Sunday, April 24, 2005

Digital Music and the iPod Shuffle

There has been a lot of talk on digital music, about rights and copyrights and technology. I have been following digital music pretty closely for years - I bought one of the first Rio MP3 players when they came out about five years ago or so and have bought various varieties ever since.

The key underlying issue isn't usually discussed - it is the basic economic principle of price = marginal cost. Ultimately, the price of an item approaches its marginal costs. Everyone now knows how easy it is to burn a CD - take the song, "rip" it to your PC, and then "burn" it as a CD that you can play in your car or stereo. A CD burner now is virtually free and comes with almost any PC out of the box, and you can buy spools of CD's for almost nothing. It gets cheaper still if you don't bother burning to a CD anymore, and just rip the song or download it and put it on your iPod or MP3 player. Now there aren't any marginal costs at all, once you buy the player and the PC. For those that slept through their economic classes, the marginal cost is the cost to produce the last item of something, not including all of the fixed costs up front to get things setup and started.

The music industry has fought this for years with cries of "piracy" and legal strategies such as suing downloaders, while they RAISED prices when everyone knows how easy it is to create a CD (and in their head, how low the marginal cost of producing those CD's are). Paying 16 - 20 dollars for a CD seems nuts to anyone who owns a PC (i.e. pretty much everyone) because they burn them and slap cover art on them and distribute them to the store. They don't even bother with the big "packages" anymore that they used to sell with CD's, now it is just the basic CD in plastic. This strategy flies in the face of economics and was a failure.

I do think that people will pay SOMETHING for music, or at least most people, so they need to try a new tactic. I recently bought the new "Queens of the Stone Age" album and it was less than ten dollars. There was a different copy of the same album with a DVD of footage of videos that was a few dollars more that I didn't buy, but I looked at it and if I was a big fan I would probably have bought that one, instead. It is a very smart pricing plan to offer both options. The new "Mars Volta" album was 8 dollars, and a lot of new music is also going for that price. Finally the music industry is trying something new instead of suing and complaining, they are trying to compete and add value.

I also use musicmatch software for my song library. Thru musicmatch you can buy songs for 1 dollar each, and they have lots of songs. Pretty much most of what you'd be looking for is out there. I spent about 10 bucks yesterday on a wide variety of songs including songs from Nine Inch Nails, James McMurtry, Daft Punk, Khasmin, and some other one-off tunes. It is fun shopping for them and easy to buy, but kind of a pain because the songs are "secured" mp3 files that don't fit in with my collection. So after I buy them, I "burn" them onto a CD and then "rip" them back as unsecured MP3 files and delete the secured ones. I am not being a pirate, I am paying for them, but I don't want secured MP3 files because then my collection will be a mess and I will not necessarily be able to download them into other MP3 players. But from the music industry's perspective I just "cherry picked" songs I liked from albums that I might have bought otherwise and thus put another pressure on the sale of full-priced albums.

Thus the music companies are trying something that might work:

  • lowering prices on new CD's to confront the economic reality that there is a free version of every song out there for downloading and you can also 'cherry pick' just the songs you like for 1 dollar each so the album can't cost 15 dollars unless you have 15 outstanding tracks (unlikely)
  • adding additional features such as live CD's or DVD's of videos or other benefits in the package that aren't available through downloads
  • for new or less established artists, lowering prices even further to get people to try the new album (like the Mars Volta)
  • selling more and more music online, where you can buy "a la carte" and just pick the songs you like
On a related digital music note, I bought a Rio Carbon player but it was a piece of junk and I returned it to circuit city under warranty. Then I bought an RCA Lyra and it, too, was a piece of junk and I returned it. Both players were SLOW to load and start and switch between songs, which is a big pain when you only play the MP3 player on your way to work you don't want to waste a bunch of minutes getting started.

So I finally broke down and took a friend's advice and bought an iPod. I had been avoiding Apple products because I don't own an Apple machine but now their devices work with windows and it seems like everyone has one. I bought a 1 gig player, which seems small (most players have 5 or 20 or 40 gig) but actually, due to the clever software, it doesn't matter. When you plug it in to your USB port you can just hit "shuffle" and it automatically fills your iPod with 1 gig of random songs from your collection. So whether you have 20 gigs or 1 gig of music in your iPod, if you are playing random songs and periodically refreshing, it doesn't matter since it takes a couple of hours to cycle through 1 gig of songs and it takes forever to cycle through 20 gigs of songs so you can't tell the difference. The key is that their software makes it easy to randomly replenish your iPod.

There is no "screen" so you can't tell the song or artist. But since it is your music, you probably know the song and artist anyways, no big loss. And it charges from ANY USB port, so it is easy to charge up even at work, you don't need to buy a charger and carry it around with you. Plus, without a screen, the battery life is VERY long. I highly recommend the iPod shuffle, although I hate the "ear buds" and replaced them with some other of the "hook behind" headphones I bought stand alone instead.

iPod Shuffle Posted by Hello

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