Apple changes it's (i)Tune

[Feanor]

... downloads should in theory be even cheaper than CDs.. but they aren't... probably due to the fact that the physical cost of producing a CD (very low) has little impact on the overall sales price of the album...

For CD versus download, the cost of physical production of the disc, booklet, and jewel case isn't the most significant thing. It's the logistics that cost the money. Most of the additional cost of the physical product comes from distribution, stock handling, inventory costs, store security, sales staff, and point-of-sale handling -- these costs are totally avoided with downloading where all you need is a server and some DASD.

This is why the download price is a huge gouge. Of course, music producers firmly believe that each and every DRM-free downloaded will be distributed illegally multiple times thus they must charge more to generate the same revenue. It seems like too big a gamble to charge a much lower price and get a much higher volume of sales, and thus end up with as much or more total revenue.

Anybody heard of Bit Torrent? Yes, it's illegal but all vitually all major records can be found, most at lossless quality. I deplore illegal downloading but it happens and will continue to happen. The best way to battle this and all illegal distribution is to make legal distribution trivially cheap.