Sunday, August 28, 2005

Thanks for all those profits. Now we'd like more.

Two record companies want Steve Jobs to change iTunes pricing so they can charge more for the most popular songs. Jobs almost always wins these battles. But now -- could it be? -- he's even more powerful than Wal-Mart: "these days, allies and adversaries both agree, he has more power online than Wal-Mart has in the bricks-and-mortar world. Apple commands an estimated 75 percent of digital music sales, and roughly 80 percent of sales of MP3 players...." It's a fight over profits as well as platforms but it's astounding how everyone has forgotten that it was Jobs -- not record executives -- who got people to pay for the product. At least Jimmy Iovine knows it's a continuing process: "'We need to convert a lot more people to the habit of buying music online. I don't think a way to convert more people is to raise the price.'" And then there are artists who realize a well-planned free offering is a good investment in audience loyalty.

All of which is useful background for Hollywood's piracy claims. Two things. If movie studio sob stories about lost profits are true, then the problem is not that their product sucks. It's that they haven't figured out that whole customer-centricity thing: "some critics of Hollywood's response to digital piracy say that the film industry is not addressing the broader challenge: a rapid and epochal shift in how audiences watch movies. 'I think the movie business is in the same place the music business was in 2001 and 2002. They're just sitting it out and not doing much to put legitimate movie offerings online.'" And second, when the piracy card is played, gadgets suffer, making my cell phone and my DVD player less cool. And that is just so wrong.

It's like you could write a book about this stuff.

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