Comments on: iTunes variable pricing has nothing to do with “supply and demand”, just record label greed and stupidity http://www.last100.com/2009/04/07/itunes-variable-pricing-supply-and-demand/ Tracking the digital lifestyle Fri, 20 Nov 2009 15:33:41 -0800 http://wordpress.org/?v=abc hourly 1 By: Steve O'Hear http://www.last100.com/2009/04/07/itunes-variable-pricing-supply-and-demand/#comment-68347 Steve O'Hear Wed, 08 Apr 2009 17:04:16 +0000 http://www.last100.com/?p=4074#comment-68347 @ Dale Dietrich Not sure there is or ever will be real competition as the major labels set the wholesale terms. As a result it looks like Amazon and co. just followed suit: http://www.last100.com/2009/04/08/more-variable-pricing/ Although ComputerWorld is reporting that Amazon is being favored over Apple as the labels continue to try to weaken Steve Jobs' grip on the music industry. @ Dale Dietrich

Not sure there is or ever will be real competition as the major labels set the wholesale terms. As a result it looks like Amazon and co. just followed suit:
http://www.last100.com/2009/04.....e-pricing/

Although ComputerWorld is reporting that Amazon is being favored over Apple as the labels continue to try to weaken Steve Jobs’ grip on the music industry.

]]> By: Dale Dietrich http://www.last100.com/2009/04/07/itunes-variable-pricing-supply-and-demand/#comment-68332 Dale Dietrich Tue, 07 Apr 2009 23:37:48 +0000 http://www.last100.com/?p=4074#comment-68332 As long as there is real competition (read Amazon.com), let the free markets run as they do. I have nothing against variable pricing when there are real competitors in the marketplace. As long as there is real competition (read Amazon.com), let the free markets run as they do. I have nothing against variable pricing when there are real competitors in the marketplace.

]]> By: Steve O'Hear http://www.last100.com/2009/04/07/itunes-variable-pricing-supply-and-demand/#comment-68328 Steve O'Hear Tue, 07 Apr 2009 18:20:42 +0000 http://www.last100.com/?p=4074#comment-68328 @KPS "Apple only has free-market incentive to lower their price if people are unwilling to pay what they are charging, for instance, if they can get it elsewhere for less money/effort." Most are unwilling to pay and can get it elsewhere - for free. That's the point. The answer isn't to raise prices for offering the same but to lower prices and add more value that's harder to get elsewhere. @KPS

“Apple only has free-market incentive to lower their price if people are unwilling to pay what they are charging, for instance, if they can get it elsewhere for less money/effort.”

Most are unwilling to pay and can get it elsewhere – for free. That’s the point. The answer isn’t to raise prices for offering the same but to lower prices and add more value that’s harder to get elsewhere.

]]> By: KPS http://www.last100.com/2009/04/07/itunes-variable-pricing-supply-and-demand/#comment-68327 KPS Tue, 07 Apr 2009 18:06:19 +0000 http://www.last100.com/?p=4074#comment-68327 This isn't quite right. Since we're not dealing with a traditional commodity, we can't just say that supply is approaching the infinite, therefore price should approach zero. You also must consider competition (can they get it somewhere else for less just as easily?) and desirability (how much are consumers willing to pay for it?). Also, this is intellectual property, not groceries that you can buy from any store. There are exclusive contracts involved with artists, agents, publishers, distributors, etc. Apple only has free-market incentive to lower their price if people are unwilling to pay what they are charging, for instance, if they can get it elsewhere for less money/effort. The same basic rules hold from a sellers perspective in that if sales go down, prices need to follow in order to make money, but if sales are great, you can charge more without hurting your business. This is no different from a lot of IP businesses, like the sale of books or sheet music. This isn’t quite right. Since we’re not dealing with a traditional commodity, we can’t just say that supply is approaching the infinite, therefore price should approach zero. You also must consider competition (can they get it somewhere else for less just as easily?) and desirability (how much are consumers willing to pay for it?). Also, this is intellectual property, not groceries that you can buy from any store. There are exclusive contracts involved with artists, agents, publishers, distributors, etc.

