Friday, June 6, 2008

Can We Call for a Do-Over?

A friend of mine who's an ardent Yankee fan ( I do make exceptions on occasion) just sent me the seat pricing schedule for the 2009 season, the inaugural of the new Yankee Stadium. In a word--INSANE. A ticket in the first section from the field will now cost $850 and one out in Section 11, way out towards the right field corner is $500. When I asked him if they're actually going to be able to sell all those seats, he immediately replied, "Every single one of them, but not to me."

One can only guess that the reason for charging the high prices is "because they can." Sure, you'll get all the hedge fund geniuses to buy in, but what about the bread and butter fan? Screw 'em, and let's not even concern ourselves about how this is ultimately guaranteeing the continued decline of our National Pastime. Even if you bring your own peanuts, there's no way the average family can make going to the ballpark a regular habit. Facing this economic reality and the contempt that the Yankee organization is showing to its customers, it wouldn't be far fetched to think that fans are already daydreaming of a way to beat the system. Maybe they can but a bleacher seat and schmear one of the ushers in the good sections. Maybe they can get in on a scalping scheme so they can sell enough tickets at a markup to afford one good one.

Sound familiar? Roll back the clock to the first ten years of the CD age. Record companies and retailers charged as much as they could (with one retailer actually selling CDs for $19.98 or $1.00 MORE than list price). Why? Because they could. They figured that the demand was there; the consumer was an early adopter who had more disposable income. Instead of looking to keep customers for the long term, the idea was to cash in while they could. And look what happened. The average consumer got so pissed off that they were just waiting for the day when they could stick it to the Man, even if the artist was getting hurt as a result. And when the Big Boxes treated CDs as a loss leader and started pricing them impossibly low, it only supported the suspicion that the consumer had been being ripped off the whole time.

As soon as the technology became available a gigantic sleeper cell of bitter and betrayed consumers was aroused and put into action in a file trading, CD-burning, hard drive swapping frenzy. Payback is a bitch. When people feel aggrieved and taking advantage of, they have no problem rationalizing sociopathic behavior.

It seems fairly reasonable then, that part of iTunes' success has been its pricing model. "99 cents per song, for every song? That seems reasonable and fair. I'm in. " It's the same tact that Southwest Airlines is taking in the face of every other airline charging fuel surcharges, charging for checked bags, charging $150 change fee, etc, etc, etc, Southwest is running full page ads touting the transparency of their fares and the respect that they show their customers.

I wonder if the record industry would be in this pickle had they shown their consumers the same level of customer-centric behavior from the very beginning. Lacking a WABAC machine, we'll never know. But one thing we do know is that if we don't figure out a way to let music fans buy product at a price which is fair and which makes them feel good about the process. then we're destined to go the way of the railroads in the jet age.

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