Digital Music Downloads Too Expensive?

threeofnine writes "The Sydney Morning Herald has an article written by a copyright and technology lawyer asking if we are paying too much for digital downloads. From the article: 'Parallel imports are unavailable in the Australian digital market, however. Australian consumers cannot purchase downloads from iTunes or Wal-Mart in the US, which are often cheaper than downloads available here, without a US-issued credit card. And restrictive licensing conditions imposed by copyright owners also limit the sale of digital downloads across international borders. For both reasons Australian consumers miss out. And retailers cannot buy downloads from overseas and resell them here, even if it is worthwhile for them to do so. In a recent analysis, the prices of Australian-made CDs of artists such as Bon Jovi, REM and Robbie Williams were compared to those of legal parallel imports. It was found that the local product was as much as 300 per cent more expensive.'"

both sides of their mouths.

Interesting key (and somewhat conflicting) points from the article:

This is not the fault of retailers. Prices for digital downloads are based on wholesale prices, and are determined on a territorial basis by record companies based on their perception of what each market can bear

and:

As a border-free environment, the internet was supposed to bring down market barriers. But record companies use the internet to create boundaries and increase protectionism in the market for sound recordings, to the detriment of consumers

So, in addition to lobbying in the United States to encumber music and entertainment beyond any previous restrictions (to the point of unusability if they get their way), the music industry tries to layer artificial geographical artifacts over the internet to further increase their (already obscene) profits. I find it interesting the entertainment wonks get away with this under the "protection of artists and intellectual property" canards juxtaposed next to the argument that many people lose their jobs to outsourcing as a result of the "global economy" and the breaking down of these alleged geographic boundaries.

Seems like those in power define by expedience.

(As an aside, another tasty tidbit in the article:

When will parallel-import laws be extended to the digital market, so that Australian consumers are finally charged a fair price for downloads?

I find this an interesting question -- maybe when Americans are also charged a fair price for music (they aren't today). Sigh.

Re:both sides of their mouths.

Those two points aren't contradictory at all.

Both support the assertion that the recording industry is still artificially keeping prices up.

Maybe someone will start up a business to issue low value American credit cards to foreigners so they can buy from iTunes. Even if it makes digital downloads 200% more expensive, there's still a savings.

Re:both sides of their mouths.

the assertion that the recording industry is still artificially keeping prices up.

I can confirm for a solid fact that this is extremely true. I can have on-demand CD's printed off Lulu for $5.75 a pop. On-demand printing is proportionally 150% or more expensive than mass-produced printing, which I also know by comparing what it costs to print off my book versus what a trade paperback goes for in the store. So imagine what the real per-unit cost of a CD is, factoring in just about everything else (and the fact that the record companies' "advance" to the band usually deducts all of the costs of recording the actual music), it is probably below $3.00, and very likely below $2.00. We're talking a ballpark markup of about 1,000%

Re:both sides of their mouths.

I had hoped that you would have a better grasp of economics when I saw you quote the the first part but alas, it was not so. The wholesale prices and retail prices of goods and services are usually determined not only on what the market can bear but also on the cost of doing business in each country. Do you honestly think the companies have no brick and mortar operations in each country for logistical purposes? They need to have a head office in each market they are dealing in and people on the ground scouting for new talent. All of this costs money and the amount varies from market to market based on the cost of living and government imposed payroll taxes.

I have a few questions for you. How would they determine how much of the sales to provide for each sales region if there was only one store? Which region would be used to determine the price? How would you handle currency fluctuations? Why should some regions suffer with lower margins in times of currency market instability while others profit more? If prices fluctuated with the currency markets, should wages do the same?

I really don't think the slashdot community understands some of the basic tenents of local economics and how the internet plays into it. If you can a company without a presence in other countries, then you can ship anywhere and charge the same price+shipping to everyone but if you have a presence in each market, you have to be able to cover your margins in those regions with slightly differing prices. Also, if you are going to have universal pricing of physical goods, chances are that your customers will have to foot the bill for import duties.

In closing, I really don't blame the slashdotters themselves but rather the clueless media which have led people to believe things which are not true like that the internet will bring down all barriers to trade. Such notions are naive and simplistic because they cannot apply to every business model out there. The only way you could have a single market is if you had a single currency and a single set of labour practices/taxes.

