Ravenwood - 02/28/05 07:00 AM
Now that demand for legal file sharing is on the rise, driven largely by the success of Apple's iPod devices, the music execs want to try hiking the prices. CNN reports that unnamed music executives are unhappy about the cheap price of music.
The Financial Times, quoting unnamed music executives, said wholesale music prices, thought to be around 65 cents a song, were originally set artificially low in a bid to stimulate demand. The executives noted the success of Apple's hugely popular iPod digital music players, the report said.Sure, ringtones cost between $2 and $3 a pop, but how many people download hundreds of ringtones to listen to over and over again? And aren't these the same people who recently settled a lawsuit for price-fixing?The executives noted that prices to download mobile phone ring tones are roughly 10 to 15 percent higher than song downloads, according to the newspaper.
When it comes to market economics, the RIAA still doesn't get it. This is something I have been saying for years now. Even as album sales start to rise, there are still problems with the industry. Take this as an example that they just don't get it:
The Big Easy Movie on DVD -- $5.99
The Big Easy Soundtrack on CD -- $15.99
While I've never been a defender of the methods employed by the RIAA, despite years of complaints that CD prices are too high, consumers continue to purchase them for the asking price. Regardless, they immediately proceed to complain about being ripped-off, as if they were forced to buy the CDs. Face it, if demand is high for a $15.99 CD, the price is clearly not too high.
The free market approach would be to allow them to raise prices all they want. We then have the right to not buy the products they sell. If people actually employed this approach, prices would drop. Personally, I used to buy at least 1 new CD per week, but now that I feel the price is too high, I buy maybe 2 new CDs per year, and the rest are all used.
The problem is basically this:
1. RIAA illegally sets elevated prices, thereby encouraging a black market for music to appear.
2. People discover the new method of getting all of the music they want for free and quickly feel entitled to it. The theft of music is then justified by pointing to the actions of the RIAA and saying, "Well, they had it coming."
This is, of course, not a critique of the official Ravenwood position, but rather just a statement on the situation in general. If people would have just corrected the market by speaking with their wallets in the first place instead of retaliatory theft, we wouldn't be in this position right now.
Posted by: roger at March 1, 2005 11:09 AM(c) Ravenwood and Associates, 1990 - 2014
