Probably one of the most overt examples of how price is what consumers will pay is Radiohead's strategy for the sale of their new album. They are going directly to their listeners and letting them pay what they want for the album. My price was 2 euros for the album which I will download in MP3 format when it comes out.
I agree with everything you said except you ending (the last sentence)..."The reason you willingly pay $4 for a cup of coffee that costs Starbucks $0.10 to make is that Starbucks isn't confused about the difference between experiences, cost, and price. I doubt the music industry is either."
Starbucks IS enlightened. However, the music labels (90+% of the cash flow of the "music industry") are not. They contribute very little to the experience of the consumer. They still believe that they create stars and are responsible for the creation of music. Nothing could be further from the truth. Just check out the experience of Colbie Collet who became a sensation thanks to her work on MySpace.com.
No, the music labels are the railroad tycoons of the twenty-second century, unaware that they provide commodity transportation of music, not an experience of value to a consumer.
Coffee puts the system under the strain of metabolizing a deadly acid-forming drug, depositing its insoluble cellulose, which cements the wall of the liver, causing this vital organ to swell to twice its proper size. In addition, coffee is heavily sprayed. (Ninety-two pesticides are applied to its leaves.) Diuretic properties of caffeine cause potassium and other minerals to be flushed from the body.
All this fear went away when I quit, and it was a book that inspired me to do it called The Truth About Caffeine by Marina Kushner. There are five things I liked about this book:
1) It details--thoroughly--the ways in which caffeine may damage your health.
2) It reveals the damage that coffee does to the environment. Specifically, coffee was once grown in the shade, so that trees were left in place. Then sun coffee was introduced, allowing greater yields but contributing to the destruction of rain forests. I haven't seen this mentioned anywhere else.
3) It explains how best to go off coffee. This is important. If you try cold turkey, as most people probably do, the withdrawal symptoms will likely drive you right back to coffee.
4) Helped me find a great resource for the latest studies at CaffeineAwareness.org
5) Also, if you drink decaf you won’t want to miss this special free report on the dangers of decaf available at www.soyfee.com
The rising cost of milk is probably the reason Starbucks coffee is going up. Milk prices are around $3-$4 a gallon which also drives up dairy products such as cream. It is also goes sour after a couple of weeks. So the cream/milk in the Latte probably costs more than the coffee beans used to make it.
Also Starbucks is a supporter of Fair Trade coffee and buys some of its coffee at a fair price so small farmers can continue farming.
Last time I heard Starbucks also provides healthcare to workers.
All these things drive up retail cup of coffee at Starbucks.
Excellent Post!!!!!
I think we're missing the point in the comments here. It's not about coffee or the price of milk. It's about what people will pay for a commodity. The answer, surprisingly enough, is "anything".
Well, I suggest getting my prices for music down as low as I can. The best way I can think of is to loan out all my CDs that I own to everyone else that I can think of, that I know. And then I'll borrow as many other CDs as I can from everyone else.
That should reduce my costs for music down into the basement, I figure. Let the RIAA gumshoes try and follow me around and check on all the CDs that I loan out and all the CDs that I borrow from everyone else.... LOL! There's not a thing that anyone can do about that, even if they are standing right there looking at you hand over a CD to a friend in plain sight and take 100 digital pictures of you doing it!! LOL!
It's time to start a mass movement of people loaning out their entire CD libraries to everyone else and everyone else loaning them out to all their friends.
I would say that about the time everyone is done loaning everything out, the "price should be right" for everyone!
Coffee, which is a real product, was a bad comparison to DIGITAL media, which is information. Cost associated with copying DIGITAL media is very little.
Was not long ago Carl posted a blog entry pointing to NBC's new price structure for digital downloads of their shows post-Apple. The link was to a screenshot of BitTorrent listing NBC's shows and price of $0. Again, shame on you for suggesting pirating NBC's shows.
Shortly, NBC chose to go with Amazon downloads at same price as Apple was offering.
The reason music will tend toward free is not because the cost to produce and distribute is decreasing, but because the cost for the end-user to make an illicit copy is also dropping. This will change the music industry forever.
There will always be a market for higher priced goods with percieved luxury, quality, and exclusivity, etc. But at it's core, the experience of listening to a "free" pirated music track and a $1 download is small--much less significant than the coffee example ranging from a handful of raw beans to a french sidewalk cafe.
There will always be a premium market for physical editions having deluxe packaging and extras-- especially as these are produced in finite quantities that have value to collectors. But for downloads (especially those encumbered with DRM) to become dominant, they will need to be priced so cheaply as to justify their convienience over obtaining pirated copies. I suspect that 10 cents a track and 99 cents per album would be about right.
Ultimately music will be probably be given away free as a means to promote the artist's identity or "brand". Popular artists will support themselves through adjunct products that cannot easily be copied (the aformentioned limited physical editions, live concerts, celebrity appearances, books, branded clothing and accessories, corporate sponsorships, etc.)
Great blog BTW.
I have an alternative view on this post..
Here are four excerpts from my blog. It was to much to paste it all..
I cover why PAID DOWNLOADS WILL END. I am not actually arguing that music will be free.
Cheers,
MARKETERS SAY IT IS, SO THEREFORE IT SHOULD BE.
In our society marketers can convince us to do just about anything. Marketers drive style, attitudes, perceptions, commitments, actions and even the language we use. Anything that is marketed long enough becomes culture. From diet drinks to hybrid vehicles, we can be guided into anything. The number of companies now pushing "free music" is staggering!
USER INTERFACES
User interfaces (technology) and partnerships between platform providers will enable new business models that are easier to consume than most of the first-generation music consumption propositions that are in the market now.
SPINS ARE MORE VALUABLE
If you are an unsprung artist (unsigned, unknown, undiscovered, emerging) and your wondering how to make money from music, you should not plan your future around selling CDs or digital downloads. In fact, holding out for your portion of a $.99 cent download may be hurting your career. There are 4,000,000 bands/solo artists in the English-speaking world and many will come to the conclusion that exposure is more valuable than download revenue.
EVOLVING BRAIN MATH
Over the next three to five years, new broadcast technologies like HD Radio and WiMax Radio, and improvements to Internet and satellite radio propositions will make the need to store 10,000 songs in your pocket less and less necessary. Gradually, the consumer purchase decision matrix, or something I call here “BRAIN MATH”, will evolve to include new and improved platforms for listening to music. As the new technology seeps into our consciousness and into our culture, as the BRAIN MATH changes, the paid download business will crumble.
Full posts at http://www.unsprungartists.com
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