Why not...

... AllOfMp3.com [allofmp3.com]?

Too expensive? I don't think so...

I find Allofmp3 to be quite reasonable! About 10 cents per song with no DRM. You can't beat that.

Re:Too expensive? I don't think so...

AllOfMP3? Good call. So, instead of illegally downloading a song, you can illegally download it AND pay a fee that never gets anywhere near artists' hands.

Re:Too expensive? I don't think so...

Actually, in the US it is not illegal. Actually, there is a little known loophole in US law that allows you to import music from outside the US without any copyright violation.

17 USC 602(a)(2) says that "importation, for the private use of the importer and not for distribution, by any person with respect to no more than one copy or phonorecord of any one work at any one time" is NOT infringement.

Thus, if you "import" one song from say, allofmp3.com, or from some other foreign server, for personal use, and do not distribute it to anyone else, the RIAA could not legally come after you.

Re:Too expensive? I don't think so...

Very interesting. Thanks! I guess it's not "little known" anymore.

This point should be stressed: "There is no private right of action for violations of customs law." Thus, the RIAA still could not come after an Allofmp3 user directly.

The RIAA is going ballistic over allofmp3. But they are trying to handle it via the governments involved, not directly with the users. Considering that the RIAA has no problem suing customers, I find that very informative.

My guess is that the RIAA does not want to risk an unfavorable ruling regarding 17 U.S.C. 602(a)(2). Can you imagine if that occurred? Suddenly downloaded music from foreign servers, even on P2P, would not be infringement. The shit would really hit the fan.

Thus, the RIAA's first step is to get Russia to shut the site down but pressuring the US government. When and if that fails I'd guess that they'll have Congress amend 17 U.S.C. 602(a)(2) to specify that it does not apply to downloaded music. Heck, their probably already working on that! Once that is amended, then they'll start suing Allofmp3 users.

selling music by the meg?

There are websites like allofmp3.com that sell mp3's in bulk with a set amount per meg.. seems pretty cheap to me, set the bitrate, if you want higher quality music than you can get on limewire or soulseek..

iTunes is too expensive .. but, there are alternatives.

Torrents have no Borders

And restrictive licensing conditions imposed by copyright owners also limit the sale of digital downloads across international borders.

Is it any surprise that the Australians are abandoning the commercial ship and are now sailing from the Pirate Bay? [thepiratebay.org]

No connection

Did anyone notice the article summary has no connection with the title whatsoever...?

There are alternative stores for them.

They can shop at eMule, Bittorrent, and Gnutella. They have very reasonable prices and the largest selection available anywhere!

http://religiousfreaks.com/ [religiousfreaks.com]

Stop the RIAA

EFF is collecting signatures [eff.org]to stop RIAA

To The United States Congress: We are the customers and former customers of the member labels of the Recording Industry Association of America (RIAA). We love music and will gladly pay a fair price for it, but we are outraged by the RIAA's tactics in suing ordinary Americans for filesharing....

Let's slashdot the Senate and House Commerce!

Re: Stop the RIAA

To The United States Congress: We are the Recording Industry Association of America (RIAA). We love selling music and will gladly sell it for a fair price, but we are outraged by filesharers' tactics in acquiring our product without paying for it...

Spin works both ways.

Prices never go down, only up

Why do CDs cost as much as vinyl LP albums did? The production costs for (digital) CDs are several of orders of magnitude less than they were for (analog) LPs, yet the price-point never moved.

Re:Prices never go down, only up

Actually, when CDs first appeared in the 80s they were a fair bit more expensive than LPs, and only moved back to more normal levels as production capacity was ramped up. The cost of the medium was never a major part of the overall cost of producing either an LP or a CD; the real question is why CDs are two to three times the price that an LP was in the mid-80s, given that the price of cocaine (which is where the majority of the recording industry's costs lie) has remained virtually static.

Off topic, but true story: at the Stonehenge Free Festival in 1984 a friend of mine, feeling thirsty, approached an ice cream van which had cans of soft drinks on display. He asked "How much is the Coke?" to which the vendor replied "£50 a gram".

