The Cost of Music

One question that many artists and music labels have toyed with is: how much money should music cost? Although this may seem like a simple question, the recent impact of digital music and illegal downloads have cause many people to rethink the cost of music. When Internet users can easily obtain practically any song they desire for free online, why would they want to pay for them? Some people might suggest that because downloading most songs for free is illegal, music listeners would refrain from doing so. This, however, is not the case.

In order to compete with sites that provide free music downloads, many music companies and artists are changing the prices of their music. Apple, for example, recently changed the prices of the songs sold on iTunes Music Store. Before the change, all songs were sold for $0.99. Now songs are available for $0.69, $0.99, or $1.20, depending on the song. Apple claims that these price changes are beneficial for consumers because the cost of the majority of the songs on iTunes has reduced from $0.99 to $0.69. Those familiar with iTunes know that the most popular songs now cost $1.20. This is a clever strategy for Apple because Apple can reassure consumers that most songs underwent a price reduction while actually increasing the price on songs that generate the most profit. Apples price changes show how one music company is attempting to keep up with competition from competing sites with free music. Because many of Apple’s potential customers are illegally downloading music for free rather than buying their music from iTunes, Apple must increase its prices to make up for lost profit.

While Apple is increasing its prices on music, other artists and music companies are decreasing their prices in attempt to encourage music listeners to buy their music. In 2007, when Radiohead’s contract with EMI ended, the band released its seventh album, “In Rainbow’s,” online for digital downloading. Instead of establishing a set price for the album, however, customers were told that they could pay what they see fit, starting at free. Once word got out that music listeners could chose what they paid for the album, thousands of people logged on to check out Radiohead’s music. The positive publicity gained from this occurrence boosted the sales of all Radiohead albums and ended up making Radiohead more profitable rather than resulting in a loss of money. This strategy was effective because people who may not have bought Radiohead’s album in the first place decided to give it a try because they could pick their price. In the end, Radiohead gained both money and more followers.

Although Apple’s and Radiohead’s approaches to music pricing were very different, both approaches depicted the difficulty and complexity in determining the price of music. There is still a great deal of debate regarding how much money consumers should have to pay for music. Some people argue that digital downloads should cost much less than cds because there is no material and packaging involved. What do you think about this issue? Who should decide how much money music should cost and what should that price be? Should the price of music depend on what form it comes in or should all forms be sold for the same price? Please feel free to share your ideas.