Bronfman on Apple and Music

Post ImageWarner Music Group CEO Edgar Bronfman Jr. has publicly responded to the comments made by Apple’s CEO Steve Jobs last week. Jobs called the record labels “greedy” and pledged to keep iTunes prices at 99 cents. Mr. Bronfman made it clear he disagrees:

He called Apple’s across-the-board $0.99-per-song charge unfair.

“There’s no content that I know of that does not have variable pricing,” said Mr. Bronfman at the Goldman Sachs Communacopia investor conference. “Not all songs are created equal—not all time periods are created equal. We want, and will insist upon having, variable pricing.”

I actually agree with Mr. Bronfman on that point; I think there should be variable pricing. What I don’t think he’d agree with is a maximum price, and no minimum price. Just as some songs are worth more than 99 cents, some are worth less and so consumers shouldn’t have to pay a premium for them. I also don’t think any song should cost more than $2.49 – if you have a CD with only one good song, that’s a fair price I’d say. Most consumers don’t want to buy an entire album, just the songs they like – a model that the record industry is clearly not used to. I like to have an entire album, and the record labels prefer me to purchase an entire album, so I think if variable pricing actually comes to pass, there should be big discounts for users who purchase an entire album.

I disagree with Mr. Bronfman on the following point though:

“We are selling our songs through iPod, but we don’t have a share of iPod’s revenue,” he said. “We want to share in those revenue streams. We have to get out of the mindset that our content has promotional value only.

“We have to keep thinking how we are going to monetize our product for our shareholders,” added Mr. Bronfman. “We are the arms supplier in the device wars between Samsung, Sony, Apple, and others.”

Um, no. The record labels sell their songs through iTunes, not through the iPod. There’s no way they should get a cut of iPod sales. And to say they are the arms supplier? Hardly! People don’t buy an iPod over a Sony player because of the music. Wake up and smell the coffee Edgar!

Read: Red Herring

4 thoughts on “Bronfman on Apple and Music

  1. I just think that variable pricing is hard to establish now because consumers are now conditioned to 99 cents per song and now view each song as a commodity. It would be hard to increase the price to $2.49. Music is all about subjective value, like I would pay more for a certain artist over another artist…so it would be difficult to establish a "fair price". However, I agree with the economies of scale pricing, when you buy the whole album, you should pay less for each song.

  2. I don’t think the 99 cent thing has been around long enough that it cannot be changed. I mean, online retailers are still experimenting with the subscription model too, which I think will ultimately win. There are a lot of songs being purchased online right now, but it’s not too late to change the pricing model in my opinon.

  3. You really think there are any songs worth 250% the going rate? I can’t imagine paying more than a buck, I’d pirate it first if I simply had to have it today. I think the max should be 99 cents, and the discounts should be from there. I’d like to see a world where songs cost no more than 99 cents, albums no more than 11.99, and older albums discounted to 4.99 or so.

  4. Thanks for the comment. I think it’s pretty clear that there are songs worth 250% the going rate and more! Think about all the albums you have purchased for just a single song. We’ve paid it in the past, why not now?

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