Price As Signal

(From Joel On Software)

EMI Group boss ALAIN LEVY said at press conference today that he believed STEVE JOBS would introduce multiple price points for ITUNES music within the next year.

The story they're trying to tell you is that "older, less popular songs could be discounted, and in-demand singles could go for more than a dollar."

The answer is that pricing sends a signal.

The music recording industry wanting different prices for songs has nothing to do with making a premium on the best songs. What they're really after is a system they can manipulate to send signals about what songs are worth, and thus what songs you should buy.

When really bad songs come out, as long as they're new and the recording industry wants to promote those songs, they'll charge the full $2.49 or whatever it is to send a fake signal that those songs are better than they really are.

It's the same reason we've had to put up with crappy radio for the last few decades -- the music industry promotes what they want to promote, whether it's good or bad, and the main reason they want to promote something is because that's a bargaining chip they can use in their negotiations with artists.

Price As Signal

Bill Smallfield, thanks for the post.