John forwarded an article to me today from the Economist, about the fight between Apple Computer and the music industry. The article is prompted by the recently announced inquiry by the Department of Justice into possible industry collusion on prices. Not much of note here until the last paragraph (emphasis added):
Mr Jobs says that the majors risk stifling the new market, and also that they are plain greedy. The charge of greed is unfair. Although digital music sales tripled in 2005 to $1.1 billion, the music companies are hardly raking in the cash from music downloads. There are two problems. First, people are downloading more single tracks than albums, which means lower revenues for the majors.
This presumes that faced with a choice of buying an entire album or nothing, that people will buy the entire album. This assumption probably isn’t valid, based on the negative trends in CD sales, which started several years prior to the iTunes music store.
Second, they are mostly filling their new iPods from their CD collections, not from iTunes. For the music giants, it may well be worth risking another run-in with the law, if that means they can make downloading truly profitable.
These CD collections… were purchased. Not from iTunes, but from record stores, Amazon, etc.
So, contrary to what was expressed by the author of this article in sentence two of the last paragraph, the charge of greed may actually be fair, since the two justifications provided are problematic.