Music "Business" & iTunes

So yesterday was Record Store Day 2011. It was an awesome experience for me. While I was only interested in the Foo Fighters "Medium Rare" release, it was still great to be involved with. When I arrived at Dearborn Music around 8:30am, I found a line already existed in the rain! We quickly struck up conversation with others in line, discussed what releases each person was there for and just talked music in general with others. It instantly took me about about 20 years to a time when this was just a regular occurrence. It happened every Tuesday morning (but usually the Monday night before), when new quality releases were coming from artists and the fans were excited day in and day out.

However, Record Store Day is not the focus for this entry. Let's go back about 12 hours prior to getting in line at Dearborn Music. While doing a scan of Facebook, I'd noticed that Lady Gaga announced her new single "Judas" was being released 4 days early via iTunes for the price of $1.29. As time went on, the mere thought of this bothered me more and more. I've made my thoughts clear on iTunes and how many things it does counter-culture to what music, art, artists and fans are about, so I don't need to retread that here. But it's this particular practice of exclusive product with inflated cost that has me quite bothered.

It basically boils down to this; How is it ok and applauded by the public to charge a THIRD more for a product or service just because you can provide it earlier than others? Anyone else employing the business model of iTunes would be called on the carpet in public forums. You may say "It's only twenty-nine cents, what's the big deal?" And I would answer in this fashion "That's exactly what they expect you to say" Can you think of one other product or service that this is acceptable from? Electronics stores have exclusive products constantly that range from early movie or album releases, to gadget and even appliance exclusives. Do they up-charge? Sometimes. But 30%? Not that I've ever seen, it's not acceptable and there would be public outrage. In most cases I've encountered, media products might receive a $1 inflation based on an original cost between $10-$25. So you're dealing with one or less than one percent profit being made from exclusivity. Electronics & gadgets tend to be even less. Take a hot new gadget with an MSRP of around $400. The highest I've ever seen items like this at a store stocking it exclusively is around $10. So again, a fair charge to get the product earlier from one venue in particular.

Really think about it and ask yourself; would I consider paying 30% more for any other product if it were exclusive to one venue? Or would you consider this to be shady, under-handed, untrustworthy, etc? Now let's take it a step further; what if that product only worked via a device provided by the same venue charging you 30% more to use it in the first place?

I'll give a fabricated, non-real world example to make my point more clear. Let's say that an energy company manufactured small home appliances. But in order to use their products, you had to have special outlets installed in your home. These outlets didn't work any different than the wide variety of other outlets available, they were just "locked down" so to speak. They only power this company's products and sometimes cause problems with your other, non-compatible appliances. Now add this to the pile; now that you've installed this companies outlet (or delivery system) in your home; now you are locked into buying only their products to work with that outlet. Upon investigation, you find out that their products are several under powered when compared to similar products from other companies. To further compound the issue, you find out that these under powered products are priced two and sometimes FOUR times as much as other, more powerful products.

So far in this example, you've bought into two items that cost more, offer less functionality and often times cause many convenience issues. Now to top things off, you come to find out that you can get an item to use with this appliance a little earlier than elsewhere. In this example, the item will cost $100 elsewhere in a few short days. But the company that sold you on their outlet and their appliance that runs on that outlet will let you have that item a few days early for $130. Would you even consider that? Would you think of it as a favor, a plus or a reason to do business with that company? I sincerely doubt it. In fact, I believe quite the contrary. I honestly believe that if ANY other company on planet Earth used these practices, they would be subject to endless amounts of controversy and they wouldn't have a customer base very long.

Yet for some reason, this practice is not only ok, but expected and accepted from iTunes. You have to over pay quite a bit for any product in the iPod line. You have to install their system resources heavy, exclusive software that only works with the iPod line. And then get a song early that they're already overcharging for (at their regular $.99 price), you have to pay 30% more. It's wrong, it's bad for business and all I can do is hope that someday soon the general public wakes up and realizes it. When something is at such a low price point, it's easier to get away with practices like this. As I said before, you were probably thinking "But it's just thirty cents!" near the beginning of this post. But again, I maintain that it's the practice, not the price that it's important. You wouldn't go to a car dealership to purchase a car that only runs on a certain company's fuel, if that fuel were over priced. And you certainly wouldn't find it acceptable to pay 30% for a $30000 vehicle because they could get it to you a few days early.

So why is it ok for iTunes to do the same thing?


-Russ