Music GroupsPrice Elasticity and Campaign Rhetoric
eMusic head David Pakman took to the streets -- or rather, the company's 17dots blog -- to defend the music service's pricing structure. The post, titled "It's a Brave New World Out There," was a reaction to news that some labels were unhappy with the revenue received from eMusic.
Much of the post had me scratching my head. There were two gaffes, which I'll point out in a second, and a great deal of campaign rhetoric. Pakman is pretty much a politician in the press, always on point, always sticking to core themes about DRM and low prices. The blog post was an expansion of those themes.
The first misstep was a statement about CD prices in the early '00s.
"Back in 2000, as CD sales began to decline, the music industry responded by actually raising its prices — to as high as $18 for a single CD! Unfortunately, this hasn’t been a productive strategy and music sales have continued to fall dramatically — by more than 20% this year alone."
In the early part of the decade, CD prices were actually dropping. This NPD Group study shows that prices dropped in every quarter from Q4 2002 to Q1 2004 (when it was $13.29) and were flat in three of four quarters in 2002.
