Calculate your chances...negative...negative...negative!

Friday, September 14, 2007

Epitaph, eMusic and one of my favorite logical fallacies.

Talk about irony. Right after I finish my eMusic post, on of the biger labels on the service announces they won't be renewing their contract when it expires next month. Though I'll admit, there's not a ton on Epitaph I'll really miss, the Anit- sub lable has a lot of gems and the label has a big catalog and some prestige that goes with it.

I won't sugar coat this. Losing a big label like Epitaph is a bad thing for eMusic. Not necessarly a "reconsider your subscription" thing, but it is unfortunate and the reason for the withdraw seems to be part of a bigger trend.

According to David Pakman, eMusic pres, Epitaph is leaving because they want eMusic to charge 99 cents a track like Apple. Now I'll leave the question of is the Epitaph catalog worth 99 cents a track up to you, but here's something that I see happening over and over with labels (and you could even throw the NBC/Universal standoff with Apple in this mix) that just flies in the face of what little I know about business and logic.

First off, if you have a product that is selling to a diminishing number of people, wouldn't it make more sense to lower the cost? Or, at the very least, keep the cost consistent, not raise it? Yet, here is this situation where they want more for their tracks when the industry as a whole is slowly going under. Hell, I read the other day FYE is raising their catalog CD prices to $19.99! It's almost like these people are trying to kill the industry themselves.

However, the big one that always gets me is kind of implied in this action by Epitaph. If X number of people are willing to pay Y for your music, then an equal number (or at least enough to prevent a loss) will be willing to pay Y plus Z for your music. I'm not genius, but I have a really hard time believing this is so.

With a service like eMusic, the cost is low enough that you don't have to be worried about taking a chance on new music. You could never collect statistics on such a thing, but I can tell you from my own experience, I'm much more willing to take a chance on something for 30 some odd cents a track than I would be at 99.

Sure, the people who are die hards will likely follow Epitaph to Apple and pay those prices, but in this environment, why would you be willing to bet on that number? To break it down another way, what is better, selling a lot of something at a lower cost, or selling fewer or something at a higher cost?

Now this is starting to get into the whole "long tail" thing and all the new economics stuff I don't claim to understand. I guess the bottom line for me is, I'm not a gambling man. If I was running the show, I'd probably stay with the lower price and current numbers rather than assuming a higher price would either keep a consistent number of customers or that the price increase would offset any loss of customers.

(Sidenote: Kudos to Epitaph for at least announcing they are leaving the service in October. Most labels just pack up shop with no warning leaving people who were planning on downloading tracks high and dry.)

UPDATE: and now they're gone. WTF? I thought it was nice they were giving people a heads up, but now it appears they've pulled everything already. Oh well, hope you got what you wanted subscribers.


José Viruete said...

I'm a worker in the music industry and I'm liking a lot this "series" of music related post, keep on, please :)

Kevin P. said...

This reminds me of a note from Trent Reznor about Year Zero sales in Australia - apparently the distributors there were charging roughly $30 US for it (as opposed to the $12 - $18 you can get it for here). His response was not a good one, and he mentioned that it's no wonder people are illegally downloading tracks with studios focusing so much on profiteering as opposed to the actual music.

Just food for thought.

Kindest regards,

Kevin P.

Amanda said...

Since I'm strictly a consumer, there's so much I don't know about the mechanics and economics of running a record label I'm loathe to get on my high horse too much. Possibly if I were in their shoes, I'd make the same decisions.

However I do think the record labels would be better off recognising reality a bit more in their practices. David Pakman's release on Epitaph put those issues very well.

Anti/Epitaph was already unavailable in Australia (altho', it must've been at some point because I definately got the Greg Graffin solo album) so it was no loss to me personally. I suppose I take a pragmatic attitude, its great to get new releases but even if their were no new releases on eMu I'd still have no trouble dispensing of my monthly quota in the backblocks.