Jazz Odyssey

There’s a good article in today’s San Mateo Daily Journal that offers a good summary of where things are between Steve Jobs and the major labels regarding the 99 cent price point for digital songs. The labels continue to make their case for variable pricing, with new and superstar music positioned at a higher price point while deeper catalog titles are offered at a discount. Jobs says this suggestion by the labels is greed, the labels counter that the marketplace should decide, not just a single retailer. The arguing has gotten louder over the last few months and as iTunes’ deal with the major labels is up for renegotiation shortly, expect the volume to increase even more.

In the air above the din is a potential issue mentioned at the end of the article:

Labels could respond by threatening to cut back the special promotional exclusives that now help drive traffic to iTunes, offering them instead to other online retailers or to wireless carriers that typically sell a song download for more than $2, analysts say.

Over the years, many online music destinations and retailers have offered featured placement for exclusive content, whether that be in the form of a music recorded specifically for that destination (such as AOL Sessions or iTunes Originals) or simply offering alternate album tracks, b-sides or videos. This featured placement of exclusive content has become a standard part of the marketing mix, but the value quid pro quo remains fuzzy. For example, having your artist on the front page of iTunes with an exclusive bonus track during release week is a great look, raises awareness and has generally had a positive impact sales. But it requires the creation of content and then agreeing that the content is available exclusively at iTunes….what are the real dollar values on both sides of the equation here? And, if you’re giving something to iTunes, you need to consider the creation of additional content for others in the space, from traditional retail partners with online presence to mobile carriers to other digital service providers….how much additional content do you need to create to give all the right players their piece of exclusivity? Will we reach a point of artists creating a 50 minute album with the need to create an additional 60 minutes of bonus content? And ultimately, is it reasonable to expect those consumers who are core fans of an artist to visit 10 different websites, subscribe to multiple digital music services and carry 5 cellphones if they want to get all the additional content by their favorite artists?

The currency of exclusivity isn’t receiving the same level of public attention as the pricing debate, but it is subject that will need to be addressed sooner or later…with the number of online entertainment destinations continuing to grow there simply won’t be enough content to go around, inevitably causing political friction. Furthermore, “superfans” won’t want to visit and/or register for dozens of online destinations to get all the bonus content…especially when P2P remains an easier option.

Stay tuned….