Friday, September 30, 2005

Name that tune('s price)

Go read this.

So the record labels are asking for variable pricing?

Good.

First off, I beleive in supply and demand.

Also, I understand that the music biz has spent 50+ years predicated on the fact that they can sell you a hit and make you buy 14 other songs with it, for $15.00 (ish), and that this model breaks when you do the $15/15 = $1/song and try and sell them independantly. In short, because your volume goes to pot, as your customers say "no thanks, I just want The Macarena, not this other spanish stuff because there's no funny dance for the other songs." So it makes sense for them to, in order to protect their revenues, ask for consumers to dish up the cash in a different way. And one way is to say "I still want $15, so I'll sell you this hit for 10$, and any of the other songs on the albume for $0.30 each."

But they should be careful! They are playing with matches, and standing in a puddle of gasoline to boot.

There are three things that could go wrong (for them, that is. Some may be very good for the consumer) as I see it:

  • Users may get sticker shock at $5 for a single. Sure, they've paid in the past (anyone remember 45's? Jeez I'm old) but it's a different ballgame now. While they may buy a $15 cd knowing they are doing so for 1 or 2 songs, they are also hoping that they'll like a few others. This is plain and simple, 5-bucks-for-one-song-period.
  • A price war may break out. And it may happen at multiple levels. One label vs another, one artist vs another (where it's really the label trying to steer users choice of, say, generic boy band)
  • unorthodox bundling may start taking place (the retailers offering their own mix packages so users still perceive $1/song, where label A's hit, while getting the $5 price, is pulling $5 worth of 15 other 30 cent songs from labels B, C, D that otherwise wouldn't get picked up at all - thus label A helping it's competition).

And that's just the conservative ideas. More "out there" theories:

  • The indie labels combine with the blogging/podcasting community to steer people to indie bands through a combination of buzz, "underground" style marketing and bargain pricing. Think of the following headlines, "Why blow your beer money on Beyonce? Click here to learn about the 10 hottest underground bands that are breakin' all the rules without breakin' your bank!"
  • Question: Does Mr Jobs have the critical mass of Ipods out there to start a record label, or partner with one for exclusivity? Does one of the major labels break ranks in order to screw their brethren in exchange for a lock on all those podders?

In any case, I just think Mr Bronfman (who, btw, hails from Montreal, my home town) should be careful. People in glass houses shouldn't throw stones.

Except of course, if "people in glass houses" means "people with the rights to Glass Houses", the Billy Joel album. which was one of those rare exceptions in that it generated five top-forty hits, and thus doesn't follow the model discussed above.

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