Music insiders said it would happen and the numbers show that it finally has. As predicted (see my previous article), after the major labels raised the track price of their most popular digital hits from 99 cents to $1.29, digital sales have declined for the first time ever.
According to Nielsen SoundScan (who tracks all physical and digital sales for the industry), the drop was only a little less than 1 percent, but it was certainly symbolic that the shortsightedness of the major labels has soured one of the few remaining bright spots of a suffering industry.
So why did they raise them in the first place? First of all, it was a power play against Steve Jobs and iTunes. The major labels have always hated the fact that a computer company was not only setting the price for their product, but distributing it as well. The second reason was that they figured (wrongly it would seem) that they'd make more money from the same amount of downloads since they never believed that the sales would decline. Even if they did, it was thought, they'd make the same money with fewer sales.
While this may be true, it's simply a bad idea from the longevity standpoint of an artist. In Music 3.0, you want as many fans to buy in as possible, not fewer. Sure, many will just illegally download the music anyway, but many won't because of the hassle factor involved. The more involvement from the fanbase, the better for everyone.
Regardless, raising the prices on a product that's not a necessity during a severe recession doesn't make much sense no matter what industry you're in.
That being said, the labels do have some really smart people working for them who could really change the landscape of the business if they were only given a chance. That just might be too much to hope for, I'm afraid.
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