It is a well established precedent for consumers to pay a premium for convenience. We expect the prices at a "convenience" store to be higher than those at Costco. We pay a delivery fee and/or tip to get food delivered to us. We abhor the "convenience charges" that Ticketmaster tacks onto our ticket orders but we usually pay up to avoid having to shlep to the venue's box office and buy the tix in person.
Which brings me to the issue of the pricing of digital music. For PC-based purchases, they are still for the most part priced at $0.99 -- something that Eliot Spitzer is looking into, but that's a topic for another post. The wireless carriers are charging $1.99 - $2.50 per track for their new digital music offerigs on the theory tof convenience -- because the consumer gets instant gratification of the music to their phone, this warrants an additional premium. But what price convenience? Is a 100 - 150% markup justified for the convenience delivered?
Consumers are willing to pay a premium for convenience as long as it's reasonable. My gut tells me that a 100% - 150% premium is off the mark. I'm sure these prices are based on analysis -- they've no doubt done their homework and probably have reams of research to back it up. But still, as a consumer I'd feel the 'I'm getting ripped off" pangs. This is something the music industry needs to be careful of. Fairly or not, they've been perceived to have ripped consumers off before by peddling $18 CDs with 1-2 good songs on it compared to similarly priced DVDs and all of their extras. Though you could also make the argument that music has a much longer shelf life than a movie -- that the right music will stay with you forever and that a few dollars is a small price to pay for such art. No matter. The image of the fat cat record labels preying on their customers persists.
Consumers hate paying monopoly prices in captive situations. It's the Ticketmaster fee, the $6 12 oz beer at the ballgame, the internet charge on your hotel bill. Consumers may be captive wireless subscribers, but this will change as they're able to sideload tracks from their PC onto their phones that have storage capacity for music, and Bluetooth tracks to their friends' phones. Jerry Seinfeld once joked about the unspoken contract between movie theaters and their patrons: 'They rip their customers off on the concessions while the customers in turn trash the theaters.' Wise words for the labels and the carriers.
Comments