Labels: downloads should be more expensive

The Financial Times reports that record labels are pushing for an increase in the cost of downloads.

Some leading music labels are in talks with online retailers to raise wholesale prices for digital music downloads in an attempt to capitalise on burgeoning demand for legal online music.

2 thoughts on “Labels: downloads should be more expensive

  1. Gary says:

    The people behind file sharing networks must be rubbing their hands with glee.

    I can’t remember where I saw it but on one blog’s comments page, someone argued that the *current* price for downloads is too high. Not just because it’s an inferior product, but because you don’t get the packaging or sleeve notes and have to provide the media if you want to burn it to CD. In the case of single tracks, I think the poster is probably right.

    On a related note, the economics of this are interesting. According to the US national association of record industry professionals, here’s how the price of an itunes download breaks down:

    Price: 99c
    Label: 55c
    Apple: 34c
    Artist: 10c

    And this is how Rolling Stone reports the breakdown of a $15.99 CD:

    $0.17 Musicians’ unions
    $0.80 Packaging/manufacturing
    $0.82 Publishing royalties
    $0.80 Retail profit
    $0.90 Distribution
    $1.60 Artists’ royalties
    $1.70 Label profit
    $2.40 Marketing/promotion
    $2.91 Label overhead
    $3.89 Retail overhead

    I’ll save you the effort of doing the sums… the pie is divided like this:

    Label: 43% (CD), 55% (iTunes)
    Artist: 16% (CD), 10% (iTunes)
    Retailer: 35% (CD), 34% (iTunes)

    To make sure I’m comparing like for like, I’ve put all royalties etc under “artists”, distributors’ slices under “retailer” and label costs, marketing etc under “label”. If the wholesale price goes up, do you reckon the artists will get a bigger share?

    Edited By Siteowner

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