Rumors are surfacing once again that music labels are trying to capitalize on the demand for purchased downloads by raising the wholesale cost of music. The latest such report is in this morning's Financial Times (thanks to Phil Leigh for the notice). To say that raising prices would be foolish is an understatement, but the attempt does seem characteristic of the short-sightededness of the music industry. Myopia has caused many of the industry's current problems, and labels will and should) continue to be punished for denying marketplace reality and mishandling opportunities.

At this stage in the evolution of a-la-carte online stores, the only priority should be building volume. As it is, wholesale costs are high for providers such as Apple's iTMS, which must pay the labels a negotiated fee per track as well as mechanical costs (that is, unnegotiated licenses available to any performer or store) to publishers. To think that the success of iTMS is an indicator of consumer acceptance of higher prices is unfathomable arrogance, but even if online sales remained strong at higher prices the entire industry needs much, much more volume before a-la-carte downloading really lifts off.