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is .99 cents for a song really too much to ask for?
Yeah...the title of this post is messed up. That should read 99 cents...nevertheless...here we go:
An old friend and former colleague of mine who spent a good part of his career working for a large Nashville-based entertainment firm is now earning a living as both an artist manager and a music marketing consultant. He also maintains a great website called The Music Gardener where he blogs frequently and offers great suggestions to artists on a variety of career development topics. And he also poses some interesting questions from time to time.
In the past couple of weeks he has been trying to tackle the question of what the cost of a song should be. In his first post asking “Is The Price Right” he laid out this argument:
“Here are a few things to think about. The price of a single song on iTunes today is .99 cents which just happens to be the same as it was for a cassette single twenty years ago. Twenty years ago a gallon of gas was $1.08, a dozen eggs were .89 cents, and movie tickets were $4.00. Last week my wife and I went to a movie and paid $12/ticket resulting in a $24 purchase for the two of us to be entertained for a couple of hours. On the way home, we purchased gas at $2.70/gallon and bought a dozen eggs for $2.50. This bodes the question “why is the price of music suppressed and not allowed to increase in value?” Do consumers think less of music than a pack of gum, a soda, or a loaf of bread? The answer is sadly a resounding and obvious yes. But why? Is there anything that can be done to change the perceived value of music in the consumer’s mind”
That brought him a lot of feedback that went along this line of thought:
“Many people still defend the argument that music should be cheaper now than it was 15-20 years ago based on the argument that it is cheaper to make and deliver digital music than it was for physical music in the past.”
And so that led him to posting the follow-up question of “Is .99 Cents Really Too Much to Ask?” And below I'll excerpt pretty much the entire post for you:
“Let’s take the economics of one song and break it down. We are going to assume the ideal scenario for a song that is written, recorded and marketed quickly. Our assumption will be based on an eight hour day which is definitely the exception for creating, recording and marketing a great song.
- A song that takes very little time to write still probably takes the better part of a day (eight hours) What should the hourly rate for a song writer be?
- A song that requires little amount of time to record will usually take at least a day (eight hours) What should the hourly rate be for the studio full of recording gear even if it is in a garage or basement?
- What is the engineer’s time worth based on an eight hours of work?
- What is the producer’s time worth on an eight hours of work?
- Let’s assume you have a marketing person who is able to pull a marketing plan together and execute it in a day. What is eight hours of his time worth?
- You also have the designer who designs the record cover which is required even in the digital age. What is eight hours of his time worth?
- Someone has to upload the music and work with iTunes in order to get it positioned and pictured. What is this person’s time worth?
- A radio promoter spends hours of time calling hundreds of radio stations making them aware of the song and asking them to play it. This is impossible to do in a day but what do you think their hourly wage should be?
- The publicist spends hours of time calling and emailing hundreds of magazines, TV shows, internet sites to set up interviews and record reviews. What should their hourly rate be?
- Magazines, Facebook, MySpace, Twitter, Reverb Nation, and even Google require a nice photo in order to feature the artist. What do you think the photographer’s hourly rate should be?
- Someone has to collect the money and make sure the songwriter’s, artist and Uncle Sam are paid. What is this person’s time worth?
In conclusion, let’s look at the .99 cent price of a song. iTunes keeps .30 cents leaving .70 cents to cover everything listed above. If we take the twelve people listed above (and there are many we left out) and divide up the .70 cents, each person would get roughly 6 cents per song sold. There are no guarantees that a song will sell more than 1 copy and many don’t. At 100 copies sold, each of these people would make $6 total. Based on eight hours, that is .75 cents an hour. Minimum wage is $7-$8 depending on which state you live.
Is this really how we want to value music? Can we change the perception in consumers minds?”
As you can see, if you agree with his numbers and follow this line of thought, we should be seeing songs sold on iTunes for probably ten bucks each, and a full album would be maybe a hundred dollars or more. Of course we know that the price for a song is just .99 cents, and even at that incredible bargain...sales are flat and illegal file sharing and downloading continues for at least one or two generations.
How I see the answer to the question of value is simply what will the consumer pay for a song? The answer is not how much it costs, not what’s fair to the composer, artist or producer, nor how we got to this place. I think pretty much everyone (even the generation raised on technology and who are used to “free” as a price point) would agree that music is worth something.
But I’ll throw this out for thought: it’s not worth .99 a song.
Viewing value through the lens of how the music business has been rolling along all these years is a trap. That model was based on ownership, and technology is pretty close to wiping that concept out. As we rapidly move to a cloud-based environment that will encompass all forms of entertainment (film, tv, books, games, music and home pc software) consumers will be giving up ownership in exchange for access to everything at any time, on whatever preferred platform there is. And the subscription prices will be mind-boggling LOW…which will make today’s .99/song almost laughable.
