May 01, 2003

Steve Jobs Has My Number

The Economist writes that

...the launch on April 28th of a new online music service by Apple, a computer maker, could be a big step forward. The new service, called iTunes Music Store, rejects monthly subscriptions for a simpler model: each track from its 200,000-track library costs $0.99. Once purchased and downloaded, a track can be copied on to as many as three computers, burned on to CDs, and transferred on to Apple?s popular iPod portable music-players. There is no need to buy an entire album just for one or two tracks. And Apple's boss, Steve Jobs, hopes that because there is no subscription fee, purchasing a track will become an "impulse buy". Many people, he observes, happily spend $3 on a cup of coffee.

If this past week is representative, Steve Jobs has got my number.

Posted by DeLong at May 1, 2003 10:02 PM | TrackBack

Comments

I find 99c per track to be a pretty frivolous way to spend money. That may be competitive with the current price of the latest albums, but if you buy used CDs, you can get tracks for less than half that price. Not to mention that you actually get a CD and a booklet and a cheap plastic case that breaks too easily along with it :)

Of course, I never was too high on buying bits...I prefer to get a recognizable product or service for my money.

Posted by: J.Goodwin on May 2, 2003 06:22 AM

Good luck, but I have my doubts.

At work I did a statistically significant survey of two workers in their 20's, who download a lot of music, whose opinion was- they were not impressed. New CD's sell for about $15 dollars new at BestBuy, with about 15 songs, so that is about $1 per song, so they are charging you the same price for a CD that you have to make yourself, plus the hassle of the restrictions and maintaining your licenses.

The price of CD's wholesaled to the record sellers must be extraordinarily "sticky", in economists terms. I know someone who works at BestBuy and they said that their sales of CDs have really dropped, but for now they make it up in sales of computers and digital cameras.

In the face of competition from internet usage, and used CD market, the prices have NOT dropped and seem to be going up! Now that the public knows how little the raw materials cost, they don't really feel that the added value given by the recording industry is justified. Maybe at a price of $5-$10 per CD the added benefit would be worth having the original CD, but not at $15.

Plus there is another issue of perceived quality that I think has been a factor. Many people feel that a CD has perhaps at most only about four really good songs, and the rest are of not as good quality, so you are really paying $3-$4 per song. Most people don't want to take the time in the store to listen to the entire album, but with the internet they have a lot of time to "try before you buy", with many people deciding not to buy.

Plus, music pirating is a different case than movie pirating. To make a movie requires a lot of resources that are not being compensated when someone takes it off the net without paying, but music is different because what is really the value is the talent of the artist. I don't have the exact numbers but major artists make most(?) of their money on concert tours, not CD sales.

The music industry has a lot of power, with increasing homogenization of the FM and barriers to entry to new musicians. With the internet, the main benefit will probably be to meet the demand for more diverse music, that is, less well known artists have another chance besides the road circuit to get exposure.

Posted by: nkirsch on May 2, 2003 08:34 AM

You guys haven't caught on.

Apple isn't selling CDs, they're selling *songs*.

Yes, you can often find a whole CD that costs less than buying the songs it contains separately.

You can also buy a half case of Pepsi for less than you'd pay for 12 individual cans.

But when you're grabbing a drink between classes, you really aren't interested in the other 11 cans, you only want one. You don't want to have to pay $4 to get one can you want and 11 you don't want or need.

Likewise, if you only want one or two songs off a CD, there's simply no way that buying the CD itself is going to be more economical than buying the two songs. You're unlikely to find a CD for $2, except maybe a Skitch Henderson CD at a tag sale.

If you *know* you want the CD, then BUY THE CD, in the manner you feel gives you the best price. But it's a bit much to criticize Apple because you can find 'Blonde on Blonde' at the Salvation Army for $4.

Posted by: Jon H on May 2, 2003 11:18 AM

I am glad somebody else pointed out this was important because it allowed people to buy the songs they really wanted. I know musicians have all kinds of artistic pretensions at times, but the number of times that an entire album is so excellent or organic that you feel you must have the whole thing is...not as high as you might guess. And in many cases, you can also buy a whole album for $9.99, which generally scoops Best Buy (although not the the used places, if you have time enough to thumb through).

So, one of the top-selling tracks right now at the Apple Music Store (tm) is the Violent Femmes "Blister in the Sun". To be brutally honest about it, the Violent Femmes have a fairly small following, but this is an extremely popular song...

I'm also not that suprised that kids in their twenties aren't overwhelmed by this particular effort, since it does not yet include many smaller (better?) labels. What they have now seems to maximally appeal to the SLOG population (SLOG=Slightly Older Geek). We'll see how this looks in 6 months or a year.

Posted by: Jonathan King on May 2, 2003 12:13 PM

I note that iTunes has a lot of backlisted material that's hard to get when you're looking for it. For a lot of artists that they list, the most or several most famous songs attributed to them are often missing. iTunes is a lot better than trying to get stuff off Amazon or sifting through used record stores for the harder to find stuff, but there's too much missing if you're looking for better known tracks.

Posted by: Scott Martens on May 2, 2003 03:00 PM

--plug plug plug plug--
If you haven't already, everyone here must try Lanch from Yahoo. It's free. After about 3 months, it still surprises me with great picks some of the time (though almost all the "popular on Launch" music gets nuked).
http://launch.yahoo.com

Basically, you pick your genres to start, and then it'll create a radio station to stream songs to you. You can't request songs; the service picks them. You can skip songs, or even tell Launch "Never play this artist again". You can rate everything, and it eventually adjusts to your tastes, largely by sending you bands that other members who have corrolating tastes have rated highly.

Posted by: Stoffel on May 3, 2003 10:58 AM
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