In the past, Apple (AAPL) has said that many more songs will be priced at 69 cents than at $1.29. But that 69-cent bargain bin is viewed as little consolation to some who question the wisdom of introducing what amounts to a 30 percent price increase with the economy in recession and online piracy an easy option.

Said Nine Inch Nails manager Jim Guerinot, “Wouldn’t it make sense to try to price it cheaper instead of squeezing the handful of people who are still willing to pay for music?”

Perhaps. But when has the recording industry ever done anything that made sense?

This morning the company announced slotMusic, a compact memory card-based music format that can be played on cellphones, PCs and some MP3 players. It relies on MP3s without digital rights management schemes and is backed by Universal Music Group, Sony BMG Music Entertainment, Warner Music Group and EMI Group, all of which apparently believe that more physical media is the best way to reinvent their business model in the era of digital distribution. Though as SanDisk VP Daniel Schreiber notes, they do have their reasons. “There’s a billion phones out there and a lot of them can play music and a lot of them have a microSD slot,” he explained. “We think there’s still a need for a tangible, physical product. People will appreciate walking out of the store playing music on their phones.”

Perhaps. But will they appreciate carrying that music around on a 0.6″ x 0.4″ medium that’s about the size of a fingernail? Seems easy to lose, doesn’t it (maybe Case Logic is planning a slotMusic binder)? And wouldn’t they rather carry around hundreds of songs, instead of the dozen or so stored on each slotMusic card? And what if the memory card in their phone is already in use, filled up with contacts, applications and other data? What then? And beyond this, haven’t iTunes and Amazon MP3 made consumers more accustomed to purchasing music à la carte? Why purchase a full album at $15, when all you really want are the only two good songs on it?

RIAA Sues Radio Stations for Giving Away Free Music

–Headline from satirical newspaper The Onion, Oct. 2, 2002

Talk about life imitating The Onion …

Apparently the recording industry’s institutional memory is about as solid as its crumbling business model. As recently as 2007, it was paying radio stations to play its music. Today, it’s accusing them of pirating it. Yersterday, the ironically named recording industry group musicFIRST demanded that broadcasters pay royalties for the music they play over the radio, dismissing as a red herring their claims that radio airplay is a form of free promotion.

And to illustrate that point, the group sent the National Association of Broadcasters a can of herring and a dictionary. Some clever folks over there at musicFIRST.

“[AM-FM broadcasting is] a form of piracy, if you will, but not in the classic sense as we think of it,” Martin Machowsky, a musicFirst spokesman told Wired. “Today we gifted them a can of herring, about their argument that they provide promotional value. We think that’s a red herring. Nobody listens to the radio for the commercials.”

Well, he got that much right. Nobody does listen to the radio for the commercials. They listen for the music. And there was a time when record labels paid broadcasters to play it. They even coined a word for the practice: payola.

The concept is simple: The music industry forms a collecting society, which then offers file-sharing music fans the opportunity to ‘get legit’ in exchange for a reasonable regular payment, say $5 per month. So long as they pay, the fans are free to keep doing what they are going to do anyway–share the music they love using whatever software they like on whatever computer platform they prefer–without fear of lawsuits. The money collected gets divided among rights-holders based on the popularity of their music. In exchange, file-sharing music fans will be free to download whatever they like, using whatever software works best for them. The more people share, the more money goes to rights-holders. The more competition in applications, the more rapid the innovation and improvement. The more freedom to fans to publish what they care about, the deeper the catalog.”

–Excerpt from “A Better Way Forward: Voluntary Collective Licensing of Music File Sharing,” Electronic Frontier Foundation, April, 2004

Turns out that the Electronic Frontier Foundation was simply ahead of its time when it suggested that the recording industry adopt a voluntary collective-licensing model for music. Because the record labels are finally warming to the idea.

During tomorrow’s South by Southwest “Mobility, Ubiquity and Monetizing Music” panel, Jim Griffin, managing director of OneHouse–a digital entertainment consultancy that works with three of the four major labels–will argue the case for a file-sharing surcharge.

Like the “File-sharing Monetization” proposal recently pitched by the Songwriters Association of Canada and the EFF plan that the industry dismissed back in 2004, Griffin’s proposal would have Internet Service Providers add a flat-rate fee to their monthly charges to underwrite the cost of unlimited music downloads. The resulting funds would be divvied up among songwriters, performers, publishers and music labels.

“It’s monetizing the anarchy,” says Peter Jenner, head of the International Music Manager’s Forum, who will join Griffin on the panel. “The labels are beginning to like the idea of an access-to-music charge, because they’re increasingly aware that their current model is broken.”

Terry Gross: “Are you trying to say to me that all that matters to you is money?”
Gene Simmons: “I will contend, and you try to disprove it, that the most important thing as we know it on this planet, in this plane, is, in fact, money. Want me to prove it? …The first thing you need–besides air, which so far is free, and by the way if you went scuba diving, you’re paying for air–the other thing besides that is food, it’s what we need to survive. I don’t know what other tool I would use besides money to buy it. Although, as a woman of course you have the ability to sell your body, then get the money, and then, with that, get food. But ultimately money is part of it.”

–Excerpt from Gene Simmons’s Feb. 4, 2002, interview with Terry Gross, host of NPR’s “Fresh Air”

Kiss fans hoping for a new album will have to make do with the band’s “Rock & Roll All Night” toothbrush instead. Because according to Kiss frontman Gene Simmons, the band won’t be going into the studio anytime soon.

Seems Simmons has been a bit disillusioned with the recording industry lately–particularly its failure to stamp out illegal file-sharing. “The record industry doesn’t have a f—ing clue how to make money,” Simmons told Bilboard. “It’s only their fault for letting foxes get into the henhouse and then wondering why there’s no eggs or chickens. Every little college kid, every freshly scrubbed little kid’s face should have been sued off the face of the earth. They should have taken their houses and cars and nipped it right there in the beginning. Those kids are putting 100,000 to a million people out of work. How can you pick on them? They’ve got freckles.”

So it is ironic, enormously ironic, to hear NBC Universal Chief Executive Jeff Zucker accuse Apple of ruining the music business (like that second Lindsay Lohan album didn’t do any damage at all). Speaking at a breakfast organized by Syracuse University’s Newhouse School, Zucker said Apple “destroyed the music business in terms of pricing” and will invariably do the same to the online video business.

Noting that NBCU booked just $15 million in revenue during the last year of its iTunes deal, Zucker described the company’s deal with Apple’s digital media store as one that was corrosive to its media business. “We don’t want to replace the dollars we were making in the analog world with pennies on the digital side,” he said. What Zucker does want is a piece of Apple’s iPod business. “Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money,” Zucker said. “They did not want to share in what they were making off the hardware or allow us to adjust pricing.”

Can’t imagine that’s going to change anytime soon, either–no matter how loudly Zucker whines. Apple CEO Steve Jobs would probably rather swallow a Zune whole than be pressured into handing over a percentage of iPod sales to record labels, as Microsoft has done with Zune.