My crystal ball shows two levels of artists: those (very few) that will stay and thrive within the major corporation environment enjoying extensive marketing campaigns, access to international media and concert venues. And everyone else.
The former will develop revenue streams built on selling tickets and merchandise. The latter….that’s the million dollar question nobody has come up with an answer for. Including me nor my old friend.
Feel free to share and maybe somebody will come up with the answer.
An old friend and former colleague of mine who spent a good part of his career working for a large Nashville-based entertainment firm is now earning a living as both an artist manager and a music marketing consultant. He also maintains a great website called The Music Gardener where he blogs frequently and offers great suggestions to artists on a variety of career development topics. And he also poses some interesting questions from time to time.
In the past couple of weeks he has been trying to tackle the question of what the cost of a song should be. In his first post asking “Is The Price Right” he laid out this argument:
“Here are a few things to think about. The price of a single song on iTunes today is .99 cents which just happens to be the same as it was for a cassette single twenty years ago. Twenty years ago a gallon of gas was $1.08, a dozen eggs were .89 cents, and movie tickets were $4.00. Last week my wife and I went to a movie and paid $12/ticket resulting in a $24 purchase for the two of us to be entertained for a couple of hours. On the way home, we purchased gas at $2.70/gallon and bought a dozen eggs for $2.50. This bodes the question “why is the price of music suppressed and not allowed to increase in value?” Do consumers think less of music than a pack of gum, a soda, or a loaf of bread? The answer is sadly a resounding and obvious yes. But why? Is there anything that can be done to change the perceived value of music in the consumer’s mind”
That brought him a lot of feedback that went along this line of thought:
“Many people still defend the argument that music should be cheaper now than it was 15-20 years ago based on the argument that it is cheaper to make and deliver digital music than it was for physical music in the past.”
And so that led him to posting the follow-up question of “Is .99 Cents Really Too Much to Ask?” And below I'll excerpt pretty much the entire post for you:
“Let’s take the economics of one song and break it down. We are going to assume the ideal scenario for a song that is written, recorded and marketed quickly. Our assumption will be based on an eight hour day which is definitely the exception for creating, recording and marketing a great song.
- A song that takes very little time to write still probably takes the better part of a day (eight hours) What should the hourly rate for a song writer be?
- A song that requires little amount of time to record will usually take at least a day (eight hours) What should the hourly rate be for the studio full of recording gear even if it is in a garage or basement?
- What is the engineer’s time worth based on an eight hours of work?
- What is the producer’s time worth on an eight hours of work?
- Let’s assume you have a marketing person who is able to pull a marketing plan together and execute it in a day. What is eight hours of his time worth?
- You also have the designer who designs the record cover which is required even in the digital age. What is eight hours of his time worth?
- Someone has to upload the music and work with iTunes in order to get it positioned and pictured. What is this person’s time worth?
- A radio promoter spends hours of time calling hundreds of radio stations making them aware of the song and asking them to play it. This is impossible to do in a day but what do you think their hourly wage should be?
- The publicist spends hours of time calling and emailing hundreds of magazines, TV shows, internet sites to set up interviews and record reviews. What should their hourly rate be?
- Magazines, Facebook, MySpace, Twitter, Reverb Nation, and even Google require a nice photo in order to feature the artist. What do you think the photographer’s hourly rate should be?
- Someone has to collect the money and make sure the songwriter’s, artist and Uncle Sam are paid. What is this person’s time worth?
In conclusion, let’s look at the .99 cent price of a song. iTunes keeps .30 cents leaving .70 cents to cover everything listed above. If we take the twelve people listed above (and there are many we left out) and divide up the .70 cents, each person would get roughly 6 cents per song sold. There are no guarantees that a song will sell more than 1 copy and many don’t. At 100 copies sold, each of these people would make $6 total. Based on eight hours, that is .75 cents an hour. Minimum wage is $7-$8 depending on which state you live.
Is this really how we want to value music? Can we change the perception in consumers minds?”
As you can see, if you agree with his numbers and follow this line of thought, we should be seeing songs sold on iTunes for probably ten bucks each, and a full album would be maybe a hundred dollars or more. Of course we know that the price for a song is just .99 cents, and even at that incredible bargain...sales are flat and illegal file sharing and downloading continues for at least one or two generations.
