Report: $1.29 songs get lower iTunes chart rankings | iLounge News

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Report: $1.29 songs get lower iTunes chart rankings

In an evaluation of the iTunes Top 100 chart rankings from Tuesday to Thursday, Billboard has discovered that songs that went up in price from $.99 to $1.29 dropped in sales rankings, though the long-term impact of the drops on revenue is less clear. Data from Wednesday, the first day following the price increase, shows that the 40 songs on the Top 100 chart priced at $1.29 dropped an average of 5.3 places from Tuesday, while the 60 remaining $.99 songs gained an average of 2.5 places. Additionally, 33 of the 40 $1.29 songs saw their prices raised on Tuesday morning, and dropped an average of 7.7 chart positions, compared to an average of 1.9 positions lost for the seven songs that were raised to $1.29 between Tuesday and Wednesday. A similar trend was seen the following day, and the two-day trend—from Tuesday to Thursday—mirrored the two prior one-day trends.

A drop in chart rankings is not directly tied to lost revenue, however. The article notes that for a price increase from $.99 to $1.29 to result in an equal or greater amount of revenue, unit sales cannot drop more than 23.3%. On the most recent track download chart, the difference between #42 and #45 in unit sales was only 3.5%, suggesting higher revenues despite a lower chart position, but the difference grew larger near the top of the chart—the difference between the #6 and the #3 chart positions equalled a 30% drop in unit sales. Finally, Billboard notes that a variety of external factors, such as radio play, media attention, placement on the iTunes Store front page, and release date could also play into the changes in chart position.

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Comments

1

May I be the first to say….DUH???  Of course this new pricing model was bound to backfire on them.  All for the sake of an increase of 30-cents in profit for a song…sad.

Posted by Michael Anders on April 10, 2009 at 9:25 AM (PDT)

2

The lables continue to baffle me…it’s the only medium that’s gone digital that just doesn’t get it…they’ve lost touch with how to market and sell their products.

Stupid is as stupid does.

Posted by ChicagoTech on April 10, 2009 at 9:44 AM (PDT)

3

It’s not backfiring on them, they’re still making more money.

Posted by John on April 10, 2009 at 9:46 AM (PDT)

4

Cool way to manipulate the download charts.

Posted by Chris on April 10, 2009 at 10:19 AM (PDT)

5

“It’s not backfiring on them, they’re still making more money.”

Um, maybe?

Even this short term snapshot does not mean they’re netting more profit. The top rated songs dropped in actual sales to the point they’re losing money, many of the middle ranked songs are making more money, but there’s plenty of stuff that was increased to $1.29 not captured by this brief overview because it’s not on these charts. The total effect is as yet unknown, and I’d bet the net will be lower than before.

Posted by Code Monkey in Midstate New York on April 10, 2009 at 11:58 AM (PDT)

6

The old $0.99 for everything made no sense economically.

  Every record store I’ve ever seen has the hits at full price and less popular stuff in the discount rack.  That’s how business works. 

  Why should anyone expect the iTunes store to work any differently?

Posted by j on April 10, 2009 at 4:37 PM (PDT)

7

“Why should anyone expect the iTunes store to work any differently?”

Because it operates on effectively $0 overhead per track sold, because it’s lesser quality than your record store example, and it’s competing with the mouseclick away P2P clients of the world.


“The old $0.99 for everything made no sense economically.”

That I agree with, because it’s at least double if not quadruple what a lossy download should sell for if they plan on ever winning against free. There’s this fatalistic argument that downloaders are simply criminals and will always choose free, but that’s pure ignorance. People have free options for most things in life, but they pay when either they see some direct benefit (better quality, more convenient, etc.) or even pay more when they see some less direct benefit even if not for themselves (cage free eggs, local produce, animal testing free cosmetics). The music industry has forgotten this basic concept - they don’t set the prices in any true sense, the consumer does. You raise prices, some percentage who would have paid $X but not the new price of $Z will now just go grab it off their favored P2P client, you lower it to $Y and some percentage who would have downloaded it at $X will pay instead. I don’t know where the balancing point for maximizing both sales numbers and sales profits is, but I do know it’s not even $0.99 let alone $1.29.

Posted by Code Monkey in Midstate New York on April 10, 2009 at 5:43 PM (PDT)

8

“The old $0.99 for everything made no sense economically.”

Why not?

When a new movie is released or a new video game comes out - they’re all priced relatively the same - in fact, when a NEW video game comes out, I don’t know of any that are priced 30% MORE than others.

From the label’s standpoint - they don’t have to create artwork for CD inserts, they don’t have to print CDs, they don’t have to pay to ship CDs, they don’t have to pay 3 middlemen to sell the CD, they don’t have to produce thousands or millions of CD jewel cases - yet they want the same money as if they were paying all of those expenses THEY NO LONGER HAVE TO PAY.

Um…no.

On the flip side - ask yourself how many times you buy an entire album.  Most albums now have one or two decent songs and the rest are crap - so may total “album” sales are down and they figure they’ll gouge us on the decent songs because they can’t sucker us into buying crappy albums anymore.

