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Cheap Downloads and Rankled Bureaucrats

With all the problems facing the US today, and Russia wishing to join the World Trade Organization, clearly the most pressing issue before our government is the illegal download site That’s the word from ArsTechnica today. They’ve got a good write-up on the comments and complaints by our Trade Representative on the subject.

It strikes me as odd that the music industry hasn’t figured something out, yet. If is offering songs for download (granted illegally); charging based on the length of the song (longer songs cost a few pennies more); and is currently the number one music download site in the world; why haven’t they realized how many more units they could move by charging less?

The music industry is so greedy that they set an arbitrary price of $1 per song, which makes downloads just about as expensive as the CDs that they been price-gouging on for years (despite the fact that unlike CDs, music downloads have zero distribution cost, zero packaging cost, and zero mark-up for record store middle men)., at 15 to 20 cents per song is kicking the shit out of Apple who is charging 99 cents. If you really want to put them out of business, work out an arrangement with iTunes and cut your price.

You will, based on AllOfMP3’s traffic and sales, move an assload more units, at no additional cost, and not have to worry about others.

The problem is marketing people.

Marketing people like to figure out the maximum amount that someone might possibly be expected to pay, so they can maximize profit. It’s not a function of costs and a “reasonable” profit. It’s a question of how much are your costs, and how much more can you possibly sell for. Unlike most other industries, however, the music industry has an effective monopoly.

The record (quaint little old pieces of vinyl that you may be too young to remember) companies have been in collusion on CD prices, and now are in collusion on Mp3 prices. It may be one of the few remaining industries where the government still turns a blind eye to predatory anti-consumer behavior. Why? Simply because the entertainment lobby throws around a lot of money and the geeks in Congress want to appear cool by having their pictures taken with celebs.

Honestly, should be teaching the music industry the way to run their business. Instead, the greedy bastards in the music industry will continue to use their lapdogs in the federal government to do their bidding to guarantee obscene profits.

Written by Michael Turk