andrewducker (![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
andrewducker) wrote2010-11-16 05:16 pm
andrewducker) wrote2010-11-16 05:16 pm
For the prettiest one
Whilst I am terribly happy for Mr Jobs and the remaining members of The Beatles on their managing to successfully sign a contract, would someone care to explain to me why iTunes is selling the albums for more than Amazon?
(Sergeant Pepper's - £7.99 on Amazon, £10.99 on iTunes).
I know Apple users are terribly loyal, but is it really worth 25% of the cost not to have to deal with those old-fashioned plastic discs?
(I speak as someone who hasn't bought music in hard copy for about five years, and gets 99% of his music through Spotify nowadays, which I'm perfectly happy to pay £10/month to get ad-free and on my mobile phone.)
(Sergeant Pepper's - £7.99 on Amazon, £10.99 on iTunes).
I know Apple users are terribly loyal, but is it really worth 25% of the cost not to have to deal with those old-fashioned plastic discs?
(I speak as someone who hasn't bought music in hard copy for about five years, and gets 99% of his music through Spotify nowadays, which I'm perfectly happy to pay £10/month to get ad-free and on my mobile phone.)
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As for Spotify, the player, at least on Mac OS, tends to intermittently decide that it can't connect to the Internet (when everything else is fine), or announce that music I added to a playlist months ago is now no longer available. I much prefer, on those occasions when I decide I want new music, to buy a physical CD and rip it in lossless format, rather than rely on some third party to stream me music in a lossy format.
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A Beatles geek writes
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I can think of several possible reasons.
One is that Amazon may be selling the product as a loss-leader to draw in customers, by selling at wholesale price or even at a net loss. (It wouldn't be the first time they've done this.)
Another is that with agency model contracts -- which Apple run on -- the vendor (EMI? Or Apple Core?) set the price and APPL just takes a 30% cut. Whereas with wholesale contracts -- which Amazon run on -- the vendor figures out a likely suggested retail price, then haggles with the retailer to give them a discount. Amazon could well be buying the Beatles CDs or MP3s at a 70% discount, and are cutting their margins accordingly.
For example, suppose the SRP is £10 -- Apple get a £3.00 commission and the other £7.00 goes to the Beatles under the agency model. Whereas Amazon goes and arm-wrestles the record company and extorts a 70% discount. They then sell for £7. Of this, £4 is profit (which goes to Amazon), and £3 ends up going to the music publisher.
The public then see Amazon as the good guys ("they're cheaper"), and Apple as more expensive. But in reality, Apple is taking a smaller slice of the pie, while Amazon is strangling the artists (or their publisher) in order to deliver a small sweetener-discount to the consumer.
(The real threat to Amazon is that the publishers will wise up and, under the agency model, start discounting to compete with Amazon's pricing. And it's going to happen sooner rather than later. While much of the whining among the ebook reading public is along the lines of "iBooks are going to cost $15! But Kindle books are $10! This is awful!" what I'm hearing is that new titles will cost $15, while backlist items will be discounted sharply -- but in a way that protects the authors' royalty statements, unlike Amazon, who gouge the artists.)
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