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In Reply to: RE: Worth more than iTunes? posted by belyin on March 11, 2008 at 10:24:04
The original justification for lossy compression was to reduce transmission and storage cost. These costs are on the technology curve and halving every 12 - 18 months. Presently the wholesale cost of bandwidth for a CD quality album download is under 10 cents, heading to zero. A number of small operations presently sell lossless downloads and the number is increasing.
Why don't Amazon and iTUNES sell lossless downloads? I suspect it is greed on the part of the major record labels and their last-century business models. In such a model one sees the cost savings of a download as one dollar. But this is an incorrect model. The economics of downloads are not a matter of avoiding $1.00 production costs. They eliminate many distribution costs along the way. The net result is that the producers of music gain as much revenue when a customer purchases a $10.00 download as when he purchases a $15.00 CD, which perhaps costs the customer $19.00 allowing for shipping and handling (or the trip to a physical store).
This is a disruptive change. A much larger share of the consumer dollar is now out of the pockets of the middlemen and into the pockets of those who contribute the real value, the musicians, producers and engineers responsible for the content. This change invalidates the previous industry business models. (See Referenced Book)
Tony Lauck
"Perception, inference and authority are the valid sources of knowledge" - P.R. Sarkar
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