Content pricing

Today’s NY Times reports that NY Attorney General Eliot Spitzer has issued subpoenas to several of the major labels as part of an investigation into possible price fixing in the digital music realm.

In September, Apple Computer Inc. CEO Steve Jobs publicly criticized music companies, calling some major labels ”greedy” for pushing Apple to hike prices on its popular iTunes service. Recording company executives have scoffed at the suggestion.

In a speech before an investors conference, Warner Music Group CEO Edgar Bronfman Jr. said that Apple’s 99-cent price for single tracks ignores the issue that not all songs are the same commercially and, like any other product, shouldn’t be priced the same.

Such discord has not kept the labels from licensing their music videos to Apple. Still, as their contracts with Apple come up for renewal, the music companies are seeking to improve their take.

Mr. Bronfman has a point, but I don’t think he realizes the favor Apple is doing his shareholders by setting a $0.99 floor online music purchases. While some songs may be worth more than a dollar, most are worth much less. The labels finally got people paying for music online, and now they get greedy. Just as folks are coming around to believing piracy is wrong…

Sooner or later the labels will run out of toes to shoot off.

It’s ironic the subject hits the headlines this way. I’ve been expecting analysts and independent artists to begin complaining that Apple’s one-price approach for music, and now videos, is detrimental to the industry. As long as Apple gets its cut, independents should be allowed to set any price they like.

Apple’s position about going over $0.99 is understandable. But why not allow content owners to set lower prices? I hardly see $0.49 downloads diluting the iTunes brand. In the world of video, if Lost is worth $2, then an independent documentary shouldn’t have to compete at the same price.

PaidContent.org covers the economics of content in depth.

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