Music industry dynamics suggest iTunes price hike

Online music consumers likely to pay more if ASCAP and BMI succeed in download revenues grab.

by Maureen Landsverk

On April 7 of this year, the American public did a double take when the prodigious increase in select iTunes music was finally implemented. Prepare for a repeat performance. In a recent CNET report, various music associations including the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music Inc. (BMI) are currently lobbying Congress for legislation that would make it mandatory for anyone selling a download to pay performance fees. If passed, this delegation of payment would likely bring a second hike in music prices âÄî a hike that will again test consumersâÄô devotion to the music industry. Last Spring, iTunes announced their plan to create a âÄúflexibleâÄù pricing structure after their dealings with three major music labels âÄî Sony BMG, Warner Music and Universal âÄî exempt Apple from complying with the corporationsâÄô copyright protection software. These negotiations resulted in the categorization of iTunes songs into three types: current and classic hits, midline songs (moderately popular) and older songs. This proved to be a regrettable decision on the labelsâÄô part; Digital Music News reported the major labelsâÄô noticeable drop in sales in the following weeks. Apple rivals have been quick to use iTunesâÄô supposed indiscretion to their advantage. Danny Stein, Chairman and CEO of eMusic, tried to subdue the flare-up by publicly pledging to never raise the price of a song above 99 cents, as long as he held his position at the company. With a monthly subscription of $11.99 and every song priced at 50 cents or below, eMusic consumers would actually stand to benefit financially, depending on their personal purchase volume. With the dynamic of mass media in constant upheaval, the way music is produced and distributed will continue to change, as will our methods of obtaining it. The complaints about iTunesâÄô last price augmentation have not yet died down as this new situation is thrown into perspective. A Business Insider poll indicates that a majority of media consumers have started searching for alternative download sources after AprilâÄôs fee fiasco; a prospective increase in already inflated music prices will undoubtedly make the iTunes Store even less popular. According to CNET, ASCAP and BMI are focusing on elevating revenues by imposing fees in three discrete areas: music downloads, movie and television show downloads, and those 30-second song samples that have become a great resource to the hesitant buyer. The opposition is fronted by Jonathan Potter, executive director of Digital Media Association (DiMA), a group that represents a variety of Web media corporations, Apple among them. CNET quotes Potter on the proposed performance fees: âÄúThese guys are afraid that the business model is shifting away from public performances to a model of private performances âĦ Songwriters are getting paid. TheyâÄôre paid sync rights and [mechanical] rights. They arenâÄôt getting paid for the public performance in a download because there is no public performance in a download.âÄù A 2005 verdict in a similar court case favored Web media companies, affirming that music downloads were not considered public performances, therefore were not chargeable. Apple in particular is a major target due to their larger-than-life profits and strict copyright laws. David Renzer, Chairman and CEO of Universal Music Publishing Group, sides with songwriters and composers on the imposition of obligatory fees. In an interview with Encore, he publicized his support: âÄú[On iTunes] you can stream radio, and you can preview (tracks), things that we should be getting paid performance income for.âÄù In theory, we as consumers want nothing more than the artists and songwriters of our generation to benefit from their music. Without their dedication and talent we wouldnâÄôt have any music to pay for. What I cannot write off as acceptable, however, is the âÄúperformance feeâÄù on a sample of digitized music. Potter makes a compelling point in his argument against the music associationâÄôs suggested policy when he states plainly that we should not be paying for a non-existent public performance. Approving this policy will put pressure on Apple once again to shift the burden to music buyers, a prospect that will not bode well for the future of iTunes or the pocketbooks of its customers. Apple is countering the inconvenience of raised costs with newer, more effective versions of the iPod, iTunes and MacBook laptops. Notably, chief executive Steve Jobs returned to the public sphere to the tune of lowered starting prices on Apple products, such as the iPod Touch, now starting at $199, down from $229. New iTunes software includes updated digitization called iTunes LP, an application that provides simple music sharing within households. These revisions to the Apple world are motivated not only by anticipated reaction to price swell, but also by competition from other music device suppliers, such as Microsoft. In the end, it all comes down to how much we as consumers of mass media are willing to pay for technological advancement and how receptive corporations stuck in the past will be to the digitization of media in the future. Today, the debate is concerning music and movie download fees; tomorrow, the Internet will pose new problems to solve and crises to conquer. The world as we know it is changing; adjustment is imminent. The only uncertainty lies in who will be forced to adjust.