Why is this even news?

Companies have been practicing price fixing for years based on location.

Don't believe me? Compare your cost of cable TV to people in other local cities.

This has also been the case for years with things like software, movies and textbooks where the producer will likely lower the price in some areas and raise it on others.

This is simple economics of pricing an item at what the market will bare. Don't like spending so much on a ____? Don't buy it then!

You aussies ain't missing a thing

These digital music stores suck. Paying more for not getting media, cases and artwork is nothing to be missed. Buy your cds in the store or download the mp3s from p2p and usenet. This iTunes and whatever is a big media and Slashdot hypefest. The music distribution monopoly has yet respond to the internet in a meaningful way for consumers. Until they do, you aren't missing out on anything.

Why they pay more

Want to know why Australians pay so much more for imported goods? It's because Australians are willing to pay more. If Australians just stopped buying overpriced foreign goods, the manufacturers would start lowering prices. But whinging about the problem is never going to fix it.

hm

...and live at 10, the sun comes up in the east!

Seriously, though - they're 'diiscovering' that record companies are using predatory pricing, collusive behavior, and generally refusing to recognize that the 'costs of distribution' in the digital age doesn't really explain their bajillion-percent markup?

Teh?

Cross Border downloading

The difference between digital media and other goods is that, for the latter, the price is determined by the cost of production and distribution plus extra which is kept as a profit. Digital media however, has zero production and distribution cost (for each individual download i mean), hence the price is entirely determined by what the record companies think is the optimum price, cheap enough for people to buy, expensive as possible to earn as much money. This means that in a third world country, the optimum price might be 10 times lower than the optimum price in a first world country. In order to make as much money as possible they have to price their downloads differently in different countries - selling it at first world prices everywhere would mean they lose out on profits in less well-off countries, selling it as third world prices mean they don't earn enough in first world countries. That's why they are so intent on limiting downloads accross digital borders. And hence, measures such as region encoding.

El Reg....

Why is nothing there only considered news here when some fancy schmany outfit says the same thing many months later?

http://www.theregister.co.uk/2005/11/16/parallel_i mports_australia/ [theregister.co.uk]

http://www.theregister.co.uk/2005/08/09/oz_legit_d ownloads_fail_two/ [theregister.co.uk] http://www.theregister.co.uk/2005/08/08/oz_legit_d ownloads_fail/ [theregister.co.uk]

El Reg users have known it sucks to be an Aussie if you want online tunes for a long damn time.

My Unpopular Opinion

It seems that everybody wants everything, and think it should be free.

Are record companies greedy and evil? You betcha.
Are they gouging customers and musicians both? Right-o.

Has everyone's perception of value been altered by p2p downloads, cracked software and other Internet-rendered amenities?

Without a doubt.

-1 Flamebait.

Re:My Unpopular Opinion

-1 Flamebait.

Why do you think your comment is flamebait? Do you think that this statement is controversial:

Has everyone's perception of value been altered by p2p downloads, cracked software and other Internet-rendered amenities? Without a doubt.

I think that statement is true, and I don't think we should attribute to it any negative connotation. I believe that the perceived value of information and creative expression was over-inflated before the digital age. Now we are seeing such things drop to their actual value, which is quite low.

I'm not saying that information is worthless. Far from it: knowledge is power certainly. What I'm saying is that previously there were boundaries on information exchange (some very real, like the difficulty of printing books, and some artificial, like copyright). Now that the boundaries have been lifted, our "perception of value" has indeed been altered. We now understand what a low cost there is on information exchange, and how much we can all benefit from the free exchange of information (examples: Linux, wikipedia, etc.).

I think p2p downloads and software cracks point to the fact that information CAN be exchanged with very little effort. I know many people hate the "information wants to be free" tagline, but ultimately it appears that since information CAN be exchanged freely, why should we artificially limit it?

I think it is a good thing that we are starting to realize that freeing information is easy and useful.

my own study

i recently did a study...
- I pay too much for gas
- I pay too much for cheeseburger
- I pay too much for clothes

What's the news here?

HK imports

It is really worth my while to buy the cheap releases in Hong Kong and resell them here, but the man wants to keep me down.

Seek out quality music.