Apple only has free-market incentive to lower their price if people are unwilling to pay what they are charging, for instance, if they can get it elsewhere for less money/effort. The same basic rules hold from a sellers perspective in that if sales go down, prices need to follow in order to make money, but if sales are great, you can charge more without hurting your business. This is no different from a lot of IP businesses, like the sale of books or sheet music.

]]> By: Steve O'Hear http://www.last100.com/2009/04/07/itunes-variable-pricing-supply-and-demand/#comment-68325 Steve O'Hear Tue, 07 Apr 2009 16:55:31 +0000 http://www.last100.com/?p=4074#comment-68325 @Davis Freeberg Devils advocate is always welcome ;-) I understand your point, but it falls down slightly considering - using your analogy - there are free cinemas open 24 hours a day, showing all the most and least popular films (file sharing sites). That's the competition. @Davis Freeberg

Devils advocate is always welcome ;-) I understand your point, but it falls down slightly considering – using your analogy – there are free cinemas open 24 hours a day, showing all the most and least popular films (file sharing sites). That’s the competition.

]]> By: Davis Freeberg http://www.last100.com/2009/04/07/itunes-variable-pricing-supply-and-demand/#comment-68323 Davis Freeberg Tue, 07 Apr 2009 15:44:00 +0000 http://www.last100.com/?p=4074#comment-68323 While I don't disagree with you, let me play devils advocate. Suppose that instead of thinking about the music as being the product, we use attention instead. Consumers only have a limited amount of it, businesses have figured out a way and want to profit as much as they can from it. If someone's attention drives them to a point where they'll be willing to pay more, manufacturers will meet that demand by creating product. This is usually done through big marketing campaigns, TV show and movie tie ins, and radio air play. By stimulating consumers interest, the business' product becomes more profitable and they can charge more. If someone values their time differently or cares more about the less popular bands, then the labels are still able to capture that sale by discounting to provide the value instead. Businesses use price discrimination to squeeze consumers all the time. It's the reason why matinees and twilight films are cheaper then the 7pm showing. The theaters know that seniors hang out in the mornings why working people come out at night. I'm not sure that their argument violates any economic theory, but I do agree that they're trying to be greedy. While I don’t disagree with you, let me play devils advocate. Suppose that instead of thinking about the music as being the product, we use attention instead. Consumers only have a limited amount of it, businesses have figured out a way and want to profit as much as they can from it. If someone’s attention drives them to a point where they’ll be willing to pay more, manufacturers will meet that demand by creating product. This is usually done through big marketing campaigns, TV show and movie tie ins, and radio air play. By stimulating consumers interest, the business’ product becomes more profitable and they can charge more. If someone values their time differently or cares more about the less popular bands, then the labels are still able to capture that sale by discounting to provide the value instead. Businesses use price discrimination to squeeze consumers all the time. It’s the reason why matinees and twilight films are cheaper then the 7pm showing. The theaters know that seniors hang out in the mornings why working people come out at night. I’m not sure that their argument violates any economic theory, but I do agree that they’re trying to be greedy.

]]> By: Ben Werdmuller http://www.last100.com/2009/04/07/itunes-variable-pricing-supply-and-demand/#comment-68320 Ben Werdmuller Tue, 07 Apr 2009 14:06:23 +0000 http://www.last100.com/?p=4074#comment-68320 Although it's by far the path of least resistance for me (I have an iPod and an iPhone, and I use iTunes every day), I've given up on the iTunes store. The Amazon MP3 store is better, but has its own problems (check out the onerous T&C). Music industry: can I just purchase some music to own at a fair price please? Thanks. Although it’s by far the path of least resistance for me (I have an iPod and an iPhone, and I use iTunes every day), I’ve given up on the iTunes store. The Amazon MP3 store is better, but has its own problems (check out the onerous T&C).

Music industry: can I just purchase some music to own at a fair price please? Thanks.

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