Good analysis. As someone about to sell song / album downloads directly and through iTunes, its helpful to think about this $.50/track number as not only a price I could set that’s “cheaper than iTunes” but also one that a theoretically free market of music downloads might recognize as “a fair price.”

With the marketplace being so fragmented by technical and legal (monopoly) barriers, it’s maybe a lot more complicated: most buyers don’t have anything like free access to the information that would allow them to assess fair value.