Tuesday, April 3, 2007

Questions About EMI Deal

I had several questions/observations for discussion regarding the EMI/Apple extravaganza:

Based on some of my reading, it seemed like it was Apple's decision to sell the new tracks at a premium - remember, the labels charge Apple a wholesale price per download, and like any retailer, they can charge the consumer whatever they please . . . that being said, do you think EMI raised the wholesale price for the DRM-free 256kbps downloads, or is Apple pocketing the entire extra $0.30 ?

While I think this is an important step forward for the industry, I'm a bit turned off by the $1.29 upsell - it was sneaky of them to increase the bitrate alongside no DRM - what are consumers actually paying extra for: higher fidelity, or the rights they should have in the first place? To clarify, Apple is still offering consumers $0.99 downloads wrapped in Fairplay - Steve has framed the $1.29 download as a complimentary product with "additional features." Speaking to this tiered offering, EMI's Nicoli said, "not everybody cares about interoperability or sound quality." WHAT?? This pissed me off - while I applaud EMI for taking the lead here, it's comments like this, straight from the TOP of one of the majors, that is a clear indication of how much further we have to go if the digital download market is going to actually hit the mainstream. While a niche audience will appreciaite this new offering, this will certainly not be opening the digital music floodgates that many had hoped a DRM-free marketplace would provide . . . at least not yet. You want to compete with P2P - how about 256kbps DRM free downloads for $0.49??? We've discussed Real's pricing experiments before - price needs to come down. Now we are witnessing a price increase to make up for the shortcomings of Apple's initial product.


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