Well the only possible sympathy I have in the examples given are for fans buying REM. Nothing could make me care about what people pay for Bon Jovi or Robbie Williams.

Maybe the way to really fight back against the music industry is to stop buying crappy music, and patronize your local used CD store. The big profits, I would imagine, come from the big multiplatinum albums, of which - maybe - one out of every 20 or 30 represents quality music?

Completely subjective, I know. Smaller labels that have not slashed prices really should, and people should make the effort to seek out independent music from these labels. People should explore new genres. I have a smattering of CDs I bought right from the small labels' websites themselves, for $10.00 for a new album, which isn't bad considering what new big-name artists' CDs sell for.

As for the issue of international markets and price gouging, nothing new here, either. In any case, when it comes to music, you don't necessarily get what you pay for either in Australia or anywhere else.

When you buy a top 40 album, you buy an image created by advertisers for the most part. There are probably half a million unsigned artists the world over who make music as good as or better than what you hear on your local top 40 station. Maybe they're not good looking, or don't know how to stand like a bunch of idiots with their hair hanging down in their eyes, or don't have the bodies to slut it up real good for MTV.

There are alternatives. Someone mentioned emusic.com - that's a good place to start.

But if you're really angry because the last Madonna CD is out of your price range, well...I'm trying real hard to care, but...

I Don't See The Big Deal With Music Downloads

Can someone please explain to me what the attraction is of music downloads anyway?

Yes, I'm middle-aged & I tend to listen mainly to classic rock albums with a little blues & soul thrown in. Most of the stuff I listen to, I can get fairly cheaply either second-hand or on eBay/Amazon marketplace - generally, I'll pick up a brand new CD for around £6 ($10). For that money, I get a nice uncompressed shiny CD with some liner notes and a hard case that I can rip at whatever bit rates I want to (I do listen to a lot of MP3-based music when I'm travelling or in the gym).

I don't go near Virgin or HMV record stores in the UK because I simply cannot justify paying anything up to £17 ($28) for a new CD but the prices that I do get my CDs at seem to be as cheap as paying to download each track individually - plus I get something tangible in the process.

I know a lot of people don't want to buy "filler" tracks on CDs and prefer downloading the tracks they want but I still don't get it - I've a collection of about 800 CDs at home and I'd say at least half of those are recordings I consider as "classics" that I can happily listen to from start to finish as completely good albums.

I'm certainly not trying to provoke a "the music of today is rubbish compared to the music of yesterday" argument because I just don't listen to enough modern music to have a valid opinion of it - but I've more than enough great music in CD album format to last me a lifetime now & if the younger generation of today has difficulty finding modern albums that are themselves "classics" in their entirety, then doesn't the "pick and mix music tracks" attitude perhaps make more of a statement about the quality of modern music than music downloads as being "the modern way" of distributing music?

price, quality, backup, DRM

I couldn't care less about the price for a song in the iTunes Music Store. I will never buy anything from it anyway.

CD's solve the DRM, quality, backup and price problems in one go.

Outsource your shopping

Since corporations are allowed to outsource anything they want, I've decided to outsource my shopping as well: http://www.mp3spy.ru/en [mp3spy.ru]

Less than $1 for most CDs, nearly every CD you can think of, and they happily accept foreign credit cards (and no funny business happening with the card either).

a simple trick to buy from outside US

Just buy an US itunes gift certificate on Ebay ; then (if you have not been ripped off by the seller...) redeem the gift certificate on itunes AND THEN create a new login with a phony US address. Here you go, Desperate Housewives complete season 2 (not to be found anywhere else at the time I tried this...)

YRO?

I lived in Australia for a while in 1989, 1990. At the time Aussie politicos were investigating price fixing of CD's. It looks like the more things change the more they stay the same, but what do inflated prices have to do with rights? Do people have a right to low prices? What a strange concept. Maybe if it is AIDS drugs, a case could be made, but music downloads?

Quality and value for money.

What about being able to download lossless if you want for the same price? MP3 128kb/s and 192kb/s is just junk with a decent sound system. FLAC all the way!

Far to expensive

Aside from the fact that music in general is too costly, consider this:

( only speaknig averages here.. )

A uncompressed CD is 17 bucks..

To buy a CD full of downloads its costs that much or more, and you only get COMPRESSED versions..

Not too equitable sounding to me..

Price & Quality

What about the comparison of the price against the quality of the sound?
Is it comparable to CD (44.1 KHz, 16 bits samples for 2 channels)?
If a physical CD costs, say, USD 15.- USD with 15 songs, each downloadable song should cost USD 1.
Much less if you think about the money they save by not printing the medium and not shipping the boxes all around the world.
Let's say USD 0.75 could be right. It's right if the song is CD quality, of course.
If it's a compressed [wikipedia.org] format song, it should cost less because quality is worse. Let's say USD 0.50 is a fair price.
Almost all legal downloads are above this price. With no real reason!
So I'd say that prices are too high when compared to quality.
And Maybe they are too high in any case.

You're Being Screwed

You're being screwed - By Your Government! They enforce these rules, so put the blame where it's due.

And you will continue to be screwed until you change your government to be more consumer friendly. And that's also putting the blame where it's due - On The Voters!

Weird

Strange, all the ones I download are completely free... hang on I think I hear somebody knocking on my door...

I Should be Rich!

From TFA:
This issue resonates in Australia, where consumers may be paying almost three times more for digital music downloads than they should be.

In a recent analysis, the prices of Australian-made CDs of artists such as Bon Jovi, REM and Robbie Williams were compared to those of legal parallel imports. It was found that the local product was as much as 300 per cent more expensive.

If these savings were available in the digital market, consumers would be paying as little as 67 cents for a digital download, instead of the $1.69 to $1.89 a track they pay at present.

Emphasis mine. Beyond the idiocy of using words like "should" when discussing what things cost in the real world, the comparison made here is completely vacuous. Just because the cost of printed cds in Australia is 3x higher than the imports doesn't mean that the cost of digital music is as well. In fact, it's clearly not.

(AUD) $1.89 to $1.69 is (USD) $1.41 to $1.26. So, at most, Australians are paying 42% more than they "should be." It's obvious that no one is selling digital music for AUD 0.67. Well, except some enterprising Russians.

Ob. SImpson Quote

Homer: "Free? yeah, I think we can afford it! HAhaha"

Actually, I use iTunes, but couldn't resist the quote.

US & Australian Free Trade agreement

Didn't Australia and the US just recently sign a free trade agreement, that was meant to open up the economic boundaries between the countries. Shouldn't have this also opened up the internet boundaries as well. How can the american companies get away with only selling to american. Typical shelfish greed of the Music industry. Lets hope a lot more artist follow the Canadian group. I might even start buying music again.

here is an idea

If downloads get to expensive perhaps these people should just buy the cd from a local retailer or abroad?

Re:Music has no absolute value

While that is normally true, music is not a free market. The music industry has both a macro and micro monopolies over music. By that I mean only a few music companies control the vast majority of music and set prices accordingly. And then each individual music company has exclusive monopolies over particular artists. So if you want to buy Rage Against the Machine, you have to buy it from Sony.

If you want evidence that the music industry ignores supply and demand, look no further than CD prices. Despite the enormous drop in CD sales the prices have not dropped. In fact, the music industry has raised prices over the same time period.

Re:I find Bittorrent and Sharaza.......

And yet here you (and your ilk) are, pissing and moaning about how the RIAA is unreasonable and unwilling to persue a mutually-beneficial compromise. Shame on you for ruining it for the rest of us.

Re:I find Bittorrent and Sharaza.......

I both buy albums, and download music (illegally), and to tell you the truth, from a moral standpoint I feel worse about paying for it.

By paying for music I am propping up an anachronistic distributing chain whose business practices I take issue with. Which, for me, is more of an issue than violating a business friendly law, or depriving the artist of the miniscule cut of the sale he'd be receiving.

For me something that is mutually beneficial would support both the artists and the consumer; paying for music ain't. I'd rather see no one pay for music and watch the record labels go down in flames (artists can still make money touring), so that when I do want to buy an album I can know that the artist is getting a reasonable cut of the sale.

Re:What do you expect from down under?

And the mention of "artists such as Bon Jovi, REM and Robbie Williams" is surely an opening for some joke about criminal record