“iGuru”

Always creative, always innovative, but dumb when it comes to his campus tour.

Regarding iStore, the prices should be lower. You get less in quality and packaging. The music industry seems very stupid about pricing.

Not in this area. Until early 2001, I was the pricing manager for a software vendor. We sold to enterprises, so it was possible to charge a different price in each transaction, which Apple clearly cannot do here.

I have no idea what the price elasticity is for down-loading music via iTunes. It may well be that Apple’s marketing folks have done some research. You never really know until you try, however. Years of experience doing pricing taught me that. It also strikes me that the demand curve for down-loading music might well be different now from what it was when iTunes was introduced. One reason is that, once somebody has acquired the necessary hardware, he’s, if not “hooked”, at least committed to acquiring music in that fashion; one barrier has been removed. Now that millions of people have the hardware, it might well be possible for Apple to raise the price. The price for the first song is the $0.99 for a download plus the price of the hardware. People are, moreover, committed psychologically as well as in terms of the hardware now being a sunk cost.

Hope these thoughts help some.

And there is something funky going on with the comments posting SW.

Markus – thanks for pointing out alternatives to iTunes. I’m actually looking for a site from which to legally download some music selections so recommendations (even from folks I find politcally naive ;>) are welcome.

Part of the “problem” I face here is that I have no desire to develop a vast collection, there are just a lot of older stuff I’d like to have without purchasing entire CDs – I’d much prefer to purchase per song. I’d prefer not to have to cough up initial or annual subscriptions to several sources (which, for lower volume, of course effectively increases the per song price). My criteria, insofar as I have given it consideration, is selection, quality of the downloaded material, speed, ease of use, and cost in, roughly, that order of importance with cost sort of running on a sliding scale within a small range. I’m not a maniac audiofile but I don’t like obvous flaws or having to pay twice due to poor quality.

Wichita – I presume you view compression algorithyms as important beyond download speed. Certainly a consideration but what other aspects are you concerned with (bits lost or added, etc)

SjV – are you aware of any trends or research in pricing models?

Rosignol – is it possible to “rip” CDs at a higher bitrate than whatever the download was at?

All – for an ignoramus on this area of technology, directed to those who pay attention, what are the major advantages and disadvantages of the main two or three formats (MP3 vs whatever)?

iTunes is a free download, and allows you to rip your own cds using whatever bit rate you like.

Feel free to claim the iTunes Store is overpriced and uses inferior technology if you like, but keep in mind that the iTunes software doesn’t care if you ever buy a song online.

He doesn’t know that. It might well be that, if the price goes up to, say, $1.09 per song from $0.99, demand will fall only 5%, and revenue will increase by about 5%.

It might well be that a pricing mechanism with different prices for different songs makes sense. Price elasticity may well be different for some songs from what it is for others.

The bit rate of the file is not the only consideration; the quality of the compression algorithm also enters into it. In blind tests, the Ogg Vorbis format is believed by many users to be the original. The Apple compression format is likewise considered by many users to be superior to mp3’s even if they are at higher bit rates.