Today’s news is that Apple has resigned contracts with the major music labels – Universal, Warner Music, EMI and Sony BMG – to sell their songs online at a fixed price of 79p in the UK and 99 cents in the US.
The BBC spins this as Apple ‘winning’ and focuses on the fact that the music companies have been fighting for months to try and charge higher prices for new releases.
I think there are a couple of bigger issues here.
Firstly, have the music labels not faced enough erosion into their profits to understand that the days of charging £20 for an album are gone? People no longer see such high prices as acceptable in the digital age and rather than charging the consumer more money for songs in a different format, shouldn’t the record labels be looking for a new model that will sustain their position for the future?
Secondly, why does the UK pay more for downloads than the US? A flat price at the US level would see the UK paying about 55p per download, not 79p. This is nothing more than protecting profits in the market and with the popularity of iTunes that is basically price fixing.
In the US the attorney general, Alberto Gonzales, has launched a wide-ranging investigation into allegations that record labels are fixing the prices of music downloads. In Europe Microsoft has faced numerous anti-trust cases from the EU over its dominance.
How long will it be before we see the EU take a stand over the same issues with Apple and the record labels? And what will that mean for the future of record companies?
Will future number 1s come exclusively from the likes of the Arctic Monkeys and Gnarls Barkley (and their record labels) who have worked out how to use the potential of online for generating interest and sales, rather than ripping off consumers over price?
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