Friday, April 15, 2005

iTunes and mp3s

I am against buying music off of iTunes; unfortunately, they are probably have one of the biggest digital catalogs.

My main objection to iTunes is the price of tracks/albums. Their tracks are encoded at only 128kbps, a bitrate much too low to charge customers $.99/track or $9.99/album--prices a little cheaper, but comparable to an actual CD. In addition, because mp3s bought off iTunes are controlled by DRM, the record companies should not need to offset potential losses (cf. to the possibility of easy, illegal sharing of non-DRM mp3s) by inflating the price.

I do wonder about the costs of producing an actual CD--including the case, printed inserts (including designer charges), shrinkwrapping, and sometimes stickers--and if they are comparable to the costs of producing the digital release. I would assume that digital release costs would include server space, bandwidth, and encoding files. But since the price of the album is mostly marked up for profit reasons, I suppose the $2-8 difference between buying digital vs.actual disc is probably reasonable--if you were actually getting the same quality and rights as buying a disc.

I hope that the digital music scene will grow closer and closer to the Russian model, e.g. www.allofmp3.com (only legal in Russia). You choose the quality and file format, and pay accordingly. I am a believer that if you offer cheap tracks, people will gobble them up, and you may end up with more profit.

I read a comment from a recording artist on David Pogue's reader forums (visit forum) that file sharing is like a progressive tax on artists; i.e., artists like Britney Spears may be more hurt from it than lesser-known artists like himself. In fact, free trading of his files would probably boost his profile and level the playing field. I would like to extend that argument towards having music available cheaply and perhaps eliminating many roles of the record company. That is, every artist becomes independent, and exclusively reaps the benefits from their mp3 sales. Those bent on achieving superstardom would have to work that much harder, but I could see record companies transform into PR companies instead.

In the meantime, I very much like Emusic.com and AudioLunchbox.com, but both carry mostly independent artists. I use Rhapsody to stream music. Not only does Rhapsody have a great mainstream catalog, they stream albums from independent labels as well. They claim to stream and burn at CD quality, but I haven't truly tested that claim. Tracks do cost less at $.79/track, but unfortunately Rhapsody does not offer album deals.

2 Comments:

At 6:43 PM, Anonymous Anonymous said...

Although I do not disagree with your ideas, I do not think it will ever be a reality. The record companies control the music industry, not the artists. Record companies will never allow artists to reap all the benefits and thus will always have a hand in how music is obtained. I foresee record companies creating more problems in the future because they don't care about the consumer, they only care about profits. A good example is the copy protected cd.

As far as cost of production, i read a few years back that the average cd production costs including case and inserts totals somewhere between $2-3 dollars. I would think that digital music would have a much lower cost due to the costs being spread out over a much larger volume. I also feel it would have a much lower risk due to not having to create a demand supply matrix to determine production. This would elimante the production of goods that end up not selling well.

 
At 7:06 PM, Blogger Benni said...

I decided to leave out "reality" in my post, but it's good to discuss it.

While current signed artists have to fulfill contracts with record companies, I don't believe that record companies ultimately can stop artists from posting their music online for sale. Whether or not artists will choose to do so is another story. Maybe artists like having someone else take care of all the PR, booking shows, producing CDs, making them a superstar, etc.

If we eliminate discs altogether, your "no demand supply matrix" theory works well. But if some discs are still being manufactured, as I believe there will still be demand for them (at least in the next five years), there may still be a comparable overhead cost of producing an album. That is, even if most people buy digitally, isn't there still some bandwidth cost? It may be minimal, but fewer CDs produced generally mean a higher cost per CD, no? Balancing the right number of CDs to produce might also make the demand supply matrix that much harder to figure out.

 

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