How I see the answer to the question of value is simply what will the consumer pay for a song? The answer is not how much it costs, not what’s fair to the composer, artist or producer, nor how we got to this place. I think pretty much everyone (even the generation raised on technology and who are used to “free” as a price point) would agree that music is worth something.
But I’ll throw this out for thought: it’s not worth .99 a song.
Viewing value through the lens of how the music business has been rolling along all these years is a trap. That model was based on ownership, and technology is pretty close to wiping that concept out. As we rapidly move to a cloud-based environment that will encompass all forms of entertainment (film, tv, books, games, music and home pc software) consumers will be giving up ownership in exchange for access to everything at any time, on whatever preferred platform there is. And the subscription prices will be mind-boggling LOW…which will make today’s .99/song almost laughable.
My crystal ball shows two levels of artists: those (very few) that will stay and thrive within the major corporation environment enjoying extensive marketing campaigns, access to international media and concert venues. And everyone else.
The former will develop revenue streams built on selling tickets and merchandise. The latter….that’s the million dollar question nobody has come up with an answer for. Including me nor my old friend.
Feel free to share and maybe somebody will come up with the answer.
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Comment by Adam Sheets on July 14, 2010 at 11:00am -
I agree with almost everything here, but the problem with drawing the comparison between a song on iTunes and a single is this. In purchasing a 45 or cassette single, the consumer actually got something. Some people, like me, would rather own a physical copy than a download. But, regardless, the price is very low for both considering the time and effort put into it.
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Comment by Hal Bogerd on July 14, 2010 at 11:16am -
Okay, I'm gonna be a wise ass. Isn't .99 cents less than a penny?
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Comment by Easy Ed on July 14, 2010 at 12:27pm -
Hal....forget it. Yes it is. See my next post called "the many mistakes of easy ed".
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Comment by Hal Bogerd on July 14, 2010 at 1:21pm
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You never know.......... I just got an email offering songs for two cents each from a "legal" Russian downloading service!
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Comment by hyperbolium.com on July 14, 2010 at 1:50pm -
"As we rapidly move to a cloud-based environment that will encompass all forms of entertainment (film, tv, books, games, music and home pc software) consumers will be giving up ownership in exchange for access to everything at any time, on whatever preferred platform there is."
I keep hearing this, but given the business failures of several cloud-hosted music services (Lala, anyone?), I remain skeptical of accepting access to an undefined collection of cloud-hosted music in lieu of a licensed physical copy. Signing up for Rhapsody does not guarantee you access to any particular song, not even to those songs which are in Rhapsody's catalog today. You may be willing to give up ownership, but the owners of the actual recordings aren't, and they're no doubt licensing their works to Rhapsody on a term basis - which means that upon renewal they may or may not re-up their license for any particular recording. Radio is a great music companion, but it's not the equivalent of a music collection.
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Comment by Easy Ed on July 14, 2010 at 2:09pm
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LaLa is a monthly Japanese shōjo manga magazine published by Hakusensha...oh wait...i think you mean the music delivery service that Apple bought for just $80,000,000 seven months ago and then shut down in May. I believe that there is a higher purpose to that transaction that we mere mortals are unable to see clearly yet. (And they weren't exactly a cloud and nor is Spotify.)
Listen...clouds will see the light of day in due time. Every major tech player like Google, Apple and Microsoft are working on it and every major media content owner are running to duck and cover. And its not just music we're talking about...its every productivity application imaginable from electronic medical records to inventory control systems. The revolution will not be televised...it'll be stored in a cloud.
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Comment by Thomas Hine on July 14, 2010 at 2:49pm -
The question is - "is the resource sustainable?" and at the moment there is no shortage of music.
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Comment by hyperbolium.com on July 14, 2010 at 3:21pm
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And iMeem was bought by MySpace. Either way, the songs you had in your virtual library went "poof" with the acquisitions and may or may not ever see the light of day again. I'm not sure how you're differentiating hosted music services from cloud services, but in both cases you're entrusting someone else to hold your music for you, and to keep it available to your always and forever. Cloud-based hosting services offer terrific value and flexibility, but I wouldn't trust them with my music library any more than I'd trust Flickr with the only copy of my photos.
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Comment by Easy Ed on July 14, 2010 at 3:34pm
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I've been using Shutterfly.
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Comment by hyperbolium.com on July 14, 2010 at 4:00pm
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"I've been using Shutterfly."
Do you upload your photos to Shutterfly and then delete all copies from your local disk drives? Or do you use Shutterfly as a handy way to provide web access to yourself, family and friends, but keep master copies of your photos in your own physically owned storage? This seems parallel to the notion of accessing music solely from an environment that's physically hosted by someone else, doesn't it?
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