Posted by Jay Livingston
I wish I knew more about the economics of the music business.
At first glance, it looks like Kanye West’s decision to sell his new album for $3.99* at Amazon is putting pride ahead of profit. Zach Baron at the Village Voice says that Kanye did it only because of the swift sales success of another album, “Speak Now,” by, oh, what was her name? You know, that one at the VMA.
There’s money, and there’s competitive, striving megalomania.** In some areas, they go together like a horse and carriage. At the financial houses (Goldman Sachs, et. al.), they say that those multi-million dollar bonuses are not about the money and what it buys. The dollars are just a way of keeping score. You want a $20 million bonus because the guy at the next desk got $18 million.
But apparently, in the music business, at least for the top stars, what you keep score with is not dollars but sales, regardless of the economics.
the rush toward ever lower pricing . . . pushes the consumer cost of an album ever closer to that terrifying price point: free. Nobody in the industry wants that, let alone a guy poised to sell something in the neighborhood of a million records over the next week.It’s like the old joke about the businessman who has cut his price so low that he’s losing $2 on every item he sells. When asked how he can do that, he says, “We’ll make it up in volume.”
I guess Kanye’s beautiful, dark, twisted response would be, “We’ll make it up in ego.”
* Now, after the first week surge, the download price has gone up to $4.99.
** I can’t believe I am the first person to come up with the pun in the subject line of this post. But if someone else did put it out there, Google’s algorithm places it far down on the list.
HT: Tyler Cowen for the link to the Voice.