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Friday, May 12, 2006

Musical Hubris

Apple approach to problem solving making things work then getting out of the way. In the light of the Apple victory over the record industries idea of variable pricing. Since everyone has touted this as Apple wins, apple victorious apple is still in charge so without hubris a discussion

I'm happy that Steve succeeded in arguing that moving away from static pricing would be dangerous, we are only just maybe at the end of early adopter phase with buuying music online... I'll be convinced when my mom buys her first track, she's resisting at the moment for the case, the album art, and the plastic disk. So Steve was successful in convincing the music industry to keeping standard pricing across the board. I prefer that I can just hit buy on my iTunes store and know that for a single track I'm gonna find a £0.79 charge on my Credit Card bill. Whether the tail end market would have benefited from variable pricing is up for discussion. Some people are claiming that Steve can now put the fear of God in to the music industry because everyone owns an iPod and if you want them to keep getting legal music do it our way. or we'll rewind 5 years and people could not pay you a dime and listen to illegally downloaded music.

Some quick beer mat calculations I heard were that a track on iTunes $1 price break down went as follows
$0.70 Labels +
$0.25 Visa +
Bandwidth costs +
Apples Profit

They reckoned that Apple were making a penny per track. This concurs with something Gruber wrote the other week about Apple's primary objective is to sell hardware, they are a hardware company. Everything else is used to sell hardware, OS X - used to sell macs, Bootcamp - used to sell macs. ITunes - used to sell iPods - used to sell Macs. So does apple effectively use iTunes tracks as a loss leader ?

Apple is apparently the 7th largest record seller in the States. Why are they this popular, with the French government trying to appease the seller of 80% of the worlds online music downloads. I have previously blogged about the ease of use compared to other services or business models. I still have a Napster account, I still pay them a tenner a month and was considering cancelling until my beta 6 Parallels install started playing sound in my Windows XP setup. I like the idea of being able to listen to all their music as long as I'm online, it's rare that I am not near a web connection. So despite my current economic arrangement with Napster, I still if I want to buy music by it from iTunes. This isn't because I want to play them on my iPod - I don't have one. Rather I know that Apples DRM is more user friendly.

Napster has long been called the poodle of the RIAA since they chose to use the MS DRM which, I agree with the TWiTs, is so much more invasive. I can download a track and know even if I've got to move it over to a CD and use as my friendly troll calls it "lousy or lossy analogue conversion" without bothering to much, I believe this is fair use under the spirit of the license. If I picked up a Napster track the DRM actually monitors any CD I burn, if I want to bung it on a mobile player I've then got to pay and extra fiver a month, as I recall. Apple have solved the problem none intrusively. They have got out of my way allowing me to enjoy the music my way, do they trust me more than Microsoft. Recently the Real CEO accused all iPod owners of pirating most of their music on their iPod.

One take on these juxtaposed methods is that Apple wanted to help the customer first to enjoy music, and Microsoft did want to help users enjoy music they worried first about placating the music industry, where Apple maybe couldn't care less about the industry, they were selling iPods before selling music. Sure now iTunes is a big proponant of iPod sales - but are the record companies also gonna throw that 70 cents away, remember iTunes just recently solid their 1 billionth song, that's a lot of 70 cents.


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