Working in the CPG (consumer packaged goods) industry (think anything that sells in a grocery store) PF's metaphor was really interesting. Wigwam's point that the retailer's job is to attain product at the lowest cost is 100% true. The retailer is all about maximizing profit margin. This holds true for the manufacturer as well. Anti trust laws force manufacturers to offer a fair price to all retailers. This way certain retailers cant just take over the market. That said, there are so many ways around that price point its not even funny. I can say, that Wal-Mart with its insane buying power purchases goods at a lower rate that your regional store. The face price up front is the same, but with bill-backs, off-invoices, accruals etc etc WalMart is getting money back. This is often based on volume. ie: walmart orders 10,000 cases and their price is $x/case while a smaller account orders 500 cases at $y/case. In my mind the comparison of grocery stores not complaining about the cost of groceries makes perfect sense.
If Pandora's audience is so much larger, then im sure Pandora could work out a system where the artist/label take a smaller cut, in trade for higher volume, basically giving them the same $ profit. Smaller streaming companies would have to pay a premium to get those big name artists, just like every other industry. The record labels and the retailers need to figure out how much $ they want to make, and how much money they will tolerate the other party making. If ABC Records sells a song to iTunes for $1000 and iTunes sells 100,000 copies at $1.00 a pop, then ABC made a bad deal. The companies need to help one another and realize that the only way to profit is to partner and work together to achieve the same goal: drive profit.
If artists dont agree to the pay structure etc for a certain service then dont sign them to play your music. And dont complain that no one listens to you. Lower pay stubs from things like spotify and pandora make sense. Im not paying $1.00 for that song, because I dont own it. I cant open it if im offline, or transfer it to another device etc. Pandora/spotify owns the song, im just listening to it.
Now to give my real opinion on the music industry, if you put it in a format that I can easily copy, transfer, etc etc dont complain... LP's worked because the average person couldnt "burn" an LP. This forced everyone to go spend $ and buy LPs. Same with 8track. Then the CD came along. Lower quality, but its 1000 times cheaper for the record label to produce, selling for the same price if not more means more profit. Then someone figured out how to read and copy one. Then the music industry discovered the mp3. One of the worst possible ways to code music. Lower quality than CD, but with the mp3 there isnt any cost at all. They just need a computer and a hard drive. No manufacturing, shipping, storage cost as all. If they sell something it is pure profit. Any moron with a keyboard can copy/paste. And then the walls came crashing down. 1 person pays for the song, copy/paste now 1000 people have it.
If the record companies dont want me to download their music, then make it a format that takes me longer than 3 seconds to copy 1000 songs...
At the end of the day lets try and remember that money makes the world go round, and the entire argument about licensing, piracy, etc is all about people trying to reap the maximum profit they can. Its simple economics.
'Fair' is a relative term.
EDIT:
In fact, to expand upon that, Pink Floyd in their Op/Ed piece compare the cost of paying royalties to the cost of buying groceries. But that is a false analogy. Because, you see, if I am a grocery store, my goal is to pay the lowest prices for the goods I sell, and to sell them for the highest prices I can. The market controls what I can sell for, that's free enterprise for you. But I am free to attempt to get lower prices from my suppliers, and if there is sufficient competition, then they may be forced to reduce their prices to me (just as the market forces me to lower my prices for retail customers if there is sufficient competition).
However the royalty rates are not something one can go shopping for; they're fixed.
So it's just not a valid comparison.
) That's what the inside argument is really about, and it's a toughie. I agree about the "petition" tactic being a bit sneaky, and I think this article is mostly trying to alert bands to think twice about it.
