I hope Elliot Spitzer finds out what I've always suspected: 99 cents is about double what I should have to pay for a single track of downloaded music. Man, if tracks were 50 cents, it would be open season, I'd be back in the music-buying business. But at 99 cents, I feel like there is no discount for not costing them the overhead of publishing the content on CDs with labelling etc.. I mean, with my DSL connection I'm paying for at least half of their distribution costs. I'm saving them at least 10 cents in packaging, probably much more than that. Maybe 99 cents is right for hot new songs. I mean, who am I to deny a company the ability to charge a premium for brand-new material. But everything else in the world should be 50 cents or less. The doofuses don't realize people would just buy tons of stuff that they hadn't bought before due to price.
Steve Jobs was right. The record execs are being greedy. Spitzer is going to prove it, and we'll all be living large with 50 cent downloads.
3 comments :
I hope Spitzer checks out the cost of handling a financial transaction, and compares several different types. I have read that a typical transaction costs a minimum of 50 cents to process through the credit card company, so a 99 cent product will only provide 49 cents in gross revenue for a vendor.
However, one technique I read about several months ago can reduce the transaction costs to an average of about 5 cents, and if the music vendors used that technique, then they should be able to reduce their price to the 50 cent range and still make a profit.
The technique I'm talking about involves using statistical analysis to generate some kind of typical billing amount. Using this, the vendor doesn't track individual sales, but maybe just counts the number of transactions, divides that into the total amount sold, and bills each customer based on the average price per transaction. That's a gross simplification, but it gives you an idea of how it works.
So how would you feel about getting a bill for an approximate amount of what you purchased, without itemizing the individual transactions? Some months you would pay a bit more and other months you would pay a bit less, but over the long run it would likely be as accurate, or more accurate, than a method that tracks individual transactions. The main difference is that the amount you pay to the money-changer is much less when you don't track individual transactions.
Those transaction fees are another oddity to me. Is 50 cents really the rock bottom that a credit card transaction can go?
Even if it is, maybe people with micro-payment sized goods could set up monthly billing or some other system that could accumulate sales and then make the transaction once in a while instead of with every small purchase?
Yes, that is an excellent question: why do the credit card companies have to charge a minimum of 50 cents per transaction? As cost per MB goes down, and transmission speeds go up, cost per transaction goes down, so why do they keep the same rate?
Instead of accosting the on-line music industry, we should be going after the credit card companies and get them to lower their rates to a reasonable level. Then we would be addressing the cause, not the symptom.
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