Posted by ChicagoTech on April 10, 2009 at 5:45 PM (PDT)

9

“Most albums now have one or two decent songs and the rest are crap”. This mantra is simply crap. It’s a catchecism dating back to the early 90s when the sort of AOR bands that had received the most promotion from the late 60s through the mid 80s had been supplanted by vapid pop acts that, for the most part, weren’t all that talented.

Today, I find that most albums are either solid because the artist is actually talented or the album is almost pure crap because the artist is a pre-packaged commodity. If you avoid the processed lunch meat of the musical world, you find yourself almost exclusively buying or otherwise acquiring whole albums versus just a few singles and not regretting the investment.

Doesn’t change the fact that digital downloads are overpriced, but the “most albums are… blah blah blah” is, at best, subjective, and arguably empirically false. It’s “truth” today seems more a product of a singles focused marketplace where, due to overpricing, people will only shell out money on a proven product and, with no way to hear whole albums before purchase short of downloading for free or the rare artist who streams the whole album, nobody feels like dropping $10-$15 just to see if they genuinely like the artist or just that one song that the radio’s are playing 24/7.

Posted by Code Monkey in Midstate New York on April 11, 2009 at 10:15 AM (PDT)

10

Code Monkey is correct, except for $0 overhead.  We all know that’s not true.

But he’s correct that there is a price point that will send users to their P2P, except those of who are suckers for better quality tracks. 

He’s also correct that a lossy file should be priced at $.25 to $.50.

The record companies’ greed and arrogance led them to bitterly protect their CD turf.  That strategy backfired.

If they had offered quarter tracks as soon as downloading became available, they would never have established the P2P mindset that is as deeply rooted as it is now.

The consumer does indeed set the price.  And now it’s as low as $0.  The record companies have no one to blame but themselves.

Posted by Chitunes on April 11, 2009 at 2:36 PM (PDT)

11

Is it literally $0, no, but it might as well be. At current hard drive prices, it’s less than 0.01 to store an entire album in the 256AAC format used by Apple and it’s, maybe, 0.01 for the bandwidth to deliver an entire album. So, fine, $0.02 assuming that only one person ever buys the album (each sale beyond the first begins dividing that $0.01 storage cost wink)

Posted by Code Monkey in Midstate New York on April 11, 2009 at 7:03 PM (PDT)

12

I never felt the need to download illegally for the last 5 years or so. Butt i’m now fed up with the stupidity of the labels.

Posted by Pieter Lammerse on April 13, 2009 at 2:39 AM (PDT)

13

Oh, the labels are their own post-modern comedy act. Technology came along and gave them the ability to remove virtually 100% of the costs in the music business other than the initial production of the music and marketing. Technology came along that gave them the ability to sell music in true CD quality 24/7 to anyone in the world for a cost to the labels of only a few cents per album. Technology came along that allowed labels to open and capitalize on their vast back catalogs that they can’t realistically sell in a physically distributed format…

...and they spent the past decade fighting it tooth and toenail, and they show no sign of buying a clue any time soon.

Meanwhile, the consumer who, I believe, in most cases would be more than willing to pay a fair price for downloads is left with the choice of either paying the same prices they’ve been getting gouged by for decades or engaging in their own campaign of guerilla price adjustment. The statistic I heard on NPR the other day put it at 40 free downloads for every paid download in the United States - and it’s generally worse ratios (for the labels) outside the U.S.. That argues in the absense of any real choice in pricing from the labels, that we, the music consuming public, are setting the price at about $0.03 a track. That is obviously too low, but it’s equally obvious that $0.99 and $1.29 is too high.

For the past two decades we’ve been hearing various forms of the argument about CD prices: the CD, in total, costs $1-$2 to deliver to the consumers’ hands, so why did prices remain so high when one of the things we were promised by labels when the CD first came out was that it was only priced so high due the new technology and it would drop substantially in the near future (*cough*price fixing*cough*). If they could afford to be selling LPs and cassettes for $6-$9 before the CD came out, there was no reason why CDs shouldn’t have dropped to those same prices in the intervening years. The intense dissatisfaction that built up among the music consumers after getting gouged for more than a decade is precisely what fueled the downloading revolution in the late 90s. So, when technology dropped the cost per album from $1-$2 to $0.02 to $0.10 (lossy versus lossless), surely at last we should have seen the promised price drops, right? Nope, the labels did nothing but make it worse over the next ten years until we wind where we are today: a generation of youth who largely doesn’t even understand why they should be paying *anything* for music and where the rest of the consumers guiltlessly download most of their music for free and cherry pick what artists and albums will get their dollar and the labels continue to react to a scenario they will never be able to change through coercion by raising prices even higher.

Reminds me very much of the quote about insanity usually attributed to Einstein.

Posted by Code Monkey in Midstate New York on April 14, 2009 at 4:53 AM (PDT)

14

Interestingly enough, I was looking for a song today and on the original album release it was priced at $1.29.  On a greatest hits compilation, it was priced at $.99 cents.  Guess which one had the higher popularity ranking, the one priced at $1.29.  I highly doubt it was a coincidence.

Posted by JW in STL on April 30, 2009 at 8:26 AM (PDT)

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