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Tuesday, 15 November 2011

A million EU album downloads for Adele, but why has this iTunes first taken so long?

I'm amazed it's taken this long for an artist to reach a million iTunes album downloads in Europe, but at £7.99 to download an album the answer to poor sales lies mainly in the ridiculously inflated pricing model set by music publishers.

When a man with no experience of professional writing or publishing sold a million e-books on Amazon, the whole publishing industry should have taken note.

How did John Locke do it? I haven't read his book Vegas Moon but let's assume it's good.  But being good doesn't itself make one rich.  In a cut-throat competitive capitalist world one needs to let the public know that the goodness is out there, and telling the world costs money.

And herein lies the excuse for the excesses of the traditional publishing industry. Investment in branding and promotion costs money.  Providing up-front advances, managing the worldwide rights distribution, organising book signings and press coverage all costs money.

John Locke's secret weapon? He decided to make his book accessible to as much of the paying public as possible, letting the public see for themselves how good his book was.  He set a price of 99 cents (US).

The paying public make a different spending decision for an item at 72p (99c) than they do at £7.99, the cover price of most published books, as well as the iTunes price for Adele's album 21.

At £7.99 I want to be sure I will enjoy the book, album or film.  I don't want to get to the third chapter and bin it.  In fact, if I do get to the third chapter, having paid £7.99 I'm damn well going to finish the bastard book even if I risk death by tedium in the interim.

And this argument works for albums as well as books.  If Adele's album sold at 79p, one tenth of the price today on iTunes, I bet it would have reached 10 million sales in Europe, and reached this milestone earlier.

Moreover, at 79p per album, I'm pretty sure piracy and the market for unlawful download services would be dented.  The question repeated by lobbyists representing the publishing industry is "how can we compete with free?"

The simple answer, even unlawful downloads aren't free - to provide.  Server hosting and bandwidth costs money.  Site coding and content organisation costs time.  Many sites facilitating copyright infringement more than recoup costs using advertising.  They operate as a  high volume, low margin profit-making unlawful business.

So you compete with "free" by learning and adapting. Go after the high volume, low margin business that pirate websites have proven exists.  Fund free downloads with adverts or sell albums and books at a price the market will jump at.  Optimise the sales price/volume curve and end this ridiculous fixation with price and artificial scarcity.

At £7.99 the price of an album download is often more than a CD purchase (£6.99 for Adele's album on CD on Amazon right now).  Yet CDs need to be produced, packaged and distributed.  They are sold on the open market and competition law prevents price fixing.

£7.99 for a digital download suits no-one but the promotion and marketing people, who spend a lot of time, effort and money telling the public how good the album is.

Don't be too hard on the fans who use unlawful suppliers to get their music for free.  The operation of the free market and the benefit it brings consumers in lower prices and limiting the opportunities for profiteering depends on each of us hunting out the cheapest price.  It's an honourable instinct, to be careful with our money; it keeps the market honest.

In using unlawful sources some go too far, but we can live with this by-product.  Besides, enjoying other's works for free is nothing new.  What typically happens when I tell a friend how good a new album or book is?  They ask to borrow it.  If it's a book, they'll read my used copy and never buy their own - this has gone on since the advent of publishing and has very little to do with the internet.

What the internet does allow is fans to shout to their friends that they've read a good book or heard a great album.  At today's pricing structure, typically these friends will then ask to borrow said book or hear the CD/mp3 to see if they like it.

Drop the price to 79p, little more than the price of a Mars Bar, one third of the price of a cup of coffee at Starbucks.  People don't need to be convinced of the quality - they will buy without trying.  It's a price where most purchasers allow curiosity to play a major part in the spending decision.  Is it any good? Let's find out!

At 79p for an ebook or album, when you see someone rave about it on Facebook, the easiest course of action is to buy your own copy.

You don't go around to a friends to ask to borrow a pen, you walk into the corner shop you'd otherwise have passed on the way to their house and buy yourself one.  But that's not necessarily true for higher-priced items.  There's no shame in borrowing tools (angle grinder, power drill £14.99 from B&Q), movies, books and CDs.

79p isn't a price that does an author or artist an injustice.  An ebook selling on Amazon for 79p nets the author around 28p from each sale.

With three more self-published authors since selling a million ebooks on Amazon there's growing evidence reducing the price below the "decision threshold" yields a big increase in sales.  If this increase can be shown to be 10-fold or greater, and this is still to be proven, the self-publishing artist or author nets around the same as he or she would with traditional publishing.

And the returns for self-publishing authors must surely improve.  How can Amazon justify holding nearly 2/3rds of the sales price in profit?  They can because it works.  A million times 35c (around 25p), as John Locke reportedly took from each sale, that will do nicely, thanks.

Amazon can charge these margins because it performs a promotion, advertising and marketing function as well as being a retailer.  Amazon today provides an audience.  But if someone in future can do it on lower margins - and there's a strong possibility they will do - the author will get more.

The 79p model has some losers, notably the industry that has built up around sales and promotion of creative works.

At 79p for a book or album the work effectively sells itself.  If it's good, people will tell their friends.  If it's cheap enough, these friends will buy their own copy on a passing recommendation.

At 79p, the market doesn't leave much room for advertising and promotion, but is this really a bad thing? Should we be reading books and listening to music just because someone with a lot of money has told us how good it is?


1 comment:

  1. This reads well.
    Another thing that's bothered me (without hopefully ranting) is that when we buy a new copy of a piece of music, we pay the whole price which must include the copyright part (which we have purchased with our original copy). I don't mind paying for the plastic, or the production, but the music was mine anyway.


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