Now, the reason the music recording industry wants different prices has nothing to do with making a premium on the best songs. What they really want is a system they can manipulate to send signals about what songs are worth, and thus what songs you should buy.
This is basically just stating that mp3s are a luxury good, ie, the more that is charged for them the higher the demand for them will be (like for diamonds or cosmetics). The record companies compose a monopoly in this country, so of course they try to induce demand.

But this is an exaggeration of sorts, of course the record companies want to earn a premium on the "best" (most desirable) songs. They already pull that shit with CDs that cost $20! They want more market flexibility in general partly so that they can hike prices without causing a market freakout.

Anyone remember those 24kt gold-plated CDs?

Call me old fashioned, I just don't see the appeal of leasing music anyway.

Do you think people actually know what they're buying with these services?

Jole != Joel
different != diffrent
actually != actualy

thet is awl.

"Wayhey! This CD is expensive! I must have it even though I hate 50 Pence sooooooo much! I do like this CD by the B.A. Baracus Band, but I'd rather have 50 Pence. I can show off how tasteful and monied I am!"

I don't anyone will be fooled.

The record industry wants you to think that.

Thanks, quansor.

edible, I'm not sure how your argument differs from Spolsky's. Joel is suggesting two "tiers" of price points, but there's no reason there couldn't be more. His argument is more subtle (and informed by years of business experience) -- that prices themselves modify demand, and not always as a direct relationship.

The principle remains the same, though, create demand, increase prices, increase profits.

flopsy: it's worked for years now, why wouldn't it keep working?

It's not, I wasn't arguing with his basic premise. I was just saying it's a bit of an exaggeration to say that it has nothing to do with making more money on more desirable songs. There's many reasons record companies want more flexibility in prices, not just this one reason that Spolsky points out.