iTunes is a Ripoff

LPs, the format of choice for people who hate leaving their living rooms

LPs, the format of choice for people who hate leaving their living rooms


For our younger devotees – and everyone knows there’s nothing a 17-year-old would rather do than read about personal finance – it might be hard to comprehend how primitive music retailing was just a few years ago. You had to physically walk into a store, then pay the equivalent of about $20 in 2013 currency to purchase an album with maybe 45 minutes’ worth of music. Most of which you hadn’t heard before, because the only outlets that existed for sampling music were your local radio stations, and they weren’t about to play more than a track or two (if that) from a typical album. Which means that if you wanted to hear something from any artist less popular than Michael Jackson or Whitney Houston, you were likely buying that artist’s music sound unheard.

So if you were a legitimate lover of a particular genre or artist, as opposed to someone who just had to get that Dave Matthews Band song your friend played at her wedding, ingesting music wasn’t a cheap pursuit. Say you wanted a B-side or a bonus track by one of your favorite artists, from a Japanese or European edition of an album that North Americans received only a diminished version of. You could find an “import” store, or the import section of a megastore, and in some cases end up paying $25 (again, 2013 equivalents) for what was essentially a single song. Nor was everything released on CD, which meant that your choice of format was sometimes between the Scylla of an easily scratchable vinyl LP and the Charybdis of a medium-fidelity cassette. Both of which would lose clarity with repeated listenings. Come to think of it, it’s something of a miracle that the recorded music industry even existed and that we didn’t just sing and whistle to ourselves instead.

Fast-forward to CDs becoming the default format for music, and fast-forward beyond that to the realization that if music can be digitally transferred to polycarbonate plastic, it can be saved as a transferable digital signal and copied infinitely. From there to Napster and its competitors, and ultimately iTunes, the world’s largest music store. Earlier this year iTunes celebrated its 25 billionth music download, this on a planet with only 7 billion people, most of whom don’t exactly have regular and fast online access.

iTunes sells most tracks for 99¢, occasional tracks for 69¢, and “premium” tracks (e.g. each one off Kanye West’s new album, which debuted at #1 on Billboard last week) for $1.29. Buy Kanye’s entire 10-track album on iTunes and you’ll pay a dollar less than if you’d bought each track individually.

You can do better. We recently discovered Russian (we think) sites Iomoio (pronounced ?) and Megaboon, whose catalogs dwarf iTunes’ and whose prices look like misprints.

That Kanye West album? 80¢ on Megaboon. That’s not a typo. Eighty American cents. It’s recorded at 336 kbps, which is considerably greater than iTunes’ 256 kbps default. You can even buy lossless files, which sell for the staggering sum of 30¢ apiece on Megaboon and will eat up much more of your storage.

How do they do it? We have our notions, but this is not our concern. There’s a Cuban joint down the street that sells the greatest empanadas we’ve ever tasted, thousands of miles from Cuba, and for astonishingly low prices, but it would take monstrous chutzpah on our part to ask the waitress why the prices were so low. We’re pretty sure that no Gabonese miners were injured nor Chinese factory workers driven to defenestration while procuring the mp3 files of Dwight Yoakam’s latest album, and that’s where our moral obligation ends. You people who look askance at the factors that enter into a good price can keep your world-weary concern to yourselves. We’re trying to spend less money than we otherwise would.

Iomoio certainly isn’t as slick nor as corporate as iTunes. The former’s onscreen copy is written in fractured but still understandable English. (You know, like most of our Carnival of Wealth submissions.) Songs download as fast as they do on iTunes, and while the Russian sites might not load as quickly, the benefits grossly outweigh the costs.

Are the services legitimate? The music downloaded fine, complete with artwork and metadata, and there are no digital rights management issues. Once they had our credit card information, they did nothing nefarious with it. We had one minor customer service issue – a ZIP file that wouldn’t unzip – reported it, and they got back to us within a day to say they’d fixed the problem. Which they had.

You have to give them a credit card deposit of at least $30. For that you get $40 worth of music, so these downloads really cost more like 6¢ apiece; even less if you leave a larger deposit. Iomoio and Megaboon are so cheap that we can’t understand why iTunes retains its dominant market position.

Actually, who are we kidding? Were Iomoio and Megaboon to get too big, Apple would press on the United States government to flex its muscle. Much in the same way that the movie industry’s trade association complained to the White House about illegal downloading, and within weeks the FBI was flying to the other side of the world to capture an innocent Kim Dotcom, freeze his assets, throw him in jail, and do it all with the implicit backing of a foreign government. Until Iomoio and Megaboon get that large and that notorious, happy downloading.

DOW GAINS .0000000000000002%

Alright, we took a little decimal license with that one. The actual headline that appeared on Fox Business Network’s After The Bell was “DOW GAINS .02%.” It should have appeared on WGSC, better known to Howard Stern aficionados as “the Who-Gives-A-Sh*t Channel.”

This is all noise, zero signal. Every daily change in the Dow is. Even the historic ones are. Every daily change in just about anything is.

As self-aware humans, we plan. That’s largely a good thing. The act of, say, enrolling in college happens with the understanding that 4 or more years down the road, and decades beyond, it’ll start paying off. Even the simpler act of planting a tree is done with a nod to a future that the planter might never be alive to see. Having kids goes on this list too, of course.

Yet for some reason, when regarding the stock market, we become mayflies. It’s as if we’re thinking, “But if the Dow fell 20 points this morning, how am I going to be able to retire at 7 p.m. and live off my investments from then until midnight?” If you want, you can blame the journalists for this: they have to talk about something, and the stock market is pretty much guaranteed to close at some level on every day that it’s open. (Curiously, the days that the Dow doesn’t close at any level are the truly newsworthy ones. 9/11, for instance.)

There’s too much information in every realm, not just finance and business. The only parts of the daily news that always contain legitimately important and timely information are sports and weather. The fluctuation in Archer Daniels Midland stock or the price of gold means nothing to the average investor over the course of a day, a week, a month, even longer. To illustrate the point, here’s the market level at yesterday’s close of business:

5 years

No, wait. This is the market level at yesterday’s final bell: 1 day

Oops. Sorry. No, it’s this:

5 day

Wait wait wait wait wait. Swear to God, this is it:2 years

In ascending order of length, the periods represented by these graphs are day, a week, 2 years and 5 years. But do you have any idea which is which?

(Answer: 5 years, a day, a week, 2 years.)

We removed the numbers on the vertical axis, and there’s no sense of scale, but that’s not the point. Whether you believe in a “permanent bull market” or not, a continually rising line isn’t visible in any of these charts. The 1-day changes seem considerably less abrupt than the 1-week changes, which would be unlikely in a rational world.

Tune out. Here’s a challenge, with absolutely no reward from us if you meet it: examine your portfolio no more than quarterly. Some wags would replace “quarterly” with “annually”, but we’re not at that level quite yet. What happens hour-to-hour is of zero consequence, and what happens over a period of weeks isn’t much more critical.

Look at other investments, ones whose price isn’t as easy to calculate. You bought your house in the hope that it’ll appreciate in value, right? If your $150,000 three-bedroom gets assessed at $149,703, what are you going to do? Sell sell sell? Pray for a bump? Or live your live confident that your house is an asset with a permanent tangible value, and that should you ever want to sell it, today’s prices will bear no relationship to those future prices?

Unplug. Read a book. Play with your kids. Go cycling. Whatever you do, don’t fool yourself into thinking that exposure to an onslaught of financial information is necessarily going to educate you. While you’re at it you ought to stop reading other personal finance blogs and just concentrate on this one. And read it largely for entertainment. (Which makes it sound as though our advice is unserious or unimportant, which is untrue. We meant entertainment in the literal sense: be entertained, while absorbing subject matter that can often be dry depending on who’s presenting it.)

It’s a cliché, but a valid one: for the most part, you make your money going into an investment, not out of it. Buy undervalued assets, and wait for them to appreciate. A stock bought at the top of the market – for example, Enron at its localized zenith – is not an undervalued asset. For a more contemporary and less notorious example, take Amazon, which is close to its current (and all-time) peak of 276½ or so. A fixation on short-term movements, no matter how drastic, will rapidly drive you insane. Considering your presumed lifespan, you want any eventual insanity to manifest itself as slowly and methodically as possible.

The average daily movement in the Dow is less than .026%. Or as CNBC might put it, “DOW UP .026%!!!!!!!!!!!!!” Journalists, even financial ones, are not renowned for having perspective. You’re smarter than that.

Women, Take Your 72¢ And Be Happy With It

Ma’am, if you don’t think you’re getting paid enough, maybe you shouldn’t have chosen modeling for a career

Our favorite talking points of election season:

  1. “Binders of women”
    A candidate could refer, somewhat obviously, to binders of women’s résumés. But if he used the shorthand “binders of women”, that means he’s a misogynist who wants to take the distaff half of the species back to the Stone Age, including his long-suffering wife. (Hmm…they also have 5 kids, who all happen to be male. The chances of that happening are 32 to 1. Can we state unequivocally that there wasn’t some sex-selective infanticide along the way?)
  2. “Women make x¢ for every dollar men make”, x being a number somewhere around 68 to 77.

This one just refuses to die. The consensus interpretation of it seems to be that for your average man who makes $50,000 in his generic job, the average woman beside him makes $36,000 or so. Since some women make as much as their male counterparts, for every one who does there must be another woman who makes even less compared to men.

This is 99% false, and even if it were 0% false, so what? Let’s examine it a little more closely:

Yes, if you add up the total amount of money earned by women in the workplace, divide that by the number of working women, multiply that by the total money earned by men, and divide that by the number of working men, you’ll get something like .72.

But that includes every job in existence, and doesn’t correct for the indisputable fact that women gravitate toward flexible jobs. Ones that allow for plenty of time away from the office, and thus that permit some form of turnover. To cite an example, the combatant commander of CENTCOM can’t take time off to drop his kids off at the pediatrician’s office or petition his boss (that’d be the Chairman of the Joint Chiefs of Staff) for additional maternity leave. Meanwhile, the daycare center supervisor at the Franklin County Public Library can afford to be a little more accommodating.

Of course, “women gravitate toward flexible jobs” is a general statement. More women do so than men, but most gainfully employed people of either sex aren’t as interested in flexibility as they are in earning money.

Lines of work in which women make several dollars for each dollar men make:

  • Stripping
  • Prostitution
  • Tending bar, and sorry if you happen to be a bartender and think we’ve drawn some equivalence between your job and the others on this brief list.

Gals, if you want to make more money, here’s a handy 2-part strategy that never fails:

  1. Pick a career that increases the likelihood that you’ll get paid more. Sure, you’d make a great receptionist. But is that really what you want to do for a living? Maybe it is, in which case, great. But think about what draws people to that job. Heck, ask a receptionist if you want to. They’re easy enough to find. Most of the women who answer phones for a living do so because the demands are small, and it’s easy to find someone to cover for them.
  2. Negotiate better. Look. No one seriously disputes that there are certain activities in which one sex has consistently shown more proficiency than the other. Here are just a few:
  • Child-rearing
  • Lifting 50-pound sacks of cement
  • Being “intuitive”, whatever the hell that means
  • Calculating cube roots and partial derivatives
  • Reading palms and consulting the stars
  • Isolating chemical elements (Yes, Marie Curie existed and was awesome. So were Albert Ghiorso, Glenn Seaborg, Enrico Fermi, Ernest Lawrence, Dmitri Mendelev, Henry Cavendish, Ernest Rutherford, Otto Hahn, Antoine Lavoisier, Joseph Priestley, Linus Pauling and about 1000 more. You want us to keep going?)
  • Interior design
  • Civil engineering
  • Human resources
  • Playing football at a professional level
  • Elementary education

Don’t pretend that men and women, cumulatively speaking, are equally adept at each of the activities listed above. But for the vast majority of jobs, it doesn’t matter whether the person performing them is male or female. Attorney. Veterinarian. United States Senator. Journalist, and if that’s what you do for a living God help you regardless of what sex you are. And yes, tire plant supervisor.

If you’re a woman, and you’re making less than your male coworkers in any of the jobs we just mentioned, why? Did you insist when you were hired that you make as much as the men do? If not, why not? And what if the men don’t each make the same amount anyway?

Alf is a shift supervisor who makes $45,000. Barry is a shift supervisor at the same plant, with responsibilities identical to Alf’s. In Barry’s interview, he insisted on $50,000 and not one penny less. The hiring manager was authorized to pay Barry as much as $54,000. There were no other qualified candidates at the time, and the plant needed to fill the position ASAP. So Barry got his $50,000.

A third shift supervisor position opens up. Cindy applies for it, and gets hired. How much should they pay her?

  • More than Alf? That’s hardly “pay equity” in the traditional sense.
  • As much as Alf? Not if Cindy a) ever glances at Barry’s paycheck and b) knows how to find a lawyer.
  • Less than Alf? No, that’s the very inequality we’re trying to avoid.

Here’s how much they should pay Cindy: whatever she can get.

Why should an employer pay you more than you ask for? More to the point, why shouldn’t you ask for as much as you can get?

The unfortunate truth is that women are almost as bad at negotiating as they are at throwing baseballs. (You ladies know you can move your elbow back, right? Try it sometime.) Heck, one of the brightest and most financially savvy women we know admits that she sucks at negotiating.

It isn’t Congress’s job to do what you can’t, or refuse to. Stand up for yourself, and demand more. Examine your alternatives – you can’t negotiate without leverage. Learn to say no. Reject the first offer. Find competitors and play them off against each other. Unlearn everything you’ve ever been taught about playing nice, being agreeable, not hurting the other person’s pride, going along to get along, etc. Money doesn’t care what sex you are. If Cindy’s years of feminine programming prohibit her from asking for as much as Barry does, that’s not the hiring manager’s problem.

This is so obvious it hardly counts as an observation, but every financial negotiation is inherently adversarial. The employer (client, etc.) wants to pay as little as possible. The employee (or vendor) wants to get paid as much as possible. The company in the above example is profiting off Barry, and profiting even more off Alf. It’s up to Cindy to decide how much she wants the company to profit off her.

It’s not that people of different sexes receive differing pay. It’s that everyone receives differing pay, depending on what they can negotiate. And that’s how it should be, unless you’ve ceded your bargaining rights to a union.

This has nothing to do with morality, or fairness. What Would Jesus Do? He’d tell you that if you agreed to work for a certain wage, even if other people are getting more than you and rubbing your face in it, suck it up until your contract expires. Or find something else.