You Can’t Compete With Free (Based On Price)
Comments (0) The conventional revisionist line that meanders around the Internet says that people started downloading free music from services on the internet as some kind of consumer rebellion against the price of CD’s. That may be true in a sense, because music did cost money that could be spent on something else, but anything not free would have been too much. In the 90′s everybody liked CD’s and bought them like hotcakes, but ‘free’ was more appealing. And the hard lesson that seems like it is taking forever to sink in is that you cannot compete with free based on price.
What about iTunes? Isn’t that profitable? Wasn’t that profitablility driven by price? Well, first of all, it’s mostly not profitable. It’s a convenient service for iPod users which is meant to drive the sales of iPods, not music. The iStore service competes on convenience, not on price. It’s right there, and it’s how you interface with your new gadget. The same is true for the Kindle store, for that matter – a painless, instant and safe transaction. The more inconvenient the other options are, the more appealing the iStore option becomes – to users who value what the iStore represents.
If iTunes had been selling albums for 5.99 when Napster hit, I don’t think most people would have cared so much for convenience and safety that it outweighed the appeal of free. Downloading was something that was ‘dangerous’, ‘rebellious’ and you had to learn some small thing to be able to do it – all things that appealed to the primary music buying demographic of young people over ‘convenient’ and ‘safe’, which is the iTunes model. At the same time people who appreciated the moral implications of piracy or saw no need for it, who I bet tended to be a little older and had money of their own, either payed the price as they always did or generally went without.
If someone has already accepted the free option as an alternative, then any price will be one hundred percent more than they want to pay. There was always a little grumbling about prices on CD’s, but on balance people often decided to buy one instead of a pizza, which cost the same. The free music option afforded people the ability to have both for the same price, where dinner costs what it costs, and the soundtrack is free. Regardless, they’ve been heavily discounted for decades and now with the global used market all but the most in demand cd’s can be had for little more than the cost of shipping.
I think people tend to forget that there’s a reason that LP’s took over the market, because people bought them instead of singles. The LP’s with their ‘unfair pricing’, seen as a value at the time, allowed an industry to support riskier artists, and for those artists to support themselves and make more out of popular music than ‘doo wop ditty’. In the end we get what we pay for, though. There is a similair dynamic in popular literature and it would be a shame to see that change.
Thankfully the publishing business isn’t making the same mistakes as the music business did and they are moving to protect the price of their books. Maybe they aren’t as awestruck by technology as we all were ten years ago, or maybe the people who are giving them advice learned a few things as well (the model where publishers set the price is the iStore model, whereas the self defeating practice of selling singles for a dollar originated with apple as well.) Regarding the resultant consumer rage about the price of books, I’d be very surprised if the average selling price, not the list, for a hardcover was higher than it was ten years ago, especially adjusted for inflation. In that context, still, ‘not free’ will always be unfair to people who have already accepted the free option as a possibility. Even though those people are not customers in any sense of the word, their voice is heard the loudest. Because honestly, no one else is complaining.
Themocracy
