Saturday, July 23, 2005

Music Prices

Music sharing supporters have often argued that "music wants to be free", but the news that Sony BMG and Spitzer are nearing a settlement over "independent promoters" demonstrates that disposable music is seeking a negative price.
The investigation relates to the companies' use of so-called "independent promoters": middlemen who are paid to plug new songs to radio stations. The practice has often been likened to payola -- direct payment in exchange for airplay of specific songs -- which has been illegal under federal law since the 1950s. It also includes more direct relations between the executives of record labels and radio stations.
Advertisements have always been negative priced content directed to increasing sales of other products. Radio airplay has long been seeking negative prices that have been expressed first as , then as , and now as actual advertisements (this song is brought to you by ...). This is because disposable music still increases sales of owned music (CD's and legal downloads). Illegal music sharing, which sets both a price floor and ceiling at zero, harms both labels and listeners because it prevents prices from reaching equilibrium. Labels lose when downloaders retain ownership of music and do not purchase it. People who claim that labels benefit because they actually own more music because of sharing are also losing because they are not being paid for the attention of their pocketbook. The zero price is also harmful to micro-payment innovation that will help musicians, writers, publishers, other content creators, and advertisement viewers.


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