I still thinking you are missing the point with Major Nelson, he goes to all the Microsoft events and gets insider information. He also works at MS (sorry I seriously thought that was known around the gaming community, that's a "my bad" on my part).
It doesn't matter. Unless you are prepared to prove that everything any executive, representative, or paid evangelist from Microsoft has said is truthful, which of course we already know is not the case, then in no way does it prove what Major Nelson says is true, and that the "music industry" set the price at $2.08
The music industry probably set it at a dollar or slightly less like they do with every other song sold to people over the internet. That means with 64 songs you are only looking at 64 bucks, which I will promise you they worked out some sort of deal.
See, now even if it was only $1 per song, the math still doesn't work out. It would mean that not only was the game (excluding all songs) was being given away, but was actually being sold at a huge loss. Of course we know that can't be the case, because the whole economic model of console games is losing money on the hardware, make up for it with inflated software prices. So no, the songs aren't even costing $1 – the simple math proves it.
Even at fifty cents the math doesn't add up, as the retailer gets a cut of the sale as well. So with GHII selling for $40 for the PS2, less say $10 to the retailer, that means gross revenue is only $30 per game. Now let's say the "music industry" is charging only $.50 per song. That leaves only a gross revenue of just $10 per game. That $10 per game has to pay for all development costs, programming, testing, marketing, disc replication, packaging, and distribution costs.... and that's ONLY if it costs just fifty cents per song.
Sorry, but this is yet another example that just because someone at Microsoft says something, doesn't make it true... and before you get all defensive on the part of Microsoft, yes, Sony and other companies do the exact same thing - although that doesn't make it right.
So no, it is not necessary to sell three songs at $6.25 in order to make a profit
(especially because they are just downloads, saving them a ton on manufacturing and distribution costs and cutting out the retailer). If it were, then every time a copy of GHII sold, they would be losing money.
Yes there are some problems, but it's not nearly as bad as people make it out to be. The reason Microsoft is trying to fix it is so the few people with issues don't make a huge fuss and reduce sales, it's all marketing.
How do you know they are not nearly as bad as people make it out to be? Because someone at Microsoft said so? Because you have access to all the customer complaints? What
facts do you have that would even support an opinion like this?
Bottom line, one only has to know basic math to know that it doesn’t have to cost $2.08 per song for them to turn a profit, and that the price is set at that level because they believe people, perhaps like yourself will not only buy it at that price, but will believe them when they tell you that the “music industry” set the price.
If they are right, more power to them. It is after all, their job to get the most profit possible. Personally, I would never pay that much for the songs – thus why I hope most consumers feel the same way, and result in a drop in price.
