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Metallica the Monopolist
By Eric de Fontenay (Founder & Publisher)
(more articles from this author)
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I found Tom White's comment to be right on point, which should concern us all.

"The most obvious reason for not wanting to sell singles: when you buy a single, the artist gets only 1/12 or so of what he/she would make when you buy an album. If you thought that only one or two songs on your album were marketable, would you want to unbundle them?"

Bundling is done for several reason: the goods are complementary (razor/blade), bundling provides additional efficiencies such as in marketing/retail,... The reason you provide, if I may paraphrase, is "I've produced a crappy set of products, of which only 20% are profitable in the market. So to ensure profitability, I'll bundle the crap with the good, forcing the consumer to pay for the 80% they don't really want."

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By itself, there is nothing wrong with this, though it would most likely turn into a business blunder as competitors offered an unbundled set of goods that reflects what consumers want. This would force the producer to themselves unbundle in order to remain competitive, though they may continue to offer the bundled set as well.

And therein lies the problem with bundling and the music business. An entrepreneur cannot unbundle Metallica's album without their permission, even where it to make business sense. Metallica's 'monopoly' over its works allows it to impose the more costly product on consumers without the competitive check that regulates most other markets. In economic terms, Metallica is a monopolist using its market power to impose a bundled product and reap supra-competitive rents.

Nor is it clear that Metallica's strategy is profit-maximizing. By forcing a bundled version of the good at a given price, the band is in fact restricting its customer base, rejecting those willing to purchase selected singles or unable to afford the full album. The situation is exacerbated by the free availability of these same tracks on file sharing systems. Metallica is practically begging their fans to go to Kazaa.

Alternatively, Metallica could broaden its market base to include non-album purchasers. Consumers purchasing the full album could be provided a bonus in order for singles not to cannibalize on album revenue, while those singles could be priced at a premium ($1.50 versus 99), reflecting the consumers desire for flexibility. Offering singles would not only enlarge buying customers among Metallica fans, but newcomers intrigued by the buzz and wishing to 'sample' their music. Incorporating these otherwise forgotten consumers may also lead to increased ancillary revenues such as merchandising and concert ticket sales.

While it may seem unfair to many Metallica fans, it is clearly within Metallica's right. Now if Metallica's label, Elektra Records, were to make individual songs available exclusively (or on a preferential basis) to firms affiliated with its parent AOL/TW while imposing the bundled album on unaffiliated companies, that would be another story.

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