Technology Liberation Front - Latest Comments in Variable price fixing?

Re: Variable price fixing?

Tim — Mon, 03 Oct 2005 19:26:52 -0000

I can't see a compelling economic rationale to prohibit retail price-fixing. But be that as it may, I don't think it's the case that no song is worth more than 99 cents. Plenty of people pay $15 for a CD with 10 songs on it. Clearly, they value at least one of those songs at more than a dollar. Moreover, chances are they're mostly buying the album so they can get 1, 2, or 3 songs. That implies that the most popular songs might be worth as much as $5.

Personally, I think the labels are shooting themselves in the foot by allowing their songs to be sold for 99 cents apiece. If all their customers began using the ITMS, they'd see their revenue drop precipitously because people would buy their favorite 2 or 3 songs on each album and they'd get a fraction of the revenue. That would be offset somewhat by people buying songs from more albums, but the total amount of music purchased would almost certainly drop. But I say if they're willing to let Steve sucker them into helping him build a music empire for an unnaturally low price, that's the free market in action.

Re: Variable price fixing?

Jerry Brito — Sat, 01 Oct 2005 15:19:34 -0000

I see what you're saying. But like I note, to get true price fixing you'd have to 1) get all the major labels agree to do it, and 2) have them all set a minimum retail price above the competitive price -- sort of what they did in CDs with MAP. If that happened, there would be cause for concern. My only point is that a call for variable pricing does not automatically equate to price fixing.

Re: Variable price fixing?

Michael Masnick — Fri, 30 Sep 2005 22:55:59 -0000

Hmm. Still sounds like price fixing to me. The labels still are the wholesalers. It's just the price they're wholesaling at is $0.65 (I've heard $0.67, btw, but it's no big difference). So, if they want "variable pricing" on the wholesale side, then JUST DO IT. Charge what they want, and let Apple decide the retail price.

However, in all of the talks Bronfman talks about songs being priced above $0.99. That's the RETAIL PRICE, over which he should have no say. He never says he wants the wholesale price raised. If that were the case, he should just raise it and not complain. The only reason to complain is if he's trying to influence the retail price... and that's price fixing.