great artistic videos that we gave away to MTV and other people for free. We didn't get paid. Now it's becoming a profit center." Universal and Google executives are now asking the other major record labels -- Sony Music Entertainment, EMI Group Ltd. and Warner Music Group Corp. -- to join their partnership.
So, let's see. MTV was launched in 1980, and now, 29 years later, labels are figuring out how to monetize their video costs?
Congrats guys. Better late than never.
Google & Universal Partner Online
Universal Music Group and Google are now partners in the music-video business. The largest of the four top recording companies and YouTube's parent company announced on Thursday that they are working together on Vevo, a new music and video entertainment service set to launch later this year. YouTube will handle the technology while Universal Music supplies the content. The two companies will share ad revenue.
The companies said and at this point it appears that Universal's content and artists will be the only label represented on the site. However, Doug Morris, Universal Music's chief executive, said in a conference call with the media that he is in negotiations with other top record labels and is confident they will join.
Read the rest here: http://tinyurl.com/dk7nqw.
Bloomberg also has a story about the genesis of Vevo.com, the new joint music video venture from Universal Music Group and Google's YouTube. Apparently, the meeting between UMG Chairman Doug Morris and Google CEO Eric Schmidt that ultimately culminated in the deal, came at the urging of U2 front man Bono, according to a source. Now, Vevo.com, which was announced last week, will stream videos from U2 and other UMG artists like Beck and the Rolling Stones. YouTube and UMG will split advertising revenues.
Read more about it by clicking here.
Yahoo's New Online Music Plan
Yahoo is partnering with other online music providers as the Internet giant tries a fresh approach to getting an edge in the evolving digital music business. The new version of Yahoo Music, unveiled on Monday, aggregates paid and free music services available on the Internet, allowing Yahoo users to access and interact with the services directly from the Yahoo site.
Yahoo has struck commercial relationships with digital music retailers like Apple Inc's, collecting a fee for every referral, the company said.
Read more about it by clicking here.
iLike Flips Name to 'Music'
iLike, a social music service that has created one of the more popular applications for Facebook's platform, has changed the app's name to the more straightforward "Music."
"Over 40 million music fans like you have used iLike to share music and discover concerts, and we're grateful to you for being one of them," an e-mail sent to members who have installed the app said. "To maintain consistency with other Facebook applications, we're renaming the 'iLike' application to simply 'Music.'"
The company name hasn't changed, and it hasn't yet reflected this on its website. But head over to Facebook, and the app's name has changed to "Music (iLike)."
Read more about it by clicking here.
A Call For An 'Open' Mobile Internet
More than likely, your wireless carrier likes to advertise its data network as open, limitless and liberating. If so, those are lies told by companies more interested in wringing every last dollar from their customers than running a real mobile internet network.
Just ask Skype's government affairs director, Christopher Libertelli. His company's cheap calling application for the iPhone couldn't gain Apple's approval unless it crippled its own software to prevent its use on AT&T's data service. The app launched last week, but is only available over a WiFi connection.
"The future looks closed, where only the applications that conform to the dictates of the carriers get in the hands of consumers," Libertelli said.
Read more about it by clicking here.
Steve Jobs Is Still In Charge
The rumors have been flying all over the media for months about Steve Jobs role at Apple since his medical leave. It appears that the rumors are nothing more than just that ... rumors. Jobs remains in control of his company.
Read more about it by clicking here.
New Internet Taxes On The Way?
Because of quirks in many state laws, sales taxes may be levied on CDs sold in storefronts, but not on iTunes and other digital downloads. It's a situation that recession-weary, tax-hungry politicians are hoping to change.
A growing number of states are considering laws to tax digital goods, such as iTunes songs, Amazon mp3s, or electronic books. Yet at a time when governments say they want to encourage broadband adoption and the development of a low-carbon economy, opponents say taxing digital goods sends exactly the wrong message.
Read more about it by clicking here.
IN THIS POLITICALLY CORRECT WORLD WE LIVE IN, EVEN MUSICIANS' NAMES AREN'T SAFE
It might sound like this is an article from THE ONION, but it's not. Almost three decades into their career, the Pet Shop Boys have been asked by animal rights group PETA to rename themselves the Rescue Shelter Boys. The synth-pop duo have declined the "bizarre" request, saying they were "unable to agree" to the name change, but "nonetheless think (it) raises an issue worth thinking about" regarding the "cramped, filthy conditions" of pet shops.
THE AFTERMATH
Jan Adams, the plastic surgeon who performed surgery on Kanye West's mother Donda before she died of heart failure, has surrendered his medical license, People magazine reports. Numerous complaints, malpractice suits and a pair of DUI charges were filed against Adams, who opted to give up his license rather than fight the charges.
AEROSMITH & ZZ HIT THE ROAD
Aerosmith and ZZ Top will kick off their joint tour June 10th with a show in St. Louis, and run through the entire summer, covering most major markets before concluding with a September 16th show in Detroit.
GUNS'N'ROSES "CHINESE DEMOCRACY" TO 'ROCK BAND'
On April 14th, 13 tracks off 'Chinese Democracy' will be available both in bulk and as individual tracks for Playstation 3 and XBox 360, while the Wii will only sell CD as individual tracks, for 'Rock Band' for all the Axl wannabes.
NUGE & DUKES GET MOTOR CITY RECOGNITION
Ted Nugent reunited the Amboy Dukes today (April 17th) to receive the Distinguished Achievement Award at this year's Detroit Music Awards. It will be the first time the band have performed together since Nugent left the group for a solo career in 1975.
ONE REASON WHY SOME GROUPS DON'T SIGN AUTOGRAPHS
A flood of forged Metallica autographs have flooded the Web since the group was inducted into the Rock and Roll Hall of Fame, Blabbermouth reports. "The number of Metallica forgeries being offered rivals the number of forged Barack Obama autographs peddled after he was elected president," said Steven Cyrkin of Autograph magazine.
A WHITER SHADE PALES THE COMPETITION
The BBC says that Procol Harum's "Whiter Shade of Pale" was named the most-played song in public places in the United Kingdom for the last 75 years. Queen's "Bohemian Rhapsody" ranked second, with the Everly Brothers' "All I Have To Do is Dream" in third. Surprisingly, the highest-ranked Beatles song was "Hello Goodbye" at 11.
GEORGE HARRISON COLLECTION SET FOR RELEASE
On June 16th, the first career-spanning collection of George Harrison's greatest hits, "Let It Roll: The Music Of George Harrison" will be released by Capitol Records. The announcement came just a few hours after Harrison received his star on the Hollywood Walk of Fame this past week.
VAN HALEN FOOTWEAR
Eddie Van Halen is launching a line of both high and low-top sneakers, reports Footwear News, similar to the ones the guitarist has long worn onstage. (The red, white and black stripes mimic the design of his Frankenstein guitar.) The shoes, priced at $54 and $59, will be sold at EVHgear.com, as well as select department and specialty stores.
ALL BY HIMSELF
Eric Carmen will begin a 180-day prison sentence on April 25th after being convicted of a DUI in Ohio. Carmen is only expected to spend 30 days behind bars.
Quotes of the week
"Don't smoke weed!"
-- Britney Spears, offering her advice to the audience after smoky conditions caused interruptions during her Circus tour stop in Vancouver. And of course Britney is a great role model for such advice."Wassup, Sacramento?"
-- Britney Spears, greeting the audience seeing her show in San Jose. Maybe Britney was the one smoking weed that night...."I'm on the toilet. Still on the toilet. Guys, dot-dot-dot, out of TP."
-- Zac Efron, joking about typical Twitter posts, at a press junket for his movie "17 Again." And yet another example that people using Twitter all day have way too much time on their hands."Country musicians are just like us: They smoke weed, get drunk, talk s--t, go to jail. But they just wear the little hats."
-- Snoop Dogg, introducing his Johnny Cash-inspired song "My Medicine," at the 'Our World Live' event. Let's not get carried away, Snoop. "Little hats"?"Surrounding myself with beautiful women keeps me young."
-- Hugh Hefner, celebrating his 83rd birthday with a party at the Las Vegas Palms Casino Resort. I guess we would be hard pressed to argue with him at this point."It's like a Ferrari without a paint job."
-- Hugh Jackman, commenting on the Internet leak of an unfinished version of his new movie "X-Men Origins: Wolverine," to PEOPLE."We are emotionally moved by the Post Office Department's selecting us rather than making the lazy choice of someone who has benefited society."
-- The Simpsons executive producer James L. Brooks, on the release of a stamp set commemorating the show's characters, in a press release."Canadian audiences seem to be very reserved. We tend to play places where people throw things at each other. Here, they just sort of sit there. And it doesn't matter what you say to 'em. It's mashed potatoes but no gravy."
-- Billy Bob Thornton, on Canadian Radio. After the comments were published everywhere, Billy and his group (The Boxmasters) cancelled the remainder of their Canadian tour dates when they were booed loudly on their Toronto date opening for Willie Nelson.
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
Concerts Held To Wish World's Poor Good Luck
ROME-More than 40 artists, including U2, Death Cab for Cutie, Rihanna, and Rage Against the Machine, performed at six simultaneous concerts across the globe Saturday as part of a new benefit show to wish the world's desperately impoverished the best of luck. The $200-a-ticket event raised more than $80 million, which will be put toward thousands of good-luck cards and balloons for developing countries and a fund for future charity performances. "I hope you will all join me in extending a hand of friendship to the have-nots, shaking their hand once, and walking away," Al Gore said in a special message via satellite. "You've had it pretty bad, and it's not likely to get better. May God help you all. See ya!" Producer Quincy Jones also brought all the participating artists together to record an all-star track that will be made available to the poor through iTunes.
THE RADIO INTERVIEW on 'THE AMERICAN PERSPECTIVE' - From newsblaze.com
"Steve Meyer is on the front line of global music sales and distribution which he expects will soar to pocket-bursting levels. What's more, he shares his insight and ingenuity with us. Steve gives us both historical perspective and futuristic vision as he chats with Judy about the love of his work, trends of the business and his personal points of view about success, happiness and blending life with the lust for life. Steve joins Judy and helps us discover the thrill of having it all with a sense of balance and purpose. "
You can listen to an interview I did with Judy Piazza of 'The American Perspective' by clicking here: (It runs about 15 minutes)
http://www.thesop.org/index.php?id=10306.
The Blogs
Check out Jerry Del Colliano's (the founder of INSIDE RADIO) daily blog, by clicking here: http://www.insidemusicmedia.blogspot.com
Website
Check out attorney Ray Beckerman's website at: http://recordingindustryvspeople.blogspot.com where he prints news about the RIAA's ongoing activities
TinyURL
Check out www.tinyurl.com where you can make a smaller URL that will work for any webpage you wish to link to or reference. (As you can see, I'm using it in my news stories above!)