The major labels (Sony Music, Warner Music, Universal Music, and others) have been charged multiple times with coordinating and controlling the price of recordings. That’s illegal in the US, Europe, and many other countries worldwide. Now, it’s happening again with subscription services, according to New York-based investor David Pakman, himself the former CEO of eMusic.
“Curiously, the on-demand subscription music services like Spotify, Deezer, Rdio and Beats Music are all priced the same at more than twice consumer spending on music,” Pakman wrote as part of a larger piece on music formats and expenditures. “They largely land at $120 per year (although Beats has a family member option for AT&T users at $15 per month.)”
“This is because the three major record labels, as part of their music licenses, have mandated a minimum price these services must charge. While it may seem strange that suppliers can dictate to retailers the price they must charge end users for their service, this is common practice in digital music.
“The services are not able to charge a price they believe will result in maximum adoption by consumers.”
“The data shows that $120 per year is far beyond what the overwhelming majority of consumers will pay for music and instead shows that a price closer to $48 per year is likely much closer to a sweet spot to attract a large number of